Enab Baladi – Jana al-Issa
Despite the public’s need to rely on electronic payment, its uptake in areas under the control of the Syrian government has remained limited due to currency deterioration and poor banking infrastructure unprepared for this type of technological shift.
In recent years, the Syrian regime’s government has focused its efforts on promoting electronic payment culture, but it has recently come to resemble forcing people to use bank cards.
On August 13, the Ministry of Finance in the Syrian government announced the adoption of electronic payment at all government fuel stations run by Mahrukat company in all provinces, with the option to pay in cash remaining available for those who prefer it.
At the end of June, the government demanded that all citizens holding smart cards open bank accounts within three months, in preparation for transferring support funds to these accounts later when the cash support system is fully operational and ready to serve the sector appropriately.
At that time, the government considered that requiring the opening of bank accounts was related to enabling citizens to receive their full entitlements from support and preventing any infringements on these entitlements from any existing or potential intermediaries, without specifying them.
The government’s push to force people to use electronic payment raises questions about the economic and financial reasons the government benefits from this, regardless of the incomplete readiness of the infrastructure to serve this transformation, and how people deal with bank cards in the context of inflation and the devaluation of the currency.
Necessary need without services
The Syrian regime’s government frequently announces the development of its electronic services, but these services often fail to achieve their goals for various reasons.
Under the economic conditions in the country related to high inflation rates or currency deterioration, resulting in the increased need to carry larger denominations of currency, Syrians’ need to shift towards electronic payment to ease their lives becomes evident.
Since 2011, the value of the Syrian pound against the US dollar has significantly dropped, making the highest denomination of Syrian currency (five thousand Syrian pounds) worth less than half a US dollar today, whereas the highest denomination at the beginning of 2011 (one thousand Syrian pounds) was worth around 20 US dollars.
Due to this significant drop on one hand, and laws that criminalize dealing in dollars on the other hand, as well as the lack of dealing with bank accounts for various reasons, Syrians today are forced to trade in large denominations of Syrian currency, but the amount may seem ordinary if measured in dollars.
Reducing cash and supporting its networks
Ayman al-Dasouki, a Syrian researcher in local administration and political economy at the Omran Center for Strategic Studies, believes that the shift towards electronic payment is driven by several considerations, such as managing the amount of cash in the market in light of high inflation rates and currency deterioration due to trading.
Al-Dasouki said in his interview with Enab Baladi that this shift provides economic opportunities for electronic payment companies, some linked to the official and unofficial economic networks of the regime, alongside reducing financial costs from printing invoices and minimizing currency forgery as much as possible. All of this pushes the regime towards this matter recently.
This shift could carry positive effects concerning simplifying transactions for citizens, instead of queuing for hours to pay bills, as well as easing their financial and investment transactions. However, that is contingent on several factors.
These factors, according to the researcher, include solving the issues and challenges related to the infrastructure of the electronic payment system, such as electricity and internet services which experience frequent outages and weak coverage, besides the weak coordination between government and non-government sectors, availability of qualified personnel to technically manage this system, and ease of citizens’ interaction with this system and its applications.
Without the availability of the above or its absence, electronic payment complicates people’s problems instead of solving them, according to al-Dasouki.
Economic researcher Najah Abdul Haleem also believes that the Syrian regime, through the shift towards electronic payment, aims to strengthen its control over the economy, as electronic payment allows the government to monitor financial activities.
The regime aspires to enhance banking liquidity, control the movement of money, and reduce reliance on printing paper currency, which has exacerbated inflation.
Abdul Haleem agrees with researcher al-Dasouki that electronic payment, despite theoretically holding some long-term benefits, requires the availability of many conditions, such as a strong infrastructure and a stable economy, to achieve these benefits.
Given the current conditions in Syria, the destruction of infrastructure, weak communications, and economic collapse, it is not expected that this shift will have any tangible impact in reality, according to the researcher, adding that potential benefits will remain very limited and unachievable without suitable conditions.
In a governmental admission, a banking sector director spoke to the local Al-Watan newspaper (unnamed) in April 2022 about the decline in ATM services in government-controlled areas, summarizing the reasons in several problems that the government has not yet found root solutions for.
Citizens compromise with the government
In a survey conducted by the United Nations in 2022 on e-governments, Syria ranked 156 globally out of 193 countries, while its global ranking in 2020 was 131, indicating a decline in e-services over the years in Syria.
Economics researcher Ayman al-Dasouki pointed out that citizens still prefer cash transactions over electronic ones due to the lack of trust in the government’s procedures and steps related to electronic financial transactions. However, they are forced to conform to these procedures as they are mandatory and unavoidable.
Economic researcher Najah Abdul Haleem noted that with increasing inflation and the devaluation of the Syrian pound, it is expected that people will avoid putting their money in banks, as financial stability makes them more dependent on retaining cash, especially given the lack of trust in the banking system.
Despite the government’s push toward using bank cards, the common behavior will continue to be cash payments, with limited use of electronic payment for essential needs only, according to Abdul Haleem.
Syria in the E-Government Development Index (EGDI)
The E-Government Development Index, a UN index, shows the state of e-government development in UN member countries.
The index also evaluates the patterns of website development in each country and considers accessibility features such as infrastructure and education levels to reflect how the state uses information technology to enhance access and inclusivity for its citizens.
The EGDI index is a composite measure of three important dimensions of e-government: online service provision, telecommunication connectivity, and human capacity.
Syria is ranked 156 out of 193 countries classified within the index regarding e-government development for 2022, while it ranks lower in citizen participation in e-services, standing at 185 out of 193.
UN data shows that Syria has regressed in terms of e-government development since 2020 when it was ranked 131 out of 193 countries, and 106 regarding citizen participation in these services.