The role of remittances in state rebuilding: The case study of Somalia

This study investigates the role of remittances in the state rebuilding of Somalia. The volume of remittances going into the Somali economy is massive, yet little is known about their contribution to the country's reconstruction. Remittances can impact state fragility, and state building. Somalia is known globally to have been the world's most failed state. For instance, the Fund for Peace fragility index places Somalia at 110.5 points while the World Bank's CPIA places Somalia at 2.0 points. State-building indicators, including economic, social equity, public services, and judicial and political functions, have been absent or weak in Somalia. However, they have been created or strengthened thanks to remittances. Therefore, gaining an in-depth understanding of their involvement with this phenomenon is crucial. This thesis seeks to answer the following questions: 1. What role do remittances play in the state rebuilding of Somalia? 2. How is the government benefiting from the remittances flow to the country? 3. How are remittances used to build civil society institutions that collaborate with the state in rebuilding? Drawing on a purposive approach, this study is based on in-depth semi-structured interviews with people rich in information on Somali affairs, academics, Hawala companies, families who receive remittances, and the Somali diaspora communities who send money back to Somalia and the relevant secondary data. Despite the increase in recent research on the effects of remittances in Somalia, a critical gap remains. The impact of remittances in the state rebuilding of Somalia is yet to be adequately addressed. While research on remittances in household expenditure, social development, education, poverty alleviation, and Hawala firms has been conducted, little has been done, especially on state and institution construction. Somalia has been without a government for the longest time in history, and the current federal government is fragile with weak institutions. Millions of Somalis live abroad, contributing significantly to the positive development of their home country through financial remittances of about $1,735 billion and social remittances in ways that merit in-depth academic analysis; thus, this study aims to bridge this gap and contribute towards these efforts by analyzing the impact of remittances and social networks on Somalia's state rebuilding processes. I argue that remittance flow impacts the state-building processes of Somalia through institution-building such as education, civil society, health, and economics. The study finds that remittances positively impact state building through the development of the healthcare system, educational institutions, roads, legal system, civil society organizations, and the country's literacy rate.