[size=30]The launch of the first “digital economy” service a few days later in Iraq: The fate of the fines will be guaranteed .. What does it mean to pay money over the phone?
2021-04-23
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Yes Iraq: Baghdad
An American report sheds light on an economic and digital transformation that will be achieved in Iraq in a few days, represented by the launch of one of the famous Iraqi banks for a digital application for financial services, while the transition to the digital economy will be an opportunity to legalize or eliminate financial corruption, and bypass the weakness of the banking infrastructure.
The Iraqi economy is preparing to achieve a technological leap that could allow it to overcome the structural problems and corruption gaps that suffocate the private sector, as the Iraqi Trade Bank will launch on the first of next May its application for financial services via mobile phone.
While this step may be considered simple, paying money via mobile phone has helped many countries in the world to bypass weak physical banking infrastructure, dry up common corruption systems and encourage innovation, according to Dr. Bilal Wahab, a researcher at The Washington Institute, and Michael Rubin, resident researcher at The Washington Institute. American Enterprise Institute in the analysis published by the American National Interest magazine.
Wahab and Robin say that corruption has been an obstacle to the Iraqi economy for many years, and Transparency International places Iraq among the most corrupt countries in the world, with a slight improvement compared to the level of corruption 10 years ago.
They added that one of the most prominent common denominators between the components of the Iraqi political spectrum is the willingness of politicians to exploit their positions to enrich themselves and their families or for the benefit of their companies, while noting that in the first years after 2003 the Iraqi government used to pay salaries to employees in cash, which opens the door to the inclusion of fake names in Payroll, and it allows presidents to deduct funds for themselves from the salaries of their subordinates, and to counter these practices the government sought to move to a system of paying wages through bank accounts, and this matter has become mandatory for workers in the prime minister and the presidency, but it is still optional for workers in Parliament.
But depositing salaries in bank accounts is not enough for the simple reason that Iraqis do not trust banks, and the use of banking services in Iraq is still low. Until 2017, the percentage of Iraqis who own bank accounts was about 20% of the total Iraqis, and now despite the presence of about seventy banks operating In Iraq, only three major banks, namely Al-Rafidain, Al-Rasheed and the Iraqi Trade Bank, account for about 85% of the total assets of the banking sector.
There is only one large international bank operating in Iraq now, which is Standard Chartered, and it owns a few branches and focuses on major government projects. The Iraqi International Smart Card won a contract to electronically pay government workers' wages through cards insured with biological agents "Qi Card". In 2019, the company said it had about 7 million people carrying its cards.
The researchers say that the weakness of the banking system in Iraq is a major reason behind the World Bank placing Iraq in the 186th place out of 190 on the ease of obtaining loans index in the World Bank's report on doing business for the year 2020. This led to a large exit of capital from Iraq.
Ali Allawi, the Iraqi Finance Minister, for example, says that about 250 billion dollars have gone out of Iraq since 2003, which is three times the annual budget of Iraq. At the same time, the weakness of the banking system has pushed Iraqi citizens to rely more on informal financial transfers, which negatively affects the government's ability to follow the movement of funds and collect taxes and fees. For example, the public treasury loses about 90% of the potential revenues of customs, estimated at 7 billion dollars annually, due to corruption of officials and armed militias.
At the same time, the central government in Baghdad and the Kurdistan Regional Government are not making sufficient efforts to enhance citizens' confidence in the banking system. There is a bill in the Iraqi parliament to insure deposits that no one cares about.
In 2014, when the Kurdistan Regional Government faced a liquidity crisis, it seized money from bank deposits, denting citizens' confidence in the banking sector as a whole.
But the new Corona virus pandemic has prompted large numbers of Iraqis to accept the idea of a digital economy. In Erbil and Baghdad, food delivery applications via smart devices such as Tiptop and Express have increased in popularity. And in the city of Sulaymaniyah in the Kurdistan region, residents have increased their interest in using the website “PayBook.com” to buy their needs instead of going to stores.
As Iraqis prepare for the digital economy era, as more than 40% of Iraqis were born after the 2003 invasion, the move to enter the Iraqi Trade Bank into the world of mobile banking will reverberate in broader areas of public confidence. For example, when a car passenger in Iraq is fined 50,000 dinars ($ 34) for not wearing a protective mask against the emerging corona virus, he does not know if the money he will pay reaches the public treasury or goes to the police's pocket. Whereas when paying the fine via mobile applications, he will ensure that it reaches the public treasury. The same applies to various forms of fines and fees that Iraqi citizens pay.
At the same time, the Iraqi Trade Bank’s provision of electronic banking services could allow Iraq to overcome the increasing obstacles to traditional banking infrastructure and corruption caused by overlapping interests.
While most regions of Iraq, such as Karbala, Anbar and Baghdad, have the ability to attract investors and provide them with the opportunity to achieve large profits, financial services via mobile phone will facilitate the practice of commercial activities, help avoid large bank fees and support greater transparency.
Therefore, researchers Bilal Wahhab and Michael Rubin call on the US administration to provide all means of support to the Iraqi government in order to develop the Iraqi banking system and push it towards the transition to a digital economy while ensuring its information security. At the same time, it is in the interest of the United States to coordinate and cooperate with Iraq to ensure that mobile financial transactions applications that allow currency exchange between dinars and dollars do not turn into a back channel for Iran to circumvent US sanctions.
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