Financial Service Providers and Transfer Mechanisms Mapping in Iraq – Iraq

Executive Summary

Globally, humanitarian agencies are using cash based intervention as a modality to transfer assistance to vulnerable households. Cash and voucher assistance (CVA) has the potential to strengthen sector and multi-sector strategies to respond to multiple needs of the vulnerable populations. It is widely acknowledged that cash transfers provide the flexibility needed by vulnerable population and benefits the local economies.

Cash is considered as a preferred response modality in the Humanitarian Response Plan 2020 for Iraq as well as being one of the modalities adopted to mitigate COVID-19 impacts. Given the trend towards longer-term protracted humanitarian crises, cash has been recognized for its role in supporting local economies and linking humanitarian assistance to longer-term assistance and social protection systems. Therefore, understanding the financial landscape, available financial services and transfer mechanisms, presence, experience, fees and capacity as well as challenges, risks, and recommendations to ensure the delivery of cash in a timely, safely, and cost-effectively manner is of paramount importance.

The mapping shows that mobile money service providers, hawala services, E-vouchers, such as RedRose and SCOPE, and pre-paid cards, such as SWITCH and NassPay, are the most commonly used transfer mechanisms. An electronic cash transfer mechanism called QI card is used by the Ministry of Displacement and Migration (MoDMs) to transfer cash to citizens. Other modalities like NassPay1 and bank accounts do exist in Iraq; however, there is no such evidence on their suitability to humanitarian cash assistance and requires further assessment. While the Financial Service Providers (FSP) landscape is challenged by limited coverage and liquidity issues. The CWG will continue to work with the partners, donors, and the private sector to strengthen the financial infrastructure. There is also a need for strong financial regulations to minimize risk of fraud and corruption.

The study shows there is a wide coverage of service providers at governorate level. However, it is worth noting that FSPs only keep a physical presence in the form of branches in areas of high population density, specifically at the district level relying on agents to enhance their reach across the other remaining districts. While coverage varies between providers, their weekly capacity ranged around 300 customers with the ability to expand on short notice.

Among the key challenges identified are the increased transfer fees and withdrawal limits due to the liquidity shortage and imposed cash-out fees on beneficiaries, which requires a more coordinated effort to regularly monitor the liquidity status, and regulate monitoring and contractual issues, including harmonizing transfer fees, standardizing FSP selection and negotiation procedures.

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