Dahabshiil

Dahabshiil
دهب شيل

Company type	Private
Industry	money transfer
Founded	1970 Burao, Somalia
Headquarters	Dubai , United Arab Emirates
Key people	Abdirashid Duale
Revenue	US$250 million (2009)
Number of employees	over 2000 worldwide
Website	www.dahabshiil.com

Dahabshiil ([Dahabshiil] Error: {{Lang-xx}}: text has italic markup (help), Arabic: دهب شيل) is an international funds transfer company headquartered in Dubai, United Arab Emirates. Formed in the early 1970s, the firm operates from over 24,000 outlets and employs more than 2,000 people across 144 countries. It provides a broad range of financial services to international organisations, as well as to both large and small businesses and private individuals. The company is also involved in numerous community building projects.

History

A Dahabshiil franchise outlet in Brisbane, Australia.

Dahabshiil (meaning "Gold smelter") was founded in 1970 by Mohamed Said Duale, a Somali entrepreneur based in Burao, the capital city of Togdheer province in the modern-day Somaliland region.

Initially a general trading enterprise, the firm began specialising in remittance broking during the 1970s, when many Somali males from northern Somalia migrated to the Gulf States for work. This resulted in a growing demand for services to transfer money from those migrant workers back to their families.

Because of foreign exchange controls imposed by the Somali government at the time, most of the funds were transferred via a trade-based system known as Franco Valuta (FV); the latter process involved the import of goods, proceeds from the sale of which were sent to migrants’ families. These transactions formed the bulk of Dahabshiil’s business throughout the 1980s.

With the Somali Civil War fast approaching, the Duale family were among the hundreds of thousands who retreated to the Somali-inhabited Ogaden region in neighbouring Ethiopia. The business in Somalia collapsed, but Duale was able to draw on an extensive network of contacts in the Gulf to re-establish the venture, setting up a small office in Ethiopia to serve displaced Somali communities there and in Djibouti.

In 1989, Dahabshiil opened its first office in London, where a number of Somalis had arrived during the war. The UK arm was managed by Mohammed Duale’s son, Abdirashid Duale, who began to expand the business as the Somali population in the UK grew.

Somali money transfer industry

A Dahabshiil franchise outlet in Puntland, Somalia.

Funds transfer services have become a large industry in Somalia, with the country now offering some of the most advanced and competitively priced telecommunications and internet services in the world. Estimates of the aggregate value of remittances from the Somali diaspora back to the home country vary. However, a recent study by the United Nations Development Programme suggested a figure of around $1.6 billion, sent largely by emigrants in the US, Europe and the Gulf region. Industry experts estimate that Dahabshiil handles around two thirds of all remittances to Somali-speaking regions.

Most of the Somali money transfer operators (MTOs) are credentialed members of either the Somali Money Transfer Association (SOMTA), an umbrella organisation that regulates the community's money transfer sector, or its predecessor, the Somali Financial Services Association (SFSA). Besides Dahabshiil, Somali MTOs include Qur'an Express, Mustaqbal, Amal Express, Kaah Express, Hodan Global, Olympic, Amana Express, Iftin Express and Tawakal Express. A unique feature of these Somali funds transfer companies is that they all charge lower commission fees than their Western counterparts; typically around 5% for sums of up to $1,000, a range encompassing the vast majority of Somali household remittances. For amounts greater than $1,000, Somali MTOs charge commissions of 3% to 4%, significantly lower than Western Union's 7.1% fee and MoneyGram's 7.2% fee for sending similar amounts to Ethiopia. Charges for the remittance of charity funding vary between 0% and 2%.

Accounting for almost a quarter of household income in Somalia, funds remitted by the Somali diaspora have helped to sustain communities in some of the most remote locations in the Horn of Africa. With around 40% of households receiving such assistance from relatives working abroad, remittances have proved significant in promoting private sector activity in telecoms, transport and housing, as well as in basic infrastructure, health and education. It has also been argued that the inflow of such foreign-based capital has helped keep the Somali shilling afloat and offset depreciatory and inflationary pressures.

Company overview

Branches and transfer network

Dahabshiil is the largest of the Somali money transfer operators (MTOs), having captured most of the market vacated by Al-Barakaat. The firm has its headquarters in Dubai and employs more than 2,000 people across 144 countries, with 130 branches in Somalia, a further 130 branches in the United Kingdom, and 400 branches globally. Its worldwide network comprises more than 24,000 agent and branch locations, and the company has invested in state-of-the-art technologies to offer both SMS notification and 24-hour online transfers.

Products and services

A Dahabshiil franchise outlet in Columbus, Ohio.

Remittance transfer remains Dahabshiil’s core business, but the company has diversified to offer financial services to international organisations, businesses and private individuals. Most of the major international development organisations operating in Somalia use Dahabshiil to transfer funds, including the UN, WHO, World Bank, Oxfam, Save the Children and Care International.

In 2008, Dahabshiil acquired a majority stake in SomTel, a Somaliland-based telecommunications firm specialising in high speed broadband, mobile internet, and mobile phone services. The acquisition provided Dahabshiil with the necessary platform for a subsequent expansion into mobile banking, a growth industry in the regional banking sector.

In early 2009, Dahabshiil opened an Islamic bank, Dahabshiil Bank International, in Djibouti. An international bank, DBI provides services to business and private clients demanding Shariah-compliant financing. Operations centre on asset finance, partnership finance and lease finance.

That same year, Dahabshiil teamed up with leading Somali retailers, hotels, restaurants, and petrol stations to launch ‘Dahabshiil eCash’, Somalia’s first debit card service.

Community investment

Dahabshiil invests 5% of its annual profits in community projects aimed at improving schools, hospitals, agriculture and sanitation services. It also sponsors a number of social events, including the Somali Week Festival and the Somali Youth Sports Association in the UK, which help to promote understanding and cooperation through Somali art and culture and sport, respectively. After the tsunami of 2005, the company helped provide immediate relief to the people in the regions of Somalia that were most affected. In 2009, the firm also donated $20,000 toward the establishment of a state-of-the-art mental health facility in Garowe, the administrative capital of the northeastern Puntland region of Somalia.

Compliance

Dahabshiil’s integrated services are managed according to strict international regulations to combat terrorism, money laundering and other illegal activities. The firm is a member of the International Association of Money Transfer Networks (IAMTN), the UK Money Transmitter Association and the USA Money Transmitter Association, and is fully compliant with AML (Anti Money Laundering) regulations.

In 2010, Dahabshiil became the first international payments firm to achieve authorisation from the UK Financial Services Authority (FSA), under the Payment Services Regulations of that year which demand the highest standards of security, customer protection, transparency and speed of delivery.

Awards

In 2008, Dahabshiil's CEO, Abdirashid Duale, was awarded Top Manager of the Year by the International Association of Money Transfer Networks in recognition of the outstanding services that the firm offers its clients. This was followed in 2010 with the UK's Mayor of Tower Hamlets award for excellence in the community, which recognizes the "outstanding contribution" Dahabshiil has made to the local, national and international Somali community over the last 40 years.

Media Coverage

Dahabshiil and Abdirashid Duale have been mentioned and profiled in a number of articles in mainstream news media. Recent examples include:

An article published in The Economist on 3 September 2011 titled, Look the other way, which discusses the continued severity of the famine in the Horn of Africa and mentions an initial donation made by Dahabshiil to the relief effort of $100,000.

An article by Katrina Manson published in the UK’s Financial Times on 24 May 2011 titled, Money man serves the Somali diaspora – a full profile of Abdirashid Duale, describing the history of Dahabshiil from his perspective.

An article published in The Economist on 10 February 2011 titled, Commerce amid chaos, which discusses the business environment in Mogadishu and the ways in which entrepreneurs have found ways to flourish in the absence of a credible state apparatus. The article describes Dahabshiil as “the biggest of the banks” – handling a “large share” of the funds remitted to Somalia by the diaspora each year.

An article by Zeinab Badawi published on the BBC News website on 26 January 2011 titled, Somalia: 20 years of anarchy, which describes Dahabshiil’s operations in Hargeisa, Somaliland, and discusses the importance of remittances to the region – to which much official aid is denied due to its lack of formal international recognition as a state.

An article by Abdirashid Duale was published in the October 2011 issue of the quarterly Forced Migration Review, a widely read journal on refugee and internal displacement published by the Oxford Department of International Development at the University of Oxford. The article, titled, How displaced communities use technology to access financial services, discusses the economic and humanitarian implications of the increasing role of technology in the Horn of Africa’s money transfer sector.