“Tidbits From TNT” Saturday Morning 3-15-2025

TNT:

Tishwash:  Net foreign investment into Iraq declined by 48%.

The Iraqi Statistical Office issued an official report stating that net foreign investment into Iraq fell from $2.9 billion in the second quarter to just $1.5 billion, a decline of 48%.

Foreign direct investment plays a pivotal role in strengthening the Iraqi economy, as it contributes to reducing dependence on the state for foreign currency, in addition to supporting vital economic sectors, according to economic expert Manar Al-Obaidi.

Meanwhile, the Iraqi government announced that net foreign direct investment over the past two years amounted to $63 billion, which contradicts official data released by the Iraqi Statistical Office  link

Tishwash:  The role of electronic payment in strengthening our banking system

Dr. Haitham Hamid Mutlaq Al-Mansour

 In light of the rapid technological developments witnessed worldwide, financial and banking systems are facing radical transformations aimed at enhancing efficiency, transparency, and financial inclusion. Among these transformations, the electronic payment system stands out as a fundamental pillar in reforming banking systems, especially in developing countries like Iraq.

 The Iraqi banking system, which has suffered for many years from structural challenges and weak infrastructure, has begun to witness positive transformations thanks to the adoption of electronic payment technologies.

Electronic payment affects the banking system in general through:

1. Increased confidence in the banking system: Electronic payments enhance customer confidence in the banking system by providing secure and fast payment methods. When individuals feel their financial transactions are secure and easy to conduct, they are more likely to deposit their money in banks rather than keeping it in cash.

2. Promoting financial inclusion: Electronic payments facilitate access to banking services for individuals and small businesses, especially in remote areas or areas with a lack of bank branches. When more people can open bank accounts and conduct financial transactions easily, this leads to increased deposit rates, as depositing money in banks becomes more attractive than keeping it outside the banking system.

3. Reducing reliance on cash: In economies that rely heavily on cash, deposit rates are relatively low due to the widespread cash culture. By adopting electronic payments, reliance on cash can be reduced and individuals and businesses can be encouraged to deposit their money in banks, leading to higher deposit rates.

4. Improving the efficiency of banking operations: Electronic payments reduce banks' operational costs, as they eliminate the need for traditional branches and their staff. This improvement in efficiency can translate into better returns on deposits, making them more attractive to savers. 

5. Increased transparency and anti-corruption: Electronic payments enhance transparency in the financial system, as financial transactions become recorded and monitored. This reduces the risk of corruption and tax evasion, enhancing customer confidence in the banking system and encouraging deposits.

Global data clearly demonstrates the strong positive relationship between the spread of electronic payments and increased deposit rates in the banking system. It is noted that countries that have adopted effective electronic payment systems, such as China, India, and Kenya, have seen significant increases in deposit rates, demonstrating the impact of electronic payments on the banking system. This is as follows:

1. China:

It is one of the most advanced countries in the field of electronic payments, with more than 80% of the population relying on platforms such as Alipay and WeChat Pay. According to World Bank reports, deposit rates in China have increased significantly with the spread of electronic payments, with the deposit-to-GDP ratio reaching more than 180% in 2022. Electronic payments have contributed to increased financial inclusion, with the number of bank accounts increasing from 64% in 2011 to more than 90% in 2022. 

2. India:

Following the launch of the Unified Payments Interface (UPI) system in India, bank deposits increased significantly. In 2022, the deposit-to-GDP ratio reached 75%, up from 60% in 2016. Electronic payments have contributed to an increase in the number of bank accounts from 35% in 2011 to more than 80% in 2022.

3. Kenya:

Kenya is a pioneer in the use of mobile payments through M-Pesa. Bank deposits have increased from 20% in 2007 to more than 70% in 2022, thanks to the spread of electronic payments and increased financial inclusion.

4. Sweden:

Sweden is one of the countries with the highest reliance on electronic payments, with cash transactions accounting for less than 1% of total transactions. Meanwhile, the Swedish deposit-to-GDP ratio is around 90%, reflecting high confidence in the banking system.

In Iraq, the deposit-to-GDP ratio remains relatively low compared to other countries, recording a 9% decline. However, since 2024, the banking sector has begun to witness a significant decline in the total value of deposits, with a 9% decline from IQD 133.5 trillion in 2023 to IQD 123.5 trillion in 2024. This decline is despite the increase in the number of bank accounts following the widespread adoption of electronic payments, which rose from 23% to approximately 50% in just a few years. This reveals the reasons behind the decline in the value of deposits in the banking system, especially in light of the Central Bank's move to promote electronic payment tools and increase reliance on the banking sector. This poses significant challenges for the government to address, developing medium- and long-term plans, and adopting supportive policies to address these challenges, which include the following:

1. Weak technological infrastructure: Iraq's telecommunications and internet networks continue to suffer from quality and coverage issues, hindering the effective implementation of electronic payment systems.

2. Low levels of financial literacy: A large portion of the population relies on cash transactions due to a lack of sufficient awareness of the benefits of electronic payment and how to use it.

3. Lack of a legal and regulatory framework: The implementation of electronic payment requires clear laws and regulations that govern electronic payment operations, protect consumer rights, and facilitate and enhance the flexibility of payment processes.

4. Security concerns: Some individuals still fear the risks of cyber-hacking and data theft, which limits their use of electronic payments.  link

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Tishwash:  A politician warns of the repercussions of Al-Kadhimi's return... he carries an American agenda.

Abdul Hamid al-Dulaimi, a member of the United Anbar Alliance, warned on Friday of the repercussions of the return of former Prime Minister Mustafa al-Kadhimi, describing him as carrying an American agenda that does not serve the people's interests. 

In a statement to Al-Maalouma Agency, Al-Dulaimi said, "Former Prime Minister Mustafa Al-Kadhimi represents the last American card for Iraq, as he has clear plans to create widespread chaos in Iraq by fueling demonstrations to destabilize the country's security and stability for reasons that have become known to everyone, in addition to spreading political differences between the poles of the political process and planting a spirit of division among its components by strengthening the regional government over the center." 

He added, "Al-Kadhimi's return to Baghdad carries within it American agendas, the outlines of which will become clear in the coming period, amid warnings from political and security sources of the repercussions of his return and its negative impact on the political process." He indicated that "Al-Kadhimi is working to attract the Sadrist movement by all means to strengthen his front and the illusions of those affiliated with the movement that his plan is in the interest of Iraq." 

Finally, Al-Dulaimi stressed that “America follows a policy of planting its spies inside countries to implement its agenda as it deems appropriate for the interests of its country.”  link

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