Enab Baladi – Jana al-Issa
Although the population relies on electronic payments, their use has remained limited in Syrian government-controlled areas due to currency weakness and poor banking infrastructure, which is unprepared for such technological change.
In recent years, the Syrian government has focused its efforts on promoting a culture of electronic payments, but recently this has become more like forcing the use of bank cards.
On August 13, the Syrian Ministry of Finance announced the introduction of electronic payment methods at all state-owned Mahrukat gas stations in all provinces, while retaining the option of paying in cash for those who prefer it.
At the end of June, the government asked all citizens with smart cards to open bank accounts within three months in order to be able to transfer the support funds to these accounts later, when the cash support system is fully operational and can adequately serve the sector.
At the time, the Government considered that the obligation to open bank accounts had to serve to enable citizens to fully assert their maintenance claims and to prevent any interference with those claims by existing or potential intermediaries, without however specifying who they were.
The government’s push to force people to pay electronically raises questions about the economic and financial reasons for the government to benefit from it – notwithstanding the incomplete readiness of the infrastructure to support this change – and how people will deal with bank cards in the face of inflation and currency devaluation.
Necessary needs without services
The Syrian regime government often announces the development of electronic services, but these services often fail to achieve their goals for various reasons.
Given the country’s economic situation, which is accompanied by high inflation rates and a deterioration of the currency, leading to an increased demand for banknotes in larger denominations, it is obvious that Syrians need to switch to electronic payments to make their lives easier.
Since 2011, the value of the Syrian pound against the US dollar has fallen significantly, so that the highest denomination of the Syrian currency (five thousand Syrian pounds) is now worth less than half a US dollar, while the highest denomination in early 2011 (one thousand Syrian pounds) was worth about 20 US dollars.
Due to this significant drop on the one hand, and due to laws that criminalize trading in dollars on the other, as well as the lack of bank accounts for various reasons, Syrians are now forced to trade in large denominations of Syrian currency. However, measured in dollars, the amount may seem normal.
Reduce cash and strengthen networks
Ayman al-Dasouki, a Syrian researcher in local government and political economy at the Omran Center for Strategic Studies, believes that the transition to electronic payments is based on several considerations, such as managing the amount of cash in the market given high inflation rates and trade-related depreciation of the currency.
Al-Dasouki said in his interview with Enab Baladi that this change will provide economic opportunities for electronic payment companies, some of which are linked to the regime’s official and unofficial economic networks, while also reducing the cost of printing invoices and minimizing counterfeiting as much as possible – all of which have been pushing the regime in this direction recently.
This change could have a positive impact as it gives citizens the opportunity to simplify their transactions, eliminating the need to stand in line for hours to pay bills and also facilitating their financial and investment transactions. However, this depends on several factors.
According to the researcher, these factors include solving problems and challenges related to the infrastructure of the electronic payment system, such as electricity and internet services, which are subject to frequent outages and poor coverage, as well as the lack of coordination between government and non-government sectors. In addition, there is the availability of qualified personnel for the technical management of this system and the ease of citizens’ interaction with this system and its applications.
Without the above-mentioned options, or the lack thereof, electronic payment complicates people’s problems rather than solving them, said al-Dasouki.
Economic researcher Najah Abdul Haleem also believes that the Syrian regime wants to strengthen its control over the economy by switching to electronic payments, as electronic payments allow the government to monitor financial activities.
The regime aims to increase bank liquidity, control the flow of money and reduce dependence on paper money printing, which has exacerbated inflation.
Abdul Haleem agrees with researcher al-Dasouki that while electronic payments theoretically offer some long-term benefits, these come with many prerequisites, such as strong infrastructure and a stable economy.
Given the current conditions in Syria, with its destroyed infrastructure, weak communications and economic collapse, this change is unlikely to have a tangible impact in reality, the researcher said, adding that the potential benefits remain very limited and cannot be achieved without the right conditions.
In a government confession, 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 and summarizes the reasons for several problems for which the government has not yet found a fundamental solution.
Citizens compromise with the government
In a 2022 United Nations survey on e-government, Syria ranked 156th out of 193 countries in the world, while in 2020 it ranked 131st in the world, indicating a decline in electronic services in Syria over the years.
Economic researcher Ayman al-Dasouki pointed out that citizens still prefer cash transactions over electronic transactions because they do not trust the government’s procedures and steps related to electronic financial transactions. However, they are forced to adhere to these procedures because they are mandatory and unavoidable.
Economic researcher Najah Abdul Haleem noted that with rising inflation and the devaluation of the Syrian pound, people are expected to avoid putting their money in banks, as financial stability will make them more dependent on keeping cash, especially given the lack of trust in the banking system.
Despite government encouragement to use bank cards, cash payments will continue to be the norm. Electronic payments will be used only to a limited extent and for basic needs, said Abdul Haleem.
Syria in the E-Government Development Index (EGDI)
The E-Government Development Index, a UN index, shows the status of e-government development in UN member countries.
The index also evaluates patterns of website development in each country and takes into account accessibility characteristics such as infrastructure and education levels to show how the government is using information technology to improve access and inclusivity for its citizens.
The EGDI index is a composite measure of three key dimensions of e-government: provision of online services, telecommunications connections and human resource capacity.
Syria ranks 156th out of 193 countries in the 2022 e-Government Development Index, while it ranks lower in citizen participation in electronic services, ranking 185th out of 193.
UN data shows that Syria has regressed in terms of e-government development since 2020, when it ranked 131st out of 193 countries and 106th in terms of citizen participation in these services.
