Examining the use of electronic money and technology by the diaspora in international remittance system: A case of Somali remittances from Canada

Abstract

AbstractThe diaspora, particularly through ICT‐enabled remittances, are an important lifeline to many in the developing world. This study aims to better understand the usefulness of ICTs in the role played by the remittance sending diasporans in developing countries' economic and social system. Through a mixed‐method approach, we explore the institution behind the Somali Hawala system and how it is enabled by technology. Guided by the question: What is the role of electronic money, technology, and the diaspora in the international remittance system? Using Somalia and the Somali diaspora, we create an inventory of the Hawala businesses based in the Canada gathered from secondary sources and online business listings. Next, surveys of 143 Somalis, who have remitted internationally in 2017, were conducted. We observed that social ties are strong motivators as to why individuals in Canada send money to people in Somalia. People who communicate less frequently were more likely to send less than $500. However, those who frequently communicate with their family members were more likely to send more than $500. Drawing on Social Network Theory and Altruism theory, we establish the role of ICTs in the Somali money transfer sector, confirming the crucial role served by ICTs in remittances.