Beirut (AFP) – Visa, currency exchange, wedding registry: in Lebanon, money transfer companies offer services previously provided by banks, which have drastically reduced the airfoil since the start of the unprecedented economic crisis.
“These companies make our lives easier,” Elias Skaff told AFP outside a branch of the OMT money transfer agency in Beirut.
“If you get a wire transfer, you will die a hundred times before you can cash it,” says the 50-year-old man, who says he survives on funds sent by his relatives overseas.
Since 2019, Lebanon has been immersed in a profound economic crisis attributed by a large part of the population to mismanagement, corruption, negligence and inertia of a ruling class that has been in place for decades.
The crisis was characterized by draconian banking restrictions that prevented savers from having free access to their money, while the local currency lost more than 90% of its value against the dollar on the black market.
To cope with the collapse, banks, once considered a beacon of the economy, have cut thousands of jobs, closed hundreds of branches and suspended a range of services, including loans.
“No additional cost”
For his wedding list, 36-year-old Elie invited his relatives and friends to turn to the money transfer company WHISH Money rather than the banks.
“Instead of waiting hours in an often crowded bank, guests can send money online via an app,” he says.
To pay their employees’ salaries, some companies also turn to money transfer companies.
“At the start of the crisis, we were forced to pay our salaries in cash, which wasted a lot of time,” explains Rachelle Bou Nader, manager of a company specializing in the sale of sporting goods.
Today, his company does business with WHISH Money. “Our employees can now withdraw their money easily, at no extra cost,” he says.
As for the banks, the costs on the services still available have increased significantly, in particular the transfers in foreign currency to and from abroad, “their only source of income”, according to Sami Nader, director of the Levant Institute for strategic affairs.
During the first six months of 2022, about 250,000 Lebanese received foreign currency money from abroad, indicates the OMT agency, which specifies that the number of transfers entering the country has increased by 8% compared to the same period in 2021 .
This growth has prompted the company, which holds 80% of the non-bank money transfer market, to expand its business. “We have more than 1,200 branches across Lebanon,” Naji Abou Zeid, executive member of OMT’s board of directors, told AFP.
In 2021, the company launched its own Visa payment card. His clients can exchange dollars for Lebanese pounds, create a wedding registry and pay various bills and taxes.
For Sami Nader, money transfer companies are flourishing in Lebanon thanks to remittances from Lebanese in the diaspora to their relatives who have remained in the country, a lucrative market.
“Today a young Lebanese abroad no longer hesitates to send US $ 100 (about € 100) to his parents, because they can make a difference,” said Nader.
According to the World Bank, Lebanon is among the countries where the volume of migratory remittances as a percentage of GDP is very high, reaching 54% in 2021 and exceeding 6 billion euros per year.
And most of these funds were sent outside the banking system, the confidence of the Lebanese in their banks was severely shaken by the crisis.
Disputes between angry customers and bank employees applying instructions are also common.
On August 11, a gunman held bank employees in Beirut hostage, demanding the withdrawal of his frozen savings to pay for his father’s hospital bills, earning a hero hail from the crowd.
“We can’t even withdraw a pound from the bank,” protests Alaa Cheikhani, 45. “Why then should we entrust our money to them?” she said, waiting to receive a wire transfer outside an OMT branch in Beirut.
© 2022 AFP