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Somaliland and Puntland receive higher diaspora remittances than the rest of Somalia

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Every year, members of the Somali diaspora send approximately $1.4b to their family, relatives, and friends in Somalia, exceeding all humanitarian and development assistance to the country. The remittances comprise around 25 percent.

Somalia’s annual overseas development assistance is estimated at $1.3bn.

Funds transfers from overseas citizens back into their home country play a very important role in countries like Somalia, where a large number of its citizens fled to the outside world, especially to the West, following the collapse of the state. These transfers help recipient families pay for their monthly basis needs such as food, water, education, and healthcare. It also helps families get access to credit. Sometimes, it helps many Somalis survive recurring droughts.

This money—usually small monthly contributions taken directly from working Somalis in the diaspora—is nothing short of a lifeline for the Somali people.

But what is less understood is how that money, the diaspora remittances, can contribute towards inequality among Somali communities, and which regions in the country receive more than others.

Yet only an estimated 40 percent of the population receives remittances. For these households, monthly remittance receipts range from $50 to more than $300, with an overall monthly average income from remittances of $229.

A report by the Rift Valley Institute, a non-profit organisation operating in Eastern and Central Africa, shows the relationship between remittances and the relative vulnerability of certain communities, and how remittances can contribute towards inequality.

According to the report, there is a clear link between the average levels of remittances, and the regions in which they are received. Regions in the north, Somaliland and Puntland, receive on average $254 per month, while regions in the south of the country, excluding the capital city, Mogadishu and the port city of Kismayo, receive $119; a significantly lower monthly total.

Populations who do not benefit from remittances are disproportionately found in the south, where there is a larger rural population, and where marginalised and ethnic minority groups are mainly found.

There is also a clear link between the distribution of remittances and dimensions of migration. The Somalis, who out-migrated first, predominantly came from the north of the country, particularly from Somaliland and Puntland. These diaspora populations are now well-established in the United States and Western Europe. These patterns have been further entrenched by subsequent migration, which is facilitated by remittance transfers from existing migrant communities in host countries and other formal processes, including family reunification programmes.

The rebellion in Somaliland (now a self-declared republic) against the government of President Siyad Barre, in the late 1980s, led to a mass exodus to foreign countries, especially to the US and the UK, before the rest of the country followed suit after the collapse of Barre’s government in 1991.

This regional inequality was considered an important factor in how the dynamics of the Somalia famine of 2011 developed, with remittance-receiving communities being less vulnerable to famine.

Clan dominance and socio-economic profile of particular clans also affect how remittances are distributed.

The 2017 drought and associated humanitarian crisis showed how Somali clans demonstrated contrasting abilities to mobilise external support and, by implication, levels of resilience.

The large and dominant clans, as well as the small but well-connected ones, were able to raise funds abroad due to their historical migration patterns and the size of their current diaspora populations.

However, clans that are agro-pastoralists and whose communal identity is based on a combination of family-lineage and land-based territory responded to the drought less successfully.

Clans whose family structures are looser and who historically have had a less prominent national political profile, and whose diaspora is smaller, raised comparatively little money from abroad.

Despite playing a crucial role in Somalia’s economy and helping families meet their basic needs, remittances do contribute to inequality.

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Business and Finance

Kenyans to start paying more for Zoom calls starting next month

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Starting from next month, paid users of Zoom in Kenya will have to fork out an additional fee for their subscription, as the government is set to impose value-added tax (VAT) on several online services to operate in the country.

In an email sent to paid subscribers yesterday, Zoom announced that starting Aug. 1, the Kenyan government will levy a 16 per cent VAT to be borne by the customer.

“Like many companies with a growing international presence, Zoom is routinely evaluating its indirect tax collection and remittance obligations,” the company said.

“The application of these taxes to business with online activities is a complex and evolving area. Zoom continues to review such developments, as well as the nature and extent of its activities in different jurisdictions, and, based on such regular review, will start charging indirect taxes where applicable,” the message read in part.”

Zoom currently prices its lowest subscription package, which offers unlimited group meetings among other perks at Ksh15,000 (about $150), while the highest-paid package costs Ksh25,000 ($250) per year. With the VAT implementation, Kenyan individuals and companies will now pay at least Ksh2,500 ($25) more for the cheapest package and at least Ksh4,100 ($41) more for the highest-priced package.

Zoom is not the only digital service to recently fall under the microscope of the Kenyan taxman. Last year, Kenya Revenue Authority (KRA) introduced the Finance Act 2020 Digital Service Taxes (DST) on income from services provided through the digital marketplace in Kenya, which is charged at 1.5 per cent of the gross value of a transaction (exclusive of VAT). The regulation requires individuals and firms that supply or expects to supply taxable goods and services worth at least Ksh5 million ($50,000) in a year to register for VAT. However, Kenyans registered for VAT will be exempted from paying the tax.

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Court orders Safaricom to pay 600,000 shillings to a blind man for refusing to hire him

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A blind man has won Ksh6million ($6,000) in compensation after a Kenyan High Court agreed with his claim that Safaricom violated his rights for failing to hire him despite interviewing and inviting him to sign an employment contract.

Mr Macharia accused Safaricom of denying him employment as a customer care executive based on his disability and sued for compensation for discrimination and violation of his rights.

He told Justice James Makau that he responded to an advert by Safaricom in August 2016 for a customer experience executive position, which invited qualified Kenyans irrespective of “race, colour, religion, gender, tribal origin, disability or age”.

Along with other persons living with disabilities (PWDs), Macharia explained that he was shortlisted for the role and went through the oral interview and medical test, except for the SHL computerised aptitude test, which was removed for the PWDs so that they were not unduly disadvantaged by the interview process. He was later invited to sign the contract of employment in July 2017. However, the network operator said the invite was erroneous.

Safaricom, in its defence, denied discrimination claims, as well as the plaintiff’s assertion that his rights were violated. The network operator argued that it allowed Macharia to be interviewed for the role of a customer care executive but lacked the specialised software that would enable visually impaired persons to work. The company also noted that it employed 11 other persons living with disabilities for the same role as their disability did not affect their ability to work.

The judge ruled in the plaintiff’s favour that Safaricom violated Mr Macharia’s rights and failed to treat him with dignity. In his speech, the Judge explained that Safaricom should have informed Mr Macharia earlier that the software was unavailable instead of subjecting him to the interview process and inviting him to sign a contract, only to claim later that letter of invitation was sent to him erroneously.

“I find that the Respondent’s excuse to be an afterthought that was introduced late to the detriment of the Petitioner. The Respondent knew right from the beginning that the Petitioner’s work called for software, yet they took him through all recruitment steps,” Justice Makau ruled.”

He added that Mr Macharia must have suffered great humiliation from fellow candidates, family members and friends.

The court, however, absolved Safaricom of any claim of discrimination, noting that Mr Macharia had not shown that he was mistreated during the interviews.

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Business and Finance

Kenyan’s Diaspora sent home 33b shillings in June

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According to new data from the Central Bank of Kenya (CBK), diaspora remittances remittance inflows remained strong in June 2021, amounting to USD 305.9 million compared to USD 288.5 million in June 2020 and USD 315.8 million in May 2021. The report also showed that the cumulative inflows in the 12 months to June 2021 totalled USD 3,383 million compared to USD 2,809 million in the same period in 2020, a 20.4 per cent increase.

The United States continues to be the largest source of remittances in Kenya, accounting for 58.8 per cent of remittances in June 2021.

Meanwhile, in May, remittance inflows increased to USD 315.8 million, compared to USD 258.2 million in May 2020, representing a 22.3 per cent increase. The cumulative inflows in the 12 months to May 2021 totaled USD 3,365 million compared to USD 2,816 million in the same period in 2020, a 19.5 per cent increase.

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