INTERVIEW-Somali remittances hit hard by financial crisis-UN

* Remittances fall by 25 percent

* Food price inflation at 300 percent

By Frank Nyakairu

The global financial crisis is adding to the suffering of millions in Somalia, a country devastated by nearly two decades of continuous war, a top U.N. official said in an interview.

Mark Bowden, U.N. humanitarian coordinator for the country, said the slowdown has cut remittances from Somalis abroad at time of massive displacement and rampant food price inflation.

"The money that the diaspora sends, we know has gone down by 25 percent this year and remittances of at least $1 billion a year come into Somalia," Bowden told Reuters quoting U.N figures for the first quarter of 2009.

More than 1 million Somalis abroad have propped up the Horn of Africa nation's economy despite the conflict. The remittances have provided a lifeline to at least a third of the population.

"The Somali diaspora are the first to be affected by the economic crisis because, unlike some other countries' expatriate populations, the Somalis tend to have less professionals and so more manual workers being affected by job cuts in Europe and America," Bowden said.

An estimated 3.4 million Somalis depend on food aid, the country is facing its worst drought in a decade and an upsurge in violence since the start May is making the situation worse.

Some 300 people have been killed and more than 120,000 have fled the capital Mogadishu since hardline Islamist militias stepped up attacks in May in a push to overthrow the government.

Bowden said increasing insecurity and drought had ramped up food price inflation to 300 percent in many parts of Somalia.

"This is a critical year for Somalia because of the potentially collapsing economy because of the drought," he said. "There is a real danger that Somalia can become more dependent on humanitarian assistance than never before."

With militia groups battling pro-government forces for control of the capital and different towns elsewhere, Bowden called for guarantees to ensure aid reached affected populations.

"I call upon everyone to help provide the guarantees that we need to deliver this food," Bowden said.

More than a dozen aid workers have been killed or kidnapped since 2008, complicating aid delivered to Somalia displaced.

This month, UNICEF accused the hardline al Shabaab group of undermining its operations by taking over its compound in the town of Jowhar -- putting the lives of 40,000 children at risk.

The target for a U.N. appeal for Somalia this year increased to $984 million, but is only one-third funded by donors to date. (Editing by David Clarke)

Source: Reuters