The Need for Improved Money Transfers Among Refugees

By Chanel Smith, EMEA Editor (@PYMNTS-EMEA)

For several countries, money transfer services help foster development. In other countries, money transfer services are a lifeline for survival.

Insufficient systems used to send cash to beneficiaries in regions suffering from humanitarian emergencies have long been a challenge for non-governmental organizations (NGOs). War-torn countries such as Syria, along with many other countries across the Middle East, desperately need improved money transfer infrastructures. The current system is flawed, with problems such as security risks, high labor requirements, and slow registration and transfer times. The NGO sector is fighting to improve the remittance systems, but the process will require a collaborative effort.

The Financial Times reported that a Western Union facility opened in July of this year in the north Lebanese city of Tripoli. However this was no ordinary Western Union outlet, conducting the usual businesses transactions and cash transfers. This pilot unit was installed specifically to help the British relief charity, Oxfam, send money to Syrian refugees. Until now, this test program has not been overly active, and has only been used for two one-off cash payments of $150 to 1,800 Syrian refugee families. Still, this represents an important example as to how NGOs can provide cash to countries with humanitarian emergencies.

Millions of people around the world suffer from such emergencies, and need outside help to obtain cash to pay for food and shelter. Syria is an unfortunate example of a war-stricken country with inhabitants who depend on receiving direct cash. Unlike refugees in countries such as Jordan and Turkey, Syrians who flee to Lebanon for safety do not get the option of staying in official camps. They are left on their own to find means of shelter and feeding their families. These people struggle in part because of the lack of accessibility of cash transfers.

“Sending cash into the field has always been challenging,” explained Lindsay Clydesdale, media officer at Oxfam. “Often the nearest bank is miles away; traditional branch banking is slow in remote and dangerous regions; after a natural disaster like an earthquake or tsunami; the banking infrastructure can be wiped out.” 

The Financial Times reported that one alternative method is to send money from charity organizations to field offices, then have the employees release the cash to the receivers. This alternative has its faults, since it requires intense labor and has many security risks.

Oxfam revealed that time is a huge obstacle as well. Many of the current remittance services take a long time to be completed—some even taking up to 14 days after registration. Clydesdale states money services such as Western Union need to be more efficient and more discreet.

Oxfam and Clydesdale argued that the Western Union pilot has the potential to set a model example, and help to improve other NGO programs that try to help people in crisis. Oxfam is fighting to find funding to expand Tripoli’s Western Union program, and reach up to 10,000 households. The Financial Times reported that a Western Union spokesperson said that NGOs that facilitate these refugee programs are given a reduced fee for services, which cuts regular transaction and distribution costs. 

“This new process would help us get funds to the right people in the right areas at the right time,” said Clydesdale.

Lebanon and Syria are only some areas in need of a better direct cash transfer system. Remittances are an important contributor to national GDP growth and the development of emerging economic nations, yet it is still needed for some very basic human needs.

To read the full story at The Financial Times click here.