Fake news from aid agencies causes real hardship

WorldRemit founder and CEO Ismail Ahmed took the stage at TechCrunch Disrupt London to talk about his company and his views on the future of remittances.
WorldRemit founder and CEO Ismail Ahmed took the stage at TechCrunch Disrupt London to talk about his company and his views on the future of remittances.
By: Ismail Ahmed
When aid agencies push false narratives to make a case for funding, it’s not just accuracy that’s the casualty. It’s the people that suffer, in very real terms.

Recently, Save the Children reported that 90% of families in Somaliland and Somalia were no longer receiving remittances. Based on a survey that randomly selected households from 5.2 million people, it explained that this was due to the “slowdown of foreign economies due to COVID19.” This finding sounds very believable, given the horrors of the pandemic, but in reality it’s just not true.

In a country where remittances account for as much as 40% of gross domestic product, such a result would have led to a collapse of the economy. Perhaps the authors of the report should have questioned their findings a little further.

Fortunately, we have reliable hard data about remittances. The Central Bank of Somaliland has just published the monthly remittances data it collects from money transfer companies. In 2021, the total remittances were up by 49%, from 1.3 billion to 1.9 billion. Remittances were also up in 2020 by 15%.

The Central Bank of Somaliland has just published the monthly remittances data it collects from money transfer companies

The last quarter of 2021 in particular saw a significant jump of remittances, in response to the worsening drought and increased food prices in the Horn of Africa.

Remittances are counter-cyclical. During an economic downturn, migrants often share whatever money they have with family members back home, to make sure that no one in their family goes hungry. They do this even if they, the migrants, are unemployed. They cut back their expenses to support their families, and remittances increase as a result.

It’s a cultural response. Somalis have always relied on time-honoured traditional wealth-sharing mechanisms in times of hardship. New technologies such as mobile money have helped strengthen these by making it easier for families to share money. This year’s response to the severe drought hasn’t been different. More recent data from money transfer companies show a higher volume of transactions in January and February 2022.

Early in the pandemic in 2020, the World Bank issued a report projecting that remittances to sub-Saharan Africa would drop by 23%. Like the virus itself, the message mutated and evolved as aid agencies amplified it to support their fundraising campaigns. Later the World Bank realised that remittances to Africa were more resilient than it had assumed and corrected its earlier report, but aid agencies continued to issue alarmist reports.

Citing one of the World Bank reports, Save the Children pushed this narrative. In February 2021, it argued in a press release that “The pandemic has obliterated the country’s economic base of diaspora remittances.” This was after the Central Bank of Somaliland and the Ministry of Finance published data showing that remittances had actually increased by 15% during the pandemic. A year later in February 2022, Save the Children published this new report — arguing “90% of families no longer receiving remittances”- that supports the statement it made a year ago concerning how the pandemic “obliterated” the remittances to the country.

This is an old story. Even back in the late 1990s, when I conducted one of the first pieces of academic research on remittances in the Horn of Africa, aid agencies then argued that remittances to Somaliland were no more than a few million dollars a year, and that the country relied on their handouts. In contrast, our estimate, based on data collected from surveys and from money transfer companies, found remittances were about $500m a year and this financed the country’s entire import bill. It was aid, not remittances, that amounted to no more than a few million dollars a year!

Conversely, when flows of funds were disrupted by regulations introduced after 9/11, the same agencies claimed that remittances were more like $1 billion a year, and that the disruption was cutting the lifeline for millions of people who now needed their support. Where remittances are concerned, aid agencies try to have it both ways.

Using incorrect remittance data to attract funding is unethical, but ethics isn’t the issue here. In his book Narrative Economics, Nobel Prize-winning economist Robert Shiller argues that, whether true or false, stories spread by the media and social media induce panic that helps propel major economic events that may lead to economic crisis and mass unemployment.

This isn’t just theory. In 2020 when the World Bank and aid agencies issued alarming reports about disruption of remittances, in a panicked response, investments initially fell and food prices rose. In some regions, speculative behaviour and hoarding increased food prices. False narratives create real harm.

At a time when governments and community leaders are encouraging the diaspora to send more money, reports suggesting that diaspora members are no longer supporting their families during the worst drought in decades have the power to undermine local efforts. Pushing false narratives hurts the very people aid agencies are trying to help.

About the Author

Ismail Ibrahim Ahmed , Founder & Chairman @WorldRemit,  Founder @SahamiyeFdn, a foundation helping Somaliland to tackle development challenges

The views expressed in this article are the author’s own and do not necessarily reflect Horndiplomat editorial policy.
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