Aid agencies can be harmful, says Somaliland tycoon


Aid agencies are hindering development and undermining efforts to attract investment in Somaliland, according to a former World Bank and UN official turned entrepreneur.

Ismail Ahmed, founder of the money-transfer company WorldRemit, claims Somaliland, his birthplace, has had to battle “negative PR” from aid agencies exaggerating their role to protect their interests. Somaliland declared itself a sovereign state independent of Somalia in 1991, but it is not recognised internationally.

The British-based Ahmed has launched the Sahamiye Foundation, with a 10-year plan to give away more than half of his wealth, amounting to $500m (£365m), to help Somaliland, primarily in health and education. “Aid agencies exaggerate what they do in markets like this. A tiny fraction of what they raise reaches intended beneficiaries,” he said.

“What they fail to understand is investment carried out by businesses. Somaliland’s GDP is dominated not by the state but by the private sector,” he added. “That negative PR, where they exaggerate issues, is really protectionist … and often leads to businesses cutting investment.”

His foundation, based in London and Somaliland’s capital, Hargeisa, aims to double literacy rates in two years, increase access to health information and help people gain new technical skills. Ahmed is frank about what he sees as the failings of aid, to which Somaliland has had little access. Though it has 4.4 million inhabitants and its own currency, army and parliament, it remains an unrecognised country and so does not receive funds from the World Bank or International Monetary Fund.

In the early days of the pandemic, Ahmed said, the World Bank predicted that remittances – money transferred back to their country by migrant workers – to sub-Saharan Africa would drop by 23%. The Somali government forecast that transfers would fall by up to 40%. Aid agencies claimed remittances would “more or less collapse”, said Ahmed, adding that as the media reported this, food prices went up and businesses cut investment.

“This did more harm than good in Africa. They had no basis to say this,” he said. “I’ve been involved in remittances for 40 years. We have hard data to show what was happening. They never bothered to check the facts.

“Remittances are counter-cyclical and so during an economic downturn we expect to see an increase in transaction numbers. That is exactly what happened in 2020.”

Somaliland’s central bank reported that remittances increased from $1.1bn to $1.3bn last year.

Ahmed came to the UK as a refugee from the war that broke out in Somaliland in 1988. Arriving with $60 to his name, he spent his summers picking strawberries in Kent to send money back to his family, then in an east African refugee camp.

He returned to Somaliland in 1992 for his PhD research into remittances. He said: “I saw the scale of remittances was far bigger than anything. The UN was exaggerating the bit of aid they delivered.”

His early career saw him working for the World Bank and the UN, where he thought he “could make a difference”. Instead, he witnessed corruption while working in Nairobi and became a whistleblower, which lost him his job.

Four years later, he won compensation from the UN, using the money to launch WorldRemit in 2010. It has gone on to become one of the world’s largest digital cross-border payment companies.

Now Ahmed’s focus is on his foundation, starting with a Somali language app. “During Covid, we saw difficulties reaching people who can’t read,” said Ahmed. “Thanks to technology, we can now do something that was unthinkable in the past. With our app, someone can reach functional literacy in 50 to 100 hours.”

He added: “Somaliland could become an example of where things have been built from the ground up, where people have owned what they are doing, where people are accountable. In Africa, the media focuses on what goes wrong, but Somaliland is one of the success stories.”