Internally displaced Somalis stand outside their makeshift shelters on the outskirts of Mogadishu. Image Credit: Reuters

Nairobi: Somalia's central bank governor says rebel groups are using informal money transfers to fund their operations and that people in the war-torn country risk starvation if it is hit by Zimbabwe-style inflation.

Bashir Isse Ali said in an interview that Al Shabab — which Washington considers as Al Qaida's proxy in the failed Horn of Africa state — sends and receives funds via money transfer firms and urged more transparency to combat money laundering.

"Al Shabab sends and receives money through this system using individuals, not as an organisation," Ali said. "Money transfer firms should know their customers and share information with authorities."

On inflation, the governor said Finance Minister Sharif Hassan Shaikh Aden planned to print money in Sudan and said this risked sparking runaway inflation that would cause people to starve.

Insurgents control most of Somalia, and the Western-backed administration is in charge of only a few streets of the capital.

The largely ineffectual central bank reopened in 2007, 16 years after it collapsed in 1991, the year military dictator Siad Barre was overthrown.


"The government's lack of control of the whole country cannot be translated to mean that there are no laws. Transparency in the system is important because we have security concerns that money can go into the wrong hands," Ali said.

The governor said it was hard for the firms to identify money laundering if it occurred.