Transferring money to Pakistan has long been beset by numerous challenges, particularly for NGOs. These challenges include the complexities of international payment methods, prohibitive costs, and bureaucratic hurdles, all of which hinder smooth transactions.
High fees and unpredictable correspondent bank charges further complicate matters, making it difficult for NGOs to determine the exact amount their local partners will receive. These issues collectively frustrate organisations trying to move money to the frontline in a timely and cost-effective manner.
Pakistan's balance of payments crisis
Pakistan's balance of payments crisis further complicates the financial environment. The country has faced significant challenges in managing its foreign exchange reserves, leading to economic instability. A persistent trade deficit, where imports consistently exceed exports, drains the country’s foreign reserves.
This situation is exacerbated by external debt repayments and the need for financial assistance from institutions like the IMF. The resultant economic volatility affects the stability of the local currency, impacting all financial transactions, including those conducted by NGOs. Understanding this broader economic context is crucial for organisations working in Pakistan, as it influences financial planning and risk management strategies.
RAAST: Promoting financial inclusion in Pakistan
Despite these challenges, Pakistan has made strides with the introduction of the RAAST system, a state-of-the-art, instant payment system aimed at enhancing financial inclusion within the country.
RAAST offers several advantages for local transactions, including reduced transaction costs and ease of use, even for individuals with limited financial literacy. By facilitating instant transactions with minimal fees, RAAST has the potential to transform Pakistan’s financial landscape, enabling greater participation in the formal economy by individuals and small businesses.
This initiative is particularly important for promoting economic stability and growth at the grassroots level. Banking innovation now has a foothold in the country, and its rollout is being closely monitored.
Case Study: Cities For Children Pakistan x GoodFX
Cities For Children, a UK-based charity, champions the belief that all children deserve the "Right to Childhood" – the right to learn and play in safety. Their mission is to provide a supportive social and material environment crucial for the development and well-being of children in urban areas, including street-connected children, working children, and those from displaced or migrant communities.
However, the charity faced significant challenges in moving funds into Pakistan to assist children displaced by flooding and natural disasters. With winter approaching, timely delivery of warm clothing and additional educational materials was essential.
To address these challenges, GoodFX partnered with a range of innovative fintech companies. Specifically, GoodFX collaborated with TransferMate, an Irish unicorn company offering non-SWIFT payment solutions that ensure fast, secure, and transparent transactions with minimal fees. This partnership provided a local, efficient alternative for both sending and receiving payments in Pakistan.
Through this collaboration, GoodFX facilitated the smooth flow of funds, significantly contributing to the well-being of children in need. By ensuring Cities For Children had the necessary resources, the children received essential winter clothing and educational materials, allowing them to continue their education in a safe and supportive environment.
Robert Hayward, Founder and CEO at GoodFX, commented:
"Recognising the critical impact of reliable banking systems on NGOs' effectiveness is central to GoodFX's operating principles."
Additionally, like all NGOs accessing payment solutions through GoodFX, Cities for Children benefited from a unique financial incentive: one-third of GoodFX's trading profits were returned to them as a cash rebate. This rebate supports the financial sustainability of NGOs, allowing them to allocate more funds towards their mission-critical activities.
A win-win-win
GoodFX aims to enable NGOs to focus more on their missions rather than the complexities of financial transactions, sharing in the banking profits they help generate. By leveraging different partners for distinct issues, GoodFX has successfully facilitated smooth and cost-effective money transfers into various emerging markets for both impact funds and charities. The impact of this collaboration has been profound, supporting local charities and refugee education programmes, thereby reinforcing the mission of NGOs like Cities For Children.