Money transfers without borders
Title: Improving access to remittances and other financial services through digital solutions (Digi#ances)
Commissioned by: German Federal Ministry for Economic Cooperation and Development (BMZ) as part of the special initiative ‘Tackling the root causes of displacement, reintegrating refugees’
Lead executing agency: Central Bank of Jordan (CBJ)
Overall term: 2015 to 2018
Jordan has been a host country for refugees from neighbouring crisis and conflict countries for decades. Due to its relative stability, Jordan has been a place of refuge for people from Palestine, Iraq, Lebanon and, since 2011 above all from Syria. Particularly in situations of need, many people are forced to rely on financial support from family members and friends. However, their possibilities for receiving money conveniently and at a low cost or keeping it safe are severely limited. At present, Syrian refugees are not permitted to open a bank account. In addition, 75 per cent of Jordanian adults do not have a bank account. For this reason, most payments from abroad as well as within Jordan are made in cash.
Digital financial services can help to minimise the high risks and costs involved when money is transferred via informal channels or formally through money transfer operators. Cross-border remittances by migrants living abroad have been a major source of income for the Jordanian economy for a long time: valued at 3.8 billion US dollars, these remittances accounted for approximately 10 per cent of GDP in 2015.
Conditions for using digital services for cross-border remittances are created for refugees and Jordanian households.
GIZ is collaborating with the Central Bank of Jordan to develop solutions that facilitate access to financial services for refugees and low-income Jordanians. This gives the target group the opportunity to further its own economic and social development. In cooperation with the project, the Consultative Group to Assist the Poor, CGAP, is conducting an extensive study to analyse the situation and possibilities for digital money transfer in Jordan. This will support the application of information-based implementation strategies. A consortium consisting of AFC, ADG and Altai Consulting is assisting the project in the basic financial literacy sector. The project employs several approaches:
A needs-based digital remittance service at national level provides the basis for cross-border systems. The partners are therefore working with the private sector to develop digital and/or mobile financial services and test them in pilot projects.
Information campaigns and training courses tailored to the target groups promote the responsible use of digital financial services. In this way, Syrian refugees, low-income Jordanians and women in particular learn how to use digital financial services.
In order to enable the services for digital cross-border remittances, the current national regulatory framework must be enhanced accordingly. The project advises the Central Bank of Jordan (CBJ) on developing regulatory and supervisory mechanisms that comply with international standards on consumer protection, anti-money laundering and anti-terror financing.
Access to financial services enhances the self-help potential of refugees and low-income Jordanians. Access to financial services also makes it easier for this target group to integrate both economically and socially into host communities. It allows them to receive transfers from family and friends conveniently, securely and at a low cost. They are able to keep their money safe and as a result are better prepared for emergencies.
Tackling the root causes of displacement, reintegrating refugees
The project is part of the special initiative ‘Tackling the Root Causes of Displacement, Reintegrating Refugees’. Since 2014, BMZ has earmarked funds for this initiative to provide short-term support to refugees and host communities, and it seeks to eliminate structural causes of displacement, such as poverty, inequality and lack of food security. The funding focuses on projects in developing countries that are particularly affected by refugee crises.