Cash cri­sis pushes Libyans to vir­tual pay­ments sys­tems

Kuwait Times - - BUSINESS -

BENGHAZI: When a cash cri­sis struck the war-torn North African coun­try of Libya, many peo­ple were forced to queue for days to with­draw their sav­ings. But elec­tronic pay­ments sys­tems set up to tackle the dearth of cash have strug­gled to gain cred­i­bil­ity amid ac­cu­sa­tions of abuse.

Said Fayez Fad­lal­lah, 35, uses a mo­bile phone app to pay for a trol­ley-full of gro­ceries at a large su­per­mar­ket in sec­ond city Benghazi. “Now I don’t have to spend hours or even days queu­ing at the bank to with­draw cash,” he said. “They re­ally solved a prob­lem for us.”

Years of vi­o­lence and po­lit­i­cal chaos since a 2011 NATO-backed up­ris­ing that top­pled and killed long­time dic­ta­tor Muam­mar Gaddafi have left Libya’s state in­sti­tu­tions in cri­sis-in­clud­ing the cen­tral bank. In 2014 it split into two, with the dif­fer­ent branches over­seen by ri­val gov­ern­ments in the west and east. The re­sult­ing cash cri­sis, fu­elled by spi­ral­ing in­fla­tion, caused huge queues to form at the banks and left many peo­ple un­able to ac­cess their salaries.

In re­sponse, the banks have launched elec­tronic pay­ment sys­tems. In Benghazi, the Bank of Com­merce & Devel­op­ment’s “Ed­fali” (Ara­bic for “pay me”) and Wahda Bank’s “Mo­biCash” al­low users to buy goods, pay restau­rant bills and ac­cess phar­ma­cies and hos­pi­tals.

But not ev­ery­one is happy. At the exit of the same Benghazi su­per­mar­ket, his arms full of pro­duce, Ay­man Al-Obeidi, 46, said the new pay­ment sys­tems were not work­ing. “We were told... that prices would re­main un­changed” com­pared with cash prices, he said. “But we saw a 40 per­cent in­crease on pay­ments with Ed­fali.”

Bank rush

Many Libyans have not had free ac­cess to their bank ac­counts since 2014. Brav­ing cold in win­ter and blis­ter­ing heat in the sum­mer, they rushed to the banks on hear­ing ru­mors of cash de­liv­er­ies and queued for hours with­out any guar­an­tee they would be able to ac­cess their own money.

The cri­sis has de­stroyed pub­lic con­fi­dence in the fi­nan­cial sec­tor. “Peo­ple don’t trust the banks any­more,” one bank em­ployee told AFP, speak­ing on con­di­tion of anonymity.

“They want to be sure they can get enough cash in case any­thing hap­pens and the banks close, or if they can’t leave their houses.” Em­ploy­ees of Libya’s vast pub­lic ser­vice still have their salaries paid di­rectly into their ac­counts. Many have turned to elec­tronic pay­ment sys­tems to ac­cess their money. Such ser­vices al­low buy­ers to credit the seller’s ac­count. They then re­ceive an SMS mes­sage con­firm­ing that the trans­ac­tion has been com­pleted. Wahda Bank’s spokesman Al-Mo­tassem Al-Fi­touri said trans­ac­tions via Mo­biCash are “very se­cure”.

“It is not even nec­es­sary to have a smart­phone to make pay­ments, nor does the mer­chant have to have a point-of-sale de­vice,” he said. The banks are aware that the ser­vices are open to abuse, how­ever. On its web­site, the BCD en­cour­ages cus­tomers to re­port price hikes on pay­ments via “Ed­fali”. And many busi­nesses that were en­thu­si­as­tic at first have since dropped the ser­vice. Salah AlA­gouri, a busi­ness­man whose clients pay him us­ing Ed­fali, is crit­i­cal. “The bank did not re­spect its com­mit­ments,” he said. “It as­sured us that we would be able to with­draw cash to the value of 25 per­cent of sales via this ser­vice, but that wasn’t the case.” —AFP

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