Tripoli- Since 2014, Libya has been suffering from a scarcity of cash as a result of the decline in oil revenues and the deterioration of the security and economic situation, which has caused Libyans to lose confidence in their banking sector and cause them to line up in long lines in front of banks to obtain sums that do not meet their needs and are not sufficient to pay their family’s expenses.
Since the new Central Bank of Libya Council, led by Governor Naji Issa, officially assumed its duties last October, the Council has been working to develop and support the transition to electronic payment.
The will of the “central”
Director of the Research and Statistics Department at the Central Bank of Libya, Ali Abu Salah, told Al Jazeera Net that electronic payment is the most important axis in the Central Bank’s comprehensive strategic plan, through developing electronic payment systems and launching smart cards.
Last November, the Central Bank announced a package of measures to develop electronic payment systems and services, which included transferring the management of the “National Distributor” system to it, and linking all electronic payment service providers to the system.
The Central Bank also supported the “LY Pay” and “One Pay” instant payment projects, reduced commissions on points of sale, and obliged banks to offer the “Qard Al Hassan” product, the use of which is limited to electronic payment methods.
Obstacles and challenges
Areas and villages far from the city suffer from weak infrastructure, especially in the field of communications, in addition to the culture of the residents of the areas in dealing with cash. Many electronic payment users also complain about the breakdown of sales systems and their delayed response due to weak communications in some areas.
In this regard, Abu Salah explains that the network of commercial banks is wide and connected to most regions throughout the country, but the availability of infrastructure represents the greatest obstacle to encouraging citizens and merchants to use electronic payment, in addition to the culture of users and merchants based on cash in kind, and there is also an obstacle. A great deal is related to state registration and licensing of commercial services.
Government actions
Abu Salah explained that the government must facilitate the registration of retailers and make it easier for them to obtain the necessary licenses to carry out their work, while developing programs to partially or completely exempt them from taxes for a period of time, and avoiding job duplication in small activities between the public and private sectors.
The Director of the Research and Statistics Department and the Communications and Media Officer at the Central Bank added that imposing the presence of an electronic payment method when obtaining or renewing commercial licenses would support the spread of electronic payment, and the government must impose electronic collection as the sole payment channel to accept government payments.
Increasing growth
In turn, the director of the Tadawul company, Aladdin Khamira, believes that the growth rates in the use of electronic payment are witnessing an unprecedented development. In 2020, operations at the national distributor did not exceed 3 billion dinars (the dollar is equivalent to 4.9 dinars), with hundreds of thousands of users and a few thousand of Points of sale. Today, the number has risen to 20 billion dinars, with more than 70,000 points of sale and 4 million users.
Khamira pointed out in a statement to Al Jazeera Net that the recent measures taken by the Central Bank ensure the growth of the volume of transactions via electronic payment by more than 60%, which may lead to an increase in total annual transactions from 20 billion dinars this year to more than 30 billion in 2025.
E-commerce support
In the context of benefiting from electronic payment tools, the Central Bank Governor obligated banks to take the necessary measures to activate bank cards on the e-commerce platform managed by the “Muamalat” company.
In a meeting that included the Director General of Muamalat Company and the competent departments of the Central Bank at the beginning of this December to follow up on the plan to diversify and spread electronic payment channels and the challenges facing it, the governor emphasized facilitating contracting procedures with merchants to enable them to engage in online sales activity, and taking the necessary measures to ensure that transactions In accordance with the best standards followed for information security and integrity, according to the Central Bank’s website.
Partial solution
For his part, Libyan businessman Hosni Bey confirmed in a statement to Al Jazeera Net that the measures taken by the Central Bank – such as opening bank clearing between the eastern and western regions and merging accounts – enhance the growth of electronic payments, but he pointed out that the liquidity crisis will remain in place as long as the government continues to finance budgets via Deficits and creating virtual money, as he described it.
For his part, Khomaira pointed out that the liquidity crisis has other causes, and is not only related to the availability of electronic payment tools, but he stressed that the completion of the “Central Bank” strategy will significantly reduce the impact of the crisis.
Final solution
In contrast, banking expert Misbah Al-Akkari, a former member of the Central Bank’s Exchange Rate Committee, believes that the liquidity crisis will be resolved once and for all by 2025, provided that all parties – including citizens, the private sector, and government bodies – commit to using electronic payment tools.
Al-Akkari explained through his Facebook account that electronic transformation will reduce dependence on paper money except in limited scopes, and will also contribute to reducing congestion in front of banks.
He added that the use of electronic payment tools enhances justice and eliminates corruption associated with cash withdrawals. It also limits feeding the black market and provides accurate statistics that benefit the national economy.
This is what the Communications and Media Officer and Director of the Research and Statistics Department at the Central Bank, Ali Abu Salah, agrees with. He believes that the future of electronic payment in Libya is a promising future, as a result of the great demand to dispense with cash if there is a reliable alternative available.
In light of these data, it seems that electronic payment represents an important step towards alleviating the liquidity crisis and opening new horizons for the banking sector, but it is not the radical solution. Addressing the crisis requires a strategic plan that the legislative, executive and supervisory institutions in the country are committed to implementing, and it includes controlling government spending and combating corruption.
