© Reuters. FILE PHOTO: A Western Union sign is seen in New York March 28, 2009. Picture from March 28, 2009. REUTERS / Eric Thayer / File Photo
From Tom Arnold
LONDON (Reuters) – Western Union Co resumes money transfer services to Afghanistan, a senior executive told Reuters on Thursday.
The world's largest money transfer company and MoneyGram International Inc, another global remittance provider, have suspended services in Afghanistan https://www.reuters.com/business/western-union-suspends-services-afghanistan-2021-08-19 two weeks after the Islamist militia captured Kabul at lightning speed.
But a lessening of security concerns after the Taliban's conquest of the country was completed https://www.reuters.com/article/us-afghanistan-conflict-idUSKBN2FY0AR paved the way for the banks to reopen this week, serving the money transfer companies rely on spending and collecting funds.
Jean-Claude Farah, Western Union (NYSE 🙂 The President of Asia, Europe, the Middle East and Africa said the reopening of banks and a move by the United States to facilitate humanitarian aid to the Afghan people had given the American company confidence to return to its services record Thursday.
“A large part of our business with Afghanistan consists of low-value family and support transfers that support the basic needs of the people there.
"We worked with the US government, which has indicated that continuation of humanitarian activities, including remittances, is consistent with US policy."
The flow of money from overseas migrant workers is a vital lifeline for many Afghans and has helped the economy of one of the world's poorest countries weather years of violence and instability. According to the United Nations, around half of the population will need help during the second drought in four years.
To make matters worse, there are a wide range of sanctions in the funding of the Taliban, while the Haqqani network, which has ties to the Taliban, is classified as a terrorist organization by the United States and Britain.
However, the administration of US President Joe Biden has pledged to allow humanitarian work to continue in Afghanistan.
"We continue to work with the US government and others to understand their policies and what kind of longer-term regulatory framework is being put in place with regard to the Taliban," Farah said.
Remittances to Afghanistan reached $ 789 million in 2020, around 4% of the country's gross domestic product (GDP), the World Bank estimates, up from $ 829 million in 2019.
Such flows have historically played an important role in supporting financial stability. Along with international grants and robust exports, remittances helped Afghanistan's current account surplus hit 14.2% of GDP in 2020, the International Monetary Fund said in June.
MoneyGram did not immediately respond to a request for comment on its plans in Afghanistan.
DO BANKS HAVE THE CASH?
In the past few days, the Central Bank of Afghanistan has given hundreds of thousands of dollars to every bank that requested liquidity, a senior banker told Reuters. But the financial system and the economy could be at risk if the Taliban can't access the central bank's roughly $ 10 billion https://www.reuters.com/business/afghanistan-central-bank-board-member-urges -biden-imf-release -Fonds-2021-09-01 in assets that are mostly located abroad.
Farah said Western Union has been assured by the banks it works with in Afghanistan that they have enough cash to pay recipients of wire transfers.
“Some of them have stated in some locations that they have good liquidity in Afghanistan and at least some liquidity in US dollars.
Before services ceased on Aug. 16, about 45% of every transaction sent to Afghanistan through Western Union was $ 200 or less, he said.
Western Union announced on Thursday that withdrawals of all funds sent to Afghanistan would be possible at selected locations. Outgoing services, funds sent from there to other countries, remained suspended, she added.