Expatriate Pakistani Remittance Enhancement – No Need for Kerry Lugar Aid
February 5th, 2010
Comments ( 5 )
The expatriate Pakistani community remits foreign currency worth U.S. $8 – $9 billion every year via official money transfers / banking channels to Pakistan. More or less the same amount is sent via the unofficial / hundi / hawala channels. Just to put things in perspective, the entire aid promised for Pakistan in the controversial and Pakistani-national-pride-hurting kerry-lugar bill was U.S. $1.5 billion. I don’t know how much of this U.S. $1.5 billion Pakistan is really going to get and in what shape, if at all we get it. But you know what: To hell with it. We don’t need foreign aid. In fact, the parliament of Pakistan should pass a resolution against this bill prohibiting GoP to accept any aid under this bill.
Our main focus should really be on channelizing the unofficial remittance transfers from the expatriates. Channelizing these transfers does not entail closing down the money changers or unofficial channels, but rather to enhance the product offerings of the official transfer/ banking channels to effectively compete with these unofficial channels. We have to first learn how to solve the customers’ problems rather than shutting down everything senselessly, or using pure brute force, which has been and remains GoP’s forte even today.
Why do people seek unofficial channels to remit money in the first place? Well, primarily because transfers via the official banking channels are expensive to remit, cumbersome, delayed, with poor currency conversion rates and require the beneficiary to have a bank account; whereas via the unofficial channel, it is faster, cheaper, it has better conversion rates, and does not require the beneficiary to have a bank account. This clearly shows that product offerings are very different and the official channels do not suitably meet the needs of a big segment of the Pakistani society; hence, the success of these unofficial channels for normal people of Pakistan.
Finally, the Government of Pakistan (GoP) has recently launched the Pakistani Remittance Initiative (http://www.pri.gov.pk). The transfer process is speedy, is cost-effective, and does not require the beneficiary to have a bank account. This, I believe if executed properly with serious customer focus, with solid leadership and a vision of at least 5 years will eventually capture at least 50-75% of these unofficial transfers. I strongly believe that this method can easily achieve enhancement of the foreign remittance by at least U.S. $5 billion, thus making the total to around U.S. $15 billion per year. However, changing consumer behavior and very importantly, their perceptions is no easy task. This scheme will take a few years to say the least to fully and truly capture the needs of the remitter and the beneficiary. But, i am convinced that Pakistan will start seeing some immediate results even in the first year.
As for the expatriates, it is their solemn duty to help their country by sending money home via the official channels. This is the least they can do for their country if they cannot be physically present here, but at the same time, I would like to caution the GoP not to appeal to the expatriates’ patriotism too much and too many times, rather focus on making their remittance product better and more efficient. The GoP should also work seriously to improve and expand their collection / distribution channels. If this means, bringing some of the money changers within the PRI ambit, then so be it. In short, make the official remittance product superior to effectively compete with unofficial channels.
These are the real things GoP should focus on… Not on debating, whining or fretting over the implications of the Kerry-Lugar bill. Screw it. We don’t need foreign aid as long as we have thoughtful expatriate Pakistanis. Rise Pakistan!
No Hope said on February 5th, 2010 at 5:24 pm
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No one would ever want to come back to Karachi after today’s double bombing in the city. Afaque, it might be time to start wrapping your things up and moving back to the States if you want to safeguard your life and your family. Pakistan ka to khudaa hee hafiz hai !
Disgusted at today’s events – you’re right that the country has gone to the dogs and they’re shredding it apart.
atharkhan said on February 13th, 2010 at 10:44 pm
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Afaque,
I think you make a good point, and I agree with you.
I have two (humble) suggestions:
(1) Please try and outline/structure your posts in advance. Otherwise, (like many writers at Dawn, etc.), you risk losing the reader halfway through the post.
(2) Please try to frame your posts positively. I think more people would stay with the blog if your posts didn’t have an angry tinge to it.
Best of luck!
-Athar.
Afaque Ahmed said on February 23rd, 2010 at 9:57 am
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Thanks Athar for your valuable suggestions. I agree with both of them. However, point # 2 is not easy for me, although I do agree with it. The reason is behind each and every article there are many personal experiences both good and bad. In many ways, I’m trying to capture my true thinking, passion and views on these issues via these articles and portraying it to people. What I mean to say, I have not picked these topics just because they are hot, and then researched them, and then made a dispassionate posts out of it to provide a balanced view. For example, since I was an expatriate for 13 years myself and even today since I work in an export oriented industry, I have been dealing with foreign currency regulations, remittance issues via the banking channels, etc., for a very long time. This has been my personal topic of research for the last 18 years, and have been a big user myself of these systems for a very long time. So when I talk about these things, even if the arguments are logical, they have conviction, passion and in some cases anger behind them.
But anyway, thanks for the valuable suggestions. I will try to incorporate them in my next posts.
asifandmaryam said on April 19th, 2010 at 3:47 pm
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An excellent blog, but unfortunately I don’t think it will be major success. As you can imagine many of the Pakistani’s for example in the UK are dispersed throughout the country. Even within Bradford there are only two locations from where I can send money missing out large populations who live in other areas and nearby towns such as Keighley and Dewsbury. For the time being the unofficial methods are far more convenient for many people.
Plus the motivation when remitting money to Pakistan is not for the betterment of the country but for the betterment of ones family or village/ town. Plus there has been virtually no marketing push for the service, this blog is the first time I ever heard of such an intiative.
Afaque Ahmed said on April 24th, 2010 at 7:52 pm
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Dear Asif,
Plz check this dawn news post which talks about the improvement in the home remittance situation.
http://www.dawn.com/wps/wcm/connect/dawn-content-library/dawn/the-newspaper/business/19-rs16bn-remittances-settled-under-pri-system-740-hh-09
Furthermore, I do agree with you partially; there will always exists 10-20% of the expatriates whose needs will only be met by the unofficial channels due to various reasons; however, like I mention in my article, major part of the problem can be addressed by improving the official product, where a lot of work is needed. I mean even the money changers can be brought under the PRI scheme. I.e. GoP has to be customer focused and solve the genuine issues. Patriotism can only take u so far…..