Once the flagship of the Lebanese economy, the banking sector is now widely despised after banks banned savers from accessing their savings and stopped offering loans – Copyright AFP JOSEPH EID
Eli Wehbe and Jonathan Sawaya
Like many people in crisis-hit Lebanon, Elias Skaff used to wait hours to withdraw cash from a bank, but now prefers money transfer companies as trust in lenders has evaporated.
Anyone who relies on traditional banks to get their money “will die 100 times before cashing it out,” said Skaff, 50, who weathered a three-year economic downturn in Lebanon thanks to US dollar payments from a relative abroad.
Once the flagship of the Lebanese economy, the banking sector is now widely despised and shunned after banks banned savers from accessing their savings, stopped offering loans and closed hundreds of branches and cut thousands of jobs.
Last month, a local resident was widely hailed as a folk hero after he stormed a Beirut bank with a rifle and held employees and customers hostage for hours, demanding part of his $200,000 frozen savings to pay hospital bills for his ailing father.
As Lebanon’s deep crisis shows no signs of easing, money transfer agencies are filling the gap by also offering currency exchange, credit cards and tax services, and even setting up wedding gift registries.
Skaff said he now receives his money through the Beirut branch of Lebanese agent Western Union OMT, which the company says has more than 1,200 branches across the country and processes 80 percent of remittances outside the Lebanese banking sector.
“We are creating services similar to those that banks provide at the request of our customers,” said OMT spokesman Naji Abu Zeid.
Lebanon has suffered its worst economic crisis since the financial sector collapsed in 2019. The local currency has lost more than 90 percent of its value on the black market due to soaring poverty and unemployment.
Angry protesters frequently attacked banks, smashing their ATMs with rocks and spray cans.
“We can’t withdraw a penny from the bank,” says Alaa Sheikhani, 45, a customer queuing at the OMT branch.
“How are we supposed to trust them with our money?”
– Survival through remittances –
Eli, 36, who recently married, said he used Whish Money, a Lebanese money transfer firm, to set up his wedding gift registry, which he says saved wedding guests time, hassle and money in fees.
“Instead of waiting hours at the bank, which is often crowded, they can hand over the money to the agency,” said the man, who asked not to be named. “In terms of time and cost savings, it’s incomparable.”
Whish Money’s chief marketing officer, Dina Daher, said the company attracts customers by charging “zero fees” for Lebanese pound transfers.
Some companies now even pay salaries through money transfer companies rather than through banks.
“When the crisis started, we were forced to pay our salaries in cash and it was a waste of time” because the accountants had to count large bundles of banknotes, said Rachel Bou Nader, HR manager.
But now her firm, sporting goods retailer Mike Sport, pays its employees through Whish, which allows them to “easily withdraw paychecks in installments and for free,” Bou Nader said.
Sami Nader, director of the Levant Policy Institute, said remittances from the Lebanese diaspora have been crucial in helping families weather the devastating economic crisis.
“Today, a young Lebanese employee living abroad would not hesitate to send $100 to his parents because now that amount matters,” he said.
Lebanese banks have skyrocketed fees for the few services they still offer, including foreign exchange transfers, which are now their only significant source of income, Nader said, adding that this has further spurred a massive exodus of people to remittance companies. .
About 250,000 Lebanese residents received remittances in the first half of 2022, up eight percent from the same period last year, according to OMT.
The World Bank said Lebanon received $6.6 billion in remittances in 2021, one of the highest levels in the Middle East and North Africa.