Is it possible to turn Idlib into cashless society: Poll
Enab Baladi – Zeinab Masri
Via its channel on Telegram, a research and studies division of a local investment company in Sarmada city in northwestern Syria, put forward a poll on the idea of transforming the city of Idlib into a cashless society as one of the solutions to curb inflation and high prices due to the circulation of the Turkish lira and the US dollar.
People in Idlib city and northern Syria, in general, are complaining about the rise in prices, which is due to the dependence of the prices of goods and products on the US dollar to Turkish lira exchange rate, which has suffered many declines during the past few months, before settling at a price of approximately 13.5 Turkish liras per dollar.
The Syrian Salvation Government (SSG) operating in Idlib and parts of the western countryside of Aleppo city had adopted the Turkish lira as a currency for trading in June 2020 and had strictly forbidden dealing in the Syrian pound in July of the same year.
Since then, the problem of inflation and high prices remained unresolved due to several factors, most notably of which are the fact that merchants buy goods in US dollars and then sell them in Turkish lira and the absence of lower denominations of both currencies.
Central payment methods
A cashless, or a non-monetary, society is an economic state in which financial transactions and the exchange of money between the transacting parties are carried out through an electronic medium (the transmission of digital data) rather than transactions involving money in the form of physical banknotes or coins.
Non-monetary societies have existed since the advent of human societies, as they depended on barter and other methods of exchange. In the modern era, cashless transactions are made possible by means of credit cards, debit cards, mobile payments, and digital currencies.
2,118 people have participated in the poll that was put forward by the company of Namaa Investments; 41 percent of whom were in favor of the idea of turning Idlib into a cashless society, 26 percent did not support the idea, while 33 percent of the participants opted for the “I do not know” option.
This poll was shared and discussed in economic groups on social media apps. On one of these apps, the poll was accompanied by a clarification stating that, in normal transactions, the sellers in northern Syria set the price of goods when selling according to the US dollar to Turkish lira exchange rate, as they purchase their goods in dollars while selling them in the lira.
In case the buyer wishes to pay for his/her purchases in dollars, the seller would tend to calculate the value of the “change” in Turkish lira, as there are no small denominations of US dollars in circulation in the north; the exchange agio will not be equal in both cases, as the merchant will not sell the dollar at the buying price, and the customer will have lost in both currencies.
The clarification carried a proposal such as activating the commercial credit service even when it comes to the smallest transactions, such as a person buying all his/her needs and not paying for them instantly while it is put on his/her tab in dollars. He/she would then pay the accrued dues when it reaches a certain limit or time. Another proposal suggests that merchants would offer prepaid cards from which individuals’ purchases would be deducted until these cards are fully consumed.
The clarification also reviewed the idea of creating central payment cards or methods similar to currency or bank balance to be utilized when needed, with obligating all parties to accept this method of payment. It should be noted that the approved currency, in this case, must be the US dollar.
In order for this method of payment to be facile to use and popular among people, it must be linked to mobile phones and not credit cards; these cards require the presence of a terminal in every station and store that accepts electronic payments, while mobile payments only require an account and a small paper with a distinctive “QR – code” for each electronic wallet (E-Wallet), which is the approved method for trading all digital currencies.
Enab Baladi discussed the possibility of adopting these proposals in northern Syria as solutions to the inflation problem and to end the state of price instability with the Ministry of Economy and Resources in the Salvation Government, and researcher in political economy, Dr. Yahya al-Sayed Omar; Prices rise at the rise of the US dollar to Turkish lira exchange rate while remaining fixed when the exchange rate falls.
Omar told Enab Baladi that the importance of turning into a cashless economy is increasing all over the world, while certain countries have advanced considerably in this field. Singapore is the first country in the world in terms of progress in adopting a cashless economy, as 61 percent of payments in the country are carried out electronically.
The concept of a cashless economy enhances electronic trade and reduces the dealing with traditional banknotes. A cashless economy has several benefits, including addressing tax evasion problems, combating terrorist financing, money laundering, and illegal trade, among several other advantages.
Regarding the chances of success of moving towards a cashless economy in northern Syria, Omar added that although it is a valid solution, in theory, it should not be considered as a radical solution; in terms of implementation, this solution does not have what it takes to succeed since northern Syria does not have a technological infrastructure, nor does it have banks. According to Omar, even if there are banks, the percentage of people dealing with them is little to none, thus, leading to the idea being unsuitable for the north.
For his part, the director of public relations in the ministry, Hamdou al-Jassem, told Enab Baladi that the adoption of credit cards and other methods of electronic payment and linking them to mobile phones are techniques that are used around the world, whether in developed or developing countries. Therefore, nothing is holding its application in the northern Syrian regions. However, the problem in the north is one of poverty and high unemployment rates.
He added that, just like any other government in the world, the Salvation Government is working on establishing an infrastructure suitable for investment in the industrial, agricultural, and service sectors. The telecommunications sector is one of these important infrastructures that can be employed, and the government is currently working on it via the General Telecommunications Corporation; it made remarkable progress in networking within the “liberated” Syrian north.
He also explained that many non-cash transactions that are carried out through cards or electronic payment services are available in banks located in the north. Many government and private institutions have contracted with banks, and the procedure is done via payment cards and current bank accounts.
The General Monetary Agency for Cash Management appeared in Idlib governorate in northwestern Syria for the first time on 11 May 2017, right after Hayat Tahrir al-Sham (HTS) announced the establishment of the General Monetary Agency for Cash Management and Consumer Protection that aims at regulating exchange operations and preventing monopoly and manipulation of currency rates.
The institution is concerned with managing the cash flow within the “liberated areas.” It is also responsible for granting licenses and following up on the work of banking and money transfer companies in those areas.
In 2018, HTS turned its money transfer and exchange company, al-Waseet, into a bank under the name of the Sham Bank, based at the location of the former Industrial Bank.
The branches of the National Postal and Telegraphic Service of Turkey (PTT), which is considered a Turkish bank in northern Syria, are distributed in 11 cities in the countryside of Aleppo that is under the control of the Syrian Interim Government (SIG), while there are no branches in the areas controlled by the Salvation Government.
Postal centers provide the possibility of opening a personal bank account valid for depositing and withdrawing various amounts of money at any given time. Employees’ pensions are wired via these accounts, as employees in those areas, including teachers, policemen, council employees, doctors, and Khateebs, were provided with bank cards that allow them to withdraw their salaries, in addition to remittances and external shipping services.
Shifting to a cashless society necessitates heavy work and serious efforts of raising awareness among the people, according to al-Jassem. It also requires trust between the existing financial institutions, the individuals, and the companies and investors in the northern regions.
However, poverty persists as the most serious obstacle to this plan. Many people lead a life below the poverty line, which hampers the application of this technology, according to al-Jassem. He pointed out that the government is currently working to “overcome obstacles” obstructing these projects and the establishment of a comprehensive infrastructure that serves the cashless society, but it needs time.
Causes of inflation
Inflation in northern Syria is due to two reasons. The first of which is the depreciation of the Turkish lira against the dollar, reaching about 13 liras to 1 USD, after exchanging a dollar for 8 liras at the beginning of the year.
The second reason behind inflation is the global energy crisis and the increasing global demand for energy. Also, the crisis in basic commodities led to an increase in the prices of most of these commodities, which has consequently led to price inflation, according to al-Jassem.
Al-Jassem explained that the fact that merchants are buying goods in dollars and selling them in Turkish lira is one of the causes of inflation and the reduction of remittances in this pair of currencies, which leads to a relative reduction in prices.
According to the economic researcher Yahya al-Sayed Omar, it is not possible to even begin to solve the problem of inflation in the north without identifying its causes; the solution to this problem is merely a solution to its causes.
One of the major causes of inflation in the north is the inflation in the Syrian regime’s regions, which is called imported inflation. As a matter of fact, the economy of the North cannot be completely separated from the regime’s economy.
Pensioners’ salaries, remittances, and smuggling are all intersection points; thus, inflation shifts from the regime-controlled regions to northern regions.
Turkey simultaneously suffers from high inflation rates, while the economy of northern Syria is strongly linked to the Turkish one. Therefore, inflation is imported from Turkey as well; according to what the researcher had stated, the impact of Turkish inflation exceeds its counterpart in the regime-controlled areas.
Concerning the effect that the dollar and the Turkish lira have on inflation, it is safe to say that the dollar does not affect it, but the Turkish lira does, not in terms of it being a trading currency, but in the sense that the lira is an importer of inflation from Turkey.
In light of these economic proposals and the possibility of their implementation, Syrians in the north and in various Syrian regions dominated by this or that military authority are facing economic hardships and terrible living conditions, while about 90 percent of them live below the poverty line, according to United Nations (UN) statistics.
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