The United Nations Development Programme (UNDP) launched a detailed report today titled "The Increasing Role of Cash Transfers and Their Importance in Lebanon," during a press conference held at the programme's office in Beirut. The report highlights the historical trend of cash transfers, their sources, and how receiving families utilized them over the past ten years. It also examines the macro and micro determinants of these transfers and their evolving role amidst the current economic and financial crisis.
The report indicates that "cash transfers to Lebanon amounted to about 37.8% of the Gross Domestic Product (GDP) in 2022, which is considered the highest recorded percentage in the countries of the Middle East and North Africa. Lebanon ranks third in terms of absolute values of cash transfers among recipient countries, following Morocco and Egypt. Conversely, the cost of cash transfers in Lebanon has an average rate of 11%, exceeding the global average of 6% and surpassing the rates recorded in neighboring countries in the region."
The report also focuses on the change in the role of cash transfers before and after the 2019 financial crisis, noting that today, cash transfers serve as a social safety net for Lebanese families. In the absence of a developed and comprehensive social protection system, these transfers are now used to partially compensate for the loss in the real value of income due to currency depreciation and rising inflation rates.
It adds, "The continuity of cash transfer flows and other financial remittances confirms a deep connection between Lebanese expatriates and their home country, Lebanon. This reality presents an important opportunity for Lebanese expatriates to invest these transfers in local development and revitalization initiatives, which would help Lebanon to compensate for the developmental losses caused by the crisis and to reshape the country's development trajectory."
The report emphasizes the importance of establishing a suitable regulatory framework to rationalize the usage of cash transfers and direct them more effectively towards local development initiatives and to meet the needs of local communities, particularly in times of crisis.
**The pillars of this framework include:**
1. A better understanding of the volume and pace of cash transfers through improved definitions and enhanced accuracy of available data.
2. Restoring trust in the Lebanese economy by improving the business environment.
3. Developing transparent mechanisms to channel expatriate funds into local investments (expatriate bonds could be one of the available options).
4. Facilitating and promoting alternative and affordable solutions for sending remittances, such as digital solutions.
5. Working to reduce the cost of cash transfers.
**The Importance of Monitoring Cash Transfer Trends**
Monitoring the trend of cash transfers is crucial for the UNDP, as these transfers represent an important part of the Lebanese economy. The detailed conclusions provided by this report offer a clear picture of how Lebanese families utilize cash transfers and their overall impact on the economy. Additionally, "understanding these dynamics allows us to develop more effective strategies and policies that can enhance the use of these funds to achieve sustainable development and economic growth."
