• Digital financial services
Jul 29, 2021

More than one million migrant workers are currently working and residing in Jordan, many of whom are originally from Asia. Generally, migrants come to Jordan with the primary objective to work, earn and remit money. However, migrants face number of obstacles in transferring money that range from lack of access to and limited choice of service providers, difficulty in complying with regulatory obstacles (especially if working informally), limited financial inclusion and awareness, and absence of safe spaces to keep cash.

Most of migrant workers in Jordan are primarily employed in low-skilled sectors, namely; garment industry dominated by migrants from Bangladesh, construction and agricultural sectors which majorly employ migrants from Egypt and Syrian refugees, in domestic work which is dominated by Asian migrants, and finally in parts of the services sector chiefly dominated by Syrian refugees and Asian migrants.

To improve access to financial services _including remittances_ through digital solutions targeting the unbanked in Jordan, and with the broader objective of increasing financial inclusion, the Deutsche Gesellschaft für Internationale Zusammenarbeit (GIZ) launched Improving Access to Remittances and other Financial Services through Digital Solutions (Digi#ances) Project on behalf of the German Federal Ministry for Economic Cooperation and Development (BMZ) and in partnership with the Central Bank of Jordan in October 2015. Digi#ances, a portmanteau of digital and remittances, is a six-year project working in three main interventions areas to further support the use of digital services for cross-border remittances by mainly Syrian refugees and Jordanian households with little or no access to financial services: first, developing an ecosystem for national mobile payments; second, enhancing the regulatory framework and supervisory instruments for national and digital cross-border remittance services as well as fostering dialogue and knowledge exchange; and third, increasing digital financial literacy and awareness of the target group. Placing strong focus on including women in financial services, Digi#ances has set a goal of reaching 50% women of new digital financial services (DFS) users. Of digital financial services, the project specifically supports the use of e-wallets.

In Jordan context, The Swiss Agency for Development and Cooperation (SDC) strives to support migrants in their ability to realize their aspirations, in harnessing the benefits from migration, and to enhance their protection at all stages of their migration journey. SDC supports several projects in that regard and its partnership with the ILO has broad outreach to garment factory workers and their employers as well as to domestic workers in Jordan.

In 2019, SDC conducted an assessment of the needs and demands of migrant workers and related stakeholders (employers, financial service providers) with regards to financial services in Jordan. The assessment provided a better understanding of the current situation and the specific obstacles migrant workers face in accessing (digital) financial services. The assessment included a feasibility study for cross-border digital transfers from Jordan and the interest of stakeholders to develop digital remittance’s products for migrant workers particularly for those who work in the garment sector. Based on the results of the assessment and through funding provided by SDC, Digi#ances project complements its activities and additionally targets migrant workers in the garment sector as beneficiaries of digital financial services while making use of already developed collaborations, methods, materials and approaches.

The co-finance project between SDC and Digi#ances started in 2020 and continues to 2021 with aim of strengthening migrant workers’ resilience as well as financial and economic inclusion. GIZ and SDC envision to enhance migrant workers´ access to adequate and affordable digital financial services for (outbound) cross-border remittances and to other financial services (e.g. bill payments for mobile phone top up, etc.) The objective shall be achieved by supporting the development and piloting of an adequate and affordable digital cross-border remittance service as well as by improving the migrant workers´ financial literacy, know-how and awareness about the responsible use of the digital financial services available to them.

The co-finance project is targeting the migrant workers in Jordan’s garment sector which employs around 75,000 individuals, of which 70% are women originating from Bangladesh, India, and Sri Lanka, and in smaller numbers from Nepal, Myanmar, China, Cambodia, and Madagascar.  The following figure showcase the sector in numbers based on The Jordan Garments, Accessories & Textiles Exporter’s Association (JGATE) reports:

The primary target of the co-finance project is Bengali workers in the garment sector, as they amount to approximate size of 20,000 and annually send around 13.5 million USD to their home country. More than half of the Bengali workers are female and live on average three years in Jordan and earn between 250 – 500 USD per month. Cash is still the almost exclusively used way of payment which reflects the fact that financial inclusion of the target groups is relatively low and provides great opportunity for improvement. Furthermore, the key criteria for the selection of this group were:

·        The strong political leverage environment to establish cross-border remittances including a partially digitalized receiving market.

·        A favorable environment to locate the migrant workers employers and thus the migrant workers themselves.

·        First positive interests of some payments service providers to target the migrant workers of the garment sector.

·        Upcoming and existing projects like “Driving Digital Wage Payments in the Garment Sector in Jordan Project”, where the International Labor Organization (ILO), Better Work Jordan (BW), the United Nations-based Better Than Cash Alliance and Digi#ances partnered to document and support the acceleration of wage digitization in the garment sector which goes hand in hand with the digitalization of the cross-border remittances.

Following the established approach of Digi#ances, the co-financed project is organized in two areas of work:

First, support the development and piloting of a needs-based, user-friendly, and affordable mobile payment system into facilitating an improved remittances corridor from Jordan to Bangladesh. As a result of a competitive bidding process, Digi#ances collaborates with Dinarak which is a Jordanian Fintech company licensed by Central Bank of Jordan to operate an e-wallet and provide digital financial services. This collaboration aims to develop, design, and implement all necessary activities to offer a fully digital and needs-based solution for outbound cross-border-remittances between Jordan and Bangladesh, in the first instance.

Second, awareness raising and provision of digital financial literacy trainings for migrant workers. Making use of already developed collaborations, methods, materials and approaches by Digi#ances, training programs shaped to the needs of the target group will be provided. The trainings will focus on the introduction to digital financial services, what is an e-wallet, use cases, saving and budgeting, rights and responsibilities as well as international remittances. In addition, a broad awareness campaign will be conducted to increase the awareness about the existence and use cases of (digital) financial services among migrant workers. The campaign will be done through social media outreach, fairs and other outreach events. Close collaboration with sectoral associations and grassroots organizations will be considered where feasible.

It is important to highlight that since March 2020, the COVID-19 crisis and the subsequent lockdown has impacted the Jordanian garment industry in terms of business continuity and salary payment. As a result, lager number of factories are now exploring options for adopting digital channels to make sure their local and migrant employees get paid, which increases the opportunity of wider adoption of different financial services, particularly digital cross-border remittances.

By Kawthar Al-Zo’ubi