The government framework for banking in Somalia was largely destroyed during the conflict of the last 20 years. The civil war also forced hundreds of thousands of Somalis to leave and start new lives abroad. As they became settled, many sought to send money home, and a growing group of Somali entrepreneurs worked to facilitate these transactions. With no banks in Somalia to receive outside wire transfers, these business people established their own systems for getting money into the country.
In general, the process begins when a person in Europe, North America, or elsewhere, gives a deposit to a Somali money transfer company. The company then contacts an agent in Somalia who is close to the intended recipient and instructs that the money be distributed. At a later point, the money transfer company bundles together its deposits and wires them, usually through a major bank, to a clearinghouse generally located in a Gulf country. The money is then converted to Somali shillings and sent into Somalia. Overall the system is faster, cheaper and capable of reaching more people than traditional wire transfer companies.