Wire companies that transfer billions in remittances to Tajikistan each year have largely been unavailable since December 3, following regulatory action by the National Bank of Tajikistan, according to Eurasianet.
The recent collapse of the money transfer system in Tajikistan is reportedly already spreading pain.
Authorities have promised that the situation will be resolved imminently, but bills need to be paid.
The overwhelming majority of money flows are coming from Russia. The Central Bank of Russia has said that around US$2.5 billion were remitted from Russia to Tajikistan in 2018 – equivalent to almost a third of Tajikistan’s GDP. That money, largely sent by migrant laborers to families back home, is a literal lifeline to both the population and the economy as a whole.
The NBT has claimed that a number of money transfer companies, such as Unistream and Contact, have already abided by the rules and been integrated into what has been dubbed the National Processing Center.
Meanwhile, Eurasianet says the services of Unistream and Contact were not available to Tajik customers, as of December 12, however.
The NBT’s rationale for its new processing system is that it will afford greater financial security to local banks. When recipients of transfers cash out, the actual money is paid upfront by local banks, which are then recompensed periodically by the wiring companies.
In making his case, the deputy chairman of the NBT, Jamoliddin Nouraliyev has pointed to the experience of companies like Lider and Migom, two money transfer companies that went bust while owing money to Tajik banks.
“This system has no analogue. It will protect the interests of consumers,” Nouraliyev has said in interviews to local television.
An extension of that argument is that the Tajik market is overwhelmingly controlled by one company – Russia’s Zolotaya Korona, which accounts for around 82 percent of wire transfers. This near-monopoly hold over the market poses an economic security risk in Nouraliyev’s view.
Local banks in Tajikistan are now eagerly encouraging customers to apply for bank cards, onto which people in Russia will be able to make payments, thereby circumventing the services of money transfer companies.
An economist who spoke to Eurasianet on condition that he be identified by the pseudonym Saifiddin Jourayev said that nudging people toward greater use of cards is in line with a broader government strategy. The thinking is that limiting the circulation of cash will ensure the stability of the slowly depreciating national currency.
“It is advantageous for the NBT to promote cashless transactions. But the question is, how much is the Tajik market ready for a cash-free system? Can you go to the bazaar and buy groceries with your card? The answer is no,” Jourayev said.
The cards being eagerly offered by Tajik banks are not associated with major international systems like Visa and Mastercard, which also limits their use for online transactions.
Bank machines in Tajikistan are often without cash, so if a cardholder desperate for liquid funds is forced to resort to the ATM of an institution in which they do not bank, they will have to pay transaction fees.
Abdumannon Sheraliyev, a Tajik economist based in Ukraine, said the NBT may, despite its assurances to the contrary, decide to use its planned role as a spigot for all money transfers to raise money through commissions.
“As a result, the commission of transfers will increase by at least 1 percent or even 2 percent,” Sheraliyev told Eurasianet.
