NAIROBI, 4 October 2011 (IRIN) - The prospect of permanent closure faced by two of Somalia's main telecommunications companies and a major money transfer firm has alarmed officials and analysts concerned about the impact on livelihoods and aid distribution as much of the country grapples with a food emergency that in some areas amounts to famine.

On 30 September, the Islamist insurgency Al-Shabab ordered the firms, Nationlink, Telecom Somalia and Dahabashiil, the largest money transfer firm in the country, to cease operations. Although the order was rescinded a few days later, Al-Shabab said they would only be allowed to continue functioning if they started paying it zakat, a form of charity and one of the five pillars of Islam. Zakat usually amounts to 2.5 percent of an individual's annual earnings.

"Our services in south and central Somalia were interrupted but we are back on for now," an official of Nationlink, who declined to be named, said.

Telecom Company Hormood, the country's other large telecommunications firm, was spared closure.

According to a Mogadishu-based journalist, if the companies were to comply with Al-Shabab's demands, it would mean "hundreds of thousands of dollars, if not a million or more" in payments.

The journalist said that even though the companies were allowed to re-open, "the issue has not been resolved and if the companies don't pay they could face closure".

Mark Bradbury, director of the Rift Valley Institute, told IRIN the action by Al-Shabab was potentially devastating as money transfer and telecommunication companies were important for facilitating remittances.

"There is a lot of evidence that remittances increase during periods of extreme hardship, such as a drought or flooding, when other coping mechanism break down," Bradbury said. "Somali families rely hugely on remittances sent from their relatives abroad. Indeed, they rely on remittances more than foreign aid."

A Somali civil society member told IRIN the timing of the closure and the threat of further action - at a time of famine when most Somalis' lifeline was the telecom and money transfer companies - was strange. "Why did they pick this time to threaten us when they must know most of us depend on them for our survival?"

In a statement on 2 October, Somalia's Information Minister, Abdulkadir Hussein Mohamed, said: "The [temporary] ban not only damages two of the most vibrant industries in the country, which employ and benefit hundreds of thousands of Somalis, but also undermines humanitarian relief efforts as the Somali diaspora and some aid agencies use [Dahabashiil's] money transfer system because it is fast, reliable and covers almost all parts of the country. This is another way Al-Shabab is preventing aid from reaching the people in need."

Laura Hammond, a senior lecturer at the School of Oriental and African Studies, London, said if the companies agreed to the taxation being demanded of them by Al-Shabab, they could run the risk of violating laws in the countries where they work that prohibit paying funds to listed terrorist organizations.

"This could put the companies, and the people who transfer money using them, in a very vulnerable position if they are seen to be supporting such groups," Hammond said.

According to the Mogadishu journalist, the demand by Al-Shabab could be an indication that the group is having resource problems.

"Maybe whatever they were getting from outside is drying up and now they want to force Somali businesses to pay them taxes," the journalist said. "Unfortunately, telecoms and transfer companies are most vulnerable, easy targets, because they operate all over the country in the most remote areas."

According to the UN 750,000 people in Somalia are at risk of dying in they do not receive urgent intervention.

Source: The Integrated Regional Information Networks (http://www.irinnews.org )