A cross-border fintech-enabled service has launched to enable pensioners in the Arab world who are residing in a different country to their homeland to receive payments more quickly.
The initial phase of the service’s rollout enables Iraqi pensioners residing in two other countries, Egypt and Jordan, to receive monthly pension payments ‘faster and more efficiently’, according to an announcement from the Arab Monetary Fund (AMF) this week.
The service works using Buna, the cross-border multi-currency payments system operated by the AMF-owned Arab Regional Payments Clearing and Settlement Organisation (ARPCSO). Buna, which was created in 2018, aims to enable financial institutions and central banks in the Arab region and beyond to send and receive payments in local currencies as well as major international currencies in a safe, cost-effective, risk-controlled and transparent environment.
Iraqi pensioners who want to use the new service can open an account in a participating bank that needs to have ‘activated the Egyptian pound and Jordanian dinar on the Buna system’. The initiative is due to expand into other countries.
The scheme’s architects also aim to explore rolling out the service beyond pensions to potentially include student grants and scholarship payments, healthcare-related payments and ‘other government use cases’. The broader ambition, the AMF states, is ‘realising the objectives of Buna to strengthen Arab economic ties, boost intra-Arab payments and the usage of Arab currencies’.
‘Continuous efforts’ to use fintech
“We are always keen to provide the best financial services to our citizens and are therefore happy to launch this initiative to offer distinguished financial services and solutions to Iraqi pensioners residing in Jordan and Egypt, giving them the possibility to receive their monthly pensions directly through their bank accounts in a fast manner, transparently, and with cost efficiency,” said Central Bank of Iraq governor His Excellency (HE) Mustafa Ghaleb Mukheef.
“This initiative also comes as part of our continuous efforts to employ fintech technology and provide the banking sector with the best modern and safe solutions in the areas of payments and financial inclusion,” he added, stating that the initiative would “pave the way for activating more intra-Arab payment services in general and governmental payments in particular.”
Central Bank of Jordan governor HE Dr Adel Al-Sharkas said that the central bank’s support for the initiative was part of its “continuous efforts” to encourage the use of Buna system for intra-Arab payments and part of an ambition to help “achieve the digital transformation of payments locally and regionally.”
Central Bank of Egypt governor HE Hassan Abdalla, meanwhile, described strengthening economic co-operation with Arab countries as a priority for the central bank of Egypt and that the new initiative “represents a pioneering step in that direction”.
Iraq has a population of about 40 million people. But a substantial number of Iraqis left the country during the dictatorship of Saddam Hussein, Iraq War and its aftermath. The AMF began operations 45 years ago and has 22 central bank members.
*** In a separate development, Buna’s chief executive Mehdi Manaa and the chief executive of Bahrain’s electronic network for financial transactions BENEFIT, Abdulwahed AlJanahi, today (8 December) signed a Memorandum of Understanding with a view to creating cross-border instant payments interoperability between Bahrain and other markets.