Western Union resuming services to Afghanistan - senior exec

MoneyGram International

02/09/2021 18:39

(Adds detail on current account surplus, Western Union's
ongoing suspension of outbound funds)
    By Tom Arnold
    LONDON, Sept 2 (Reuters) - Western Union Co  WU.N  is
resuming money-transfer services to Afghanistan, a senior
executive told Reuters on Thursday, a decision he said was in
line with a U.S. push to allow humanitarian activity to continue
after the Taliban's takeover.
    The world's largest money-transfer firm and MoneyGram
International Inc  MGI.O , another global remittance provider,
suspended services in Afghanistan https://www.reuters.com/business/western-union-suspends-services-afghanistan-2021-08-19
 two weeks ago after the Islamist militia captured Kabul at
lightning speed.  urn:newsml:reuters.com:*:nL8N2PQ551
    But an easing of security concerns following the completion
of the Taliban's conquest of the country https://www.reuters.com/article/us-afghanistan-conflict-idUSKBN2FY0AR
 opened the way for the reopening this week of banks, which the
money-transfer firms rely on to dispense and collect funds.
 urn:newsml:reuters.com:*:nL4N2Q310T
    Jean Claude Farah, Western Union's president in Asia,
Europe, the Middle East and Africa, said the reopening of banks,
plus a push by the United States to facilitate humanitarian
assistance to the Afghan people, had given the American company
confidence to resume services on Thursday.  urn:newsml:reuters.com:*:nL1N2Q236N
    "Much of our business involving Afghanistan is low-value
family and support remittances that support basic needs of the
people there, so that's the grounding that we have and why we
want to reopen our business," Farah told Reuters. 
    "We've engaged with the U.S. government, which has conveyed
that allowing humanitarian activities, including remittances, to
continue are consistent with U.S. policy."
    The flow of funds from migrant workers overseas is a key
lifeline for many Afghans and has helped the economy of one of
the world's poorest nations weather years of violence and
instability. The United Nations says about half of the
population requires aid amid the second drought in four years.
    
    SANCTIONS ON FINANCING
    One complication is that there are a broad range of
sanctions on financing to the Taliban, while the Haqqani
network, which has links to the Taliban, is classed as a
terrorist organisation by the United States and Britain.
    Yet U.S. President Joe Biden's administration has said it is
committed to allowing humanitarian work to continue in
Afghanistan. 
    "We are continuing to engage with the U.S. government and
others to understand their policies and what type of longer term
regulatory framework will be put in place as it relates 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 estimated, down from $829 million in 2019.
    Such flows have historically played an important role in
supporting financial stability. Along with international grants
and resilient exports, remittances helped Afghanistan's current
account surplus reach 14.2% of GDP in 2020, the International
Monetary Fund said in June.
    MoneyGram didn't immediately respond to a request for
comment on its plans in Afghanistan.
    
    DO BANKS HAVE THE CASH?
    In recent days, Afghanistan's central bank has provided
funds of hundreds of thousands of dollars to each bank that
requested liquidity, a senior banker told Reuters. But the
financial system and economy could be in peril unless the
Taliban can access the central bank's roughly $10 billion https://www.reuters.com/business/afghanistan-central-bank-board-member-urges-biden-imf-release-funds-2021-09-01
 in assets, which are mostly outside of the country.
 urn:newsml:reuters.com:*:nL1N2Q31S6
    Farah said that Western Union had been assured by the banks
it partners with in Afghanistan that they had sufficient cash to
pay receivers of remittances.
    "Some of them have indicated at some locations that they
have good liquidity in afghani and at least some liquidity in
U.S. dollars as well, we allow payouts in both, to resume
remittances," he added.
    Before it shut down services on Aug. 16, around 45% of each
transaction sent via Western Union to Afghanistan was $200 or
less, he said.
    Western Union said on Thursday that payouts of any funds
sent to Afghanistan were available in select locations. Outbound
services, money sent from there to other countries, remained
suspended, it added.


 (Reporting by Tom Arnold; Editing by Pravin Char)
 ((Tom.Arnold@thomsonreuters.com; +442075428510; Reuters
Messaging: tom.arnold.thomsonreuters.com@reuters.net))