UNITED NATIONS // Wiring money home is about to become easier, quicker and cheaper for Arab expatriates under a new electronic transfer system using post offices in countries across the Middle East. Under a deal between Emirates Post and national postal services in seven other Arab countries, migrant workers will be able to send cash from a post office in one country, and their families will collect the money almost immediately from a post office in their country.
The transfers via a computer network connecting post offices in the UAE, Egypt, Jordan, Morocco, Qatar, Syria, Tunisia and Yemen will cost between US$3 (Dh11) and $6 - far less than the present cost of sending money through a currency exchange house. More than half a million expatriates from the seven Arab countries live in the UAE. Post office officials say they expect more countries to join the network soon.
Nasser Fathi Qaddoumi, an adviser to Emirates Post, said a key advantage of the system was that it used an existing chain of post offices that stretched to rural and remote corners of the Arab world as well as towns and cities. An expatriate Moroccan in Dibba would now be able to wire money directly to his family more than 6,000km away, even if they live in a remote town. Until now it would have been a difficult, time-consuming and expensive procedure, Mr Qaddoumi said.
"One of the problems of private sector money-transfer outlets is that they are concentrated only in the big cities and metropolitan areas, but post offices are already everywhere," he said. "Although there are only eight Arab countries in the system at the moment, we expect many more to have joined by the end of the year." Customers in the UAE will be able to visit an Emirates Post branch, fill out a form detailing their own and beneficiary's details and hand over the cash for transfer. The clerk will explain how much this represents in the destination currency.
The beneficiary can then go to the nearest post office, show proof of identity and collect the money. Mr Qaddoumi chaired the Arab League postal committee that established the system. "A system has existed previously that involves printed orders which were faxed or posted to destination countries, but this could take several days before the money was available," he said. "With the new secured computer system, the money is transferred within a few minutes."
Indian expatriates have benefited from a similar system since April, when Emirates Post began electronic transfers to 97 main post offices and more than 2,400 branches in the regions of Delhi, Mumbai, Chennai, Kolkota and Kerala. The system relies on technology designed by the Universal Postal Union (UPU), an organ of the UN based in Berne, Switzerland, that helps the postal systems of different countries co-operate.
The network, called the International Financial System (IFS), was designed to provide migrant workers with a cheap, reliable and secure way of sending money to their families, and has already proved successful in parts of Africa, the Asia-Pacific region and Latin America. "Studies show that the average amount of money being sent from migrant workers is in the region of $100," said Rheal LeBlanc, a spokesman for UPU.
"If you are going through a private operator, the money transfer commission can be anywhere between 13 and 15 per cent, and this could represent a lot of money to a migrant worker who is sending earnings home to his family," Mr LeBlanc said. Fatima Zahra Raai, 24, a Moroccan living in Abu Dhabi, sends between Dh1,000 and Dh5,000 a month to Morocco using a private company. When told about the new system, she said she welcomed any alternative to the high transfer and exchange costs.
"When I change more than Dh1,000, then I have to pay around Dh66 in charges," Ms Raai said. "If I want to send Dh1,000 home I have to pay a charge of around Dh30. It is too much." Although it only takes around an hour for the money to be transferred electronically to a Moroccan branch of the same company, she said it could take up to a week for her family to be able to get to the nearest branch to collect it.
"It is a long process," she said. "And if I want to exchange money - maybe dollars or dirhams - the banks don't give good rates of exchange." Mustafa el Hossiny, 25, from the town of Samanod in Egypt, sends money to his family most months through an Egyptian bank he says offers the most reasonable transfer and exchange rates. "Usually I use this bank because they charge a smaller amount, around Dh15, to transfer the money," he said. "Some of the large banks charge at least double that amount for small transfers, around Dh30, so I do not use them any more."
Mr Hossiny's family has to travel into the city to collect the money from a branch of the bank but he says travel costs are low and this does not cause undue stress. He did not rule out opting for the new post office system if it proved cheaper and easier. Mr LeBlanc cited World Bank statistics that show 220 million migrant workers annually transfer remittances totalling more than $300 billion, and a similar sum is transferred through informal remittance systems, known in the Middle East as hawala, that are open to exploitation.
"There is a belief that some of the money going through these informal channels can be used to cover up money laundering or finance terrorism," said Mr LeBlanc. "One of our main objectives is to try to stay inside these formal channels such as the post office." Ibrahim Hafez, consul general of Egypt in Dubai and the northern emirates, praised the new transfer system as a positive step towards helping the estimated 300,000 Egyptians who live in the UAE.
"There are already some agreements regarding transfer rates between some banks, such as the National Bank of Egypt, and the UAE, but of course having this new agreement in place will give more facilities for people to transfer money, more channels through which to transfer their savings in a cheaper, more efficient and cost-effective way, then of course it is very good," he said. @Email:jreinl@thenational.ae