Faisal Khan

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Increasing Remittances in Pakistan

Recently, the Prime Minister made a statement that good news will follow with regards to increasing remittance in Pakistan from US$ 20 Billion per year to US$ 30 Billion per year, if not US$ 40 Billion per year. The original article can be read here. 

This figure is very much doable. The numbers will not be easy, they will be difficult to achieve, given such statements of the past, but they are definitely doable.

Whilst everyone has an opinion on it, I and a lot many of my colleagues in the business have discussed this at length. On how it can be done. Here is what we have come up with.

The trade missions and embassies of Pakistan abroad have very little to no impact on remittances. Consular services are very much restricted geographically and the message they send out, is extremely narrow and that too, delivered to a very small audience that is already (perhaps) using the banking channels to send money back home.

We need to look at ways to diversify on how money can come to Pakistan, from corridors other than the Middle East, where we rely too much.

Secondly, we need to completely revamp the PRI (Pakistan Remittance Initiative) in SBP and remove the old school that is running it, fire the current Head of PRI. He has perhaps done more damage to remittances because of his ineptness and incompetence that anyone else.

PRI, currently produces more hinderances than progress.

Low Hanging Fruit

Today, remittances are the backbone of the industry. Here is a summarized version of what the PTI government can do immediately.

  1. Take the subsidy back to Saudi Riyal 25 (instead of SR 20 as it is right now).
  2. Clear all past subsidies within 14 days, I am not sure what pleasure the national exchequer gets from holding on to money that is rightfully due to others.
  3. Implement a policy of clearing subsidy dues on the 1st and 15th of every month.
  4. Do this for two quarters and you should see a healthy jump in inward remittances. If not, re-evaluate and re-execute. 

The subsidy model has worked for Pakistan. We cannot experiment otherwise. A lot many people would like to see the subsidy model be abolished, but because it has a powerful historical data of increasing remittances, we should not downplay it, but rather fix what is broken inside of it.

What Else We Can Do…

We should allow a 7 days (guaranteed) process for any foreign money transfer operator or program manager to get approved and start sending remittances into Pakistan.

We need to quickly declare all money coming from overseas income via marketplaces or freelancers, as remittances immediately.

Lastly, we need to constitute a small oversight board that includes government and non-government personnel, from banking and private sector to enable and think of other incentives of increasing remittances. This board should meet monthly. It should also set the focus and directions for PRI to operate under. No more one-man show.

We need to increase licenses for INWARD only remittances to Private Limited Companies in Pakistan, which will deal with digital remittances only.

We need to have such licenses at a cost of US$ 1,000 and they are to be fully-functional licensed money transfer licenses.

We need to remove the restriction of a company being 2 years old outside to be able to do a tie-up as a correspondent in Pakistan. As long as the company is able to provide regulatory coverage, we need to approve it. Seven (7) day end-to-end approval process.

This is how you increase remittances. 

This is what the Philippines did. I actually read the manual on that, which in many circles is called the Remittance Bible. Over 2,000 pages. Embassies and consular services do nothing significant to increase remittances. Neither is the current management of PRI.

We need to reduce friction in the entire process of getting money into Pakistan, which includes the legal paperwork and approval process to be better, more smoother and quicker than any private sector setup anywhere in the world.

I hope we can for once sack the non-performers in PRI and get back on track.

God Speed Imran Khan.

The Bretton Woods Agreement and Significance

Any student of economics will tell you, that sooner or later, the Bretton Woods Agreement will come into their syllabus and what a difference it made to the world.

Established in 1944, the Bretton Woods Agreement remains to be one of the most historical achievements ever made through global cooperation and coordination. The agreement was establish to streamline the management of monetary & exchange rates. The agreement was reached in July of 1944 at the U.N. Monetary and Financial Conference that went down in New Hampshire’s Bretton Woods. The Bretton Woods Agreement pegged currencies to the cost of gold and made the U.S. dollar the standard global currency. The agreement remains one of the most important decisions ever made in the global financial history.

To get a better send of why the conference was held in the United States and why the world’s gold was mostly in the US, and why such a standard was needed, I cannot emphasis enough in reading a great book called Lords of Finance (The Banks Who Broke The World)  by Liaquat Ahamed. Also important is to know, why the U.S. Dollar continued to be at the forefront on the stage of global currencies.

The creation of the Bretton Woods Agreement involved all the World War II Allied countries. 730 delegates from 44 countries met in Bretton Woods with the aim of creating a new and standard international monetary system. The primary objectives of the meeting was to improve economic growth, alleviate competitive devaluations and establish a system for foreign exchange rates. It took a period of more than 2 years just to prepare for the event.

United Kingdom’s John Maynard Keynes and the Treasury Department’s Harry Dexter White were the two key figures of the Bretton Wood System. The two were the primary designers of this system with Keynes proposing the creation of a global central bank that would be called Clearing Union and White proposing limiting the resources and powers of each country. Although both proposals were considered in developing the system, the Bretton Woods Agreement leaned more on the side of White’s proposal.

Every country that was involved in the creation of the agreement agreed to ensure that their central banks would have to preserve the fixed exchange rates between the standard currency (the dollar) and their own currencies. One of the strategies that these countries would implement to ensure this was purchasing its currency from the foreign exchange markets in the event that the value of their currencies dropped in relation to the dollar. This would as a result minimize the supply of the said currency and ultimately raise its value. For currencies that grew stronger, banks would print more to raise the supply and lower the value. I’ll also publish a separate article on Currency Debasement and also put some videos out.

Countries that participated in the event also came to an agreement aimed at preventing trade warfare. One way of achieving this was that the member countries agreed not to lower the value of their currencies with the aim of boosting trade. They were also required to regulate their currencies in some instances.

The Bretton Woods System was implemented and went fully operational in 1958. While it was taking effect, currencies were also becoming convertible. For currency conversion, nations were required to settle international balances strictly in dollars. The U.S dollars were on the other hand convertible to gold. At the time the system was just beginning to gain traction, the applied exchange rate was $35/ounce. The United States was charged with the duty of keeping fixed the prices of gold and appropriately adjusting the dollar supply.

Results of the Bretton Woods Agreement

The most notable outcome of the Bretton Woods Agreement was the creation of two bodies that would transform the international trade scene. The IMF – International Monetary Fund was among the bodies that were created following the agreement. IMF was very crucial to the success of the system. It was largely important since member countries would occasionally need to be bailed out if the value of their currencies dropped. The IMF would also monitor exchange rates to ensure that the standards were met.

Another institution created by the Bretton Woods Agreement was the World Bank Group. The main objective of the institution was to deliver financial assistance to countries to aid in reconstruction after the world war.

Dissolution of the Bretton Woods Agreement

The dissolution of the Bretton Woods System occurred between the years 1968 and 1973. The U.S. dollar was overvalued, a factor that led to the rise of concerns about the exchange rates and its tie to gold prices. The then president Richard Nixon instructed for a temporary suspension of the convertibility of the dollar – this is today called the Nixon Shock. This allowed countries to choose their own preferred exchange agreements.

The Bretton Woods Agreement contributed greatly to the development of the international economy and enhanced trade between countries. It also encouraged international cooperation and led to the creation of two institutions that have played a major role in the development of global economy.

Job Opening: Digital Marketer

Digital Marketer

A couple of days ago I had put up a post on Facebook for a Digital Marketer that I am looking for a new venture that I am starting, based out of Istanbul as well as assist in my existing venture of banking & payments.

Here is the job description as I see it:

The Startup:

The startup is related to providing professional services related to migration, resident and work visas and passports. Helping and enabling people to move abroad to a select number countries for which we have representation and experience on.

The programs are specifically designed for single men/women, young couples or young families, that don’t have lots of money but want to move aboard.

The service is a concierge  level services, which implies not just having clients fill out forms and get the residency/work permits or passports (citizenship by investment) but assist with the initial migration (tax, banking, utility setup, apartment rental, schooling, insurance, healthcare, etc.)

Target markets are developing countries: India, Pakistan, Bangladesh, Nepal, Sri Lanka, Nigeria, Sub-Saharan African Countries, Egypt, Tunisia, Morocco, and a few countries from Latin America.

This is a high-ticket items sales marketing position.

Experience:

  • If you are fresh or a n00b, out of college/university, etc. you’re not for me.
  • If you’re a senior with more than 8+ years of experience, you’re not for me.
  • If you have LESS than 3 years of experience, you’re not for me.
  • If you work for your own company and want to offer your services to me, you’re not for me.
  • If your husband & wife team does this and wants to take me as a client, you’re not for me.
  • If you want to do this in addition to your regular day job, you’re not for me.
  • If you plan to outsource any aspect of your job, you’re not for me.
  • Growth Hacking, Hustling and Scaling MUST be in your DNA. If you don’t have these attributes, you’re not for me.

Qualification:

  • I personally, don’t care if you went to university or not. If you have a college degree or not.
  • I’m interested in your skills set – which is what I would be testing and quizzing you heavily on.
  • If you’ve NEVER sold high-ticket items more than $5,000, then sadly, you’re not for me.
  • A background check would be required and you would have to have a clean record. This includes providing of a Police Character Certificate.

Job Description:

You will be responsible for increasing the digital content footprint so that it shows up in all the relevant web mediums / domain-properties.

It would always start by understanding the properties we own and the properties where we would like the content to be in. This includes blogs, Youtube, Instagram, IGTV, Twitter, Facebook, FB Groups, FB Live, LinkedIn, Quora, etc.

Paramount to this exercise is the understanding the importance of keywords, keyword research and prioritizing them into a content calendar.

The goal would be to enable various content points from where traffic is driven to the sales funnel where very specific Call To Actions is presented.

You will be responsible for organizing the keyword research, prioritizing content based on the keyword research and traffic.

You will not be writing the content. But you will be curating a lot of it, as well as set the templates for the various landing pages, etc. (we plan to have 1000s of LPs).

This is not just restricted to web only. Video and Podcast will also be a significant part of the content /marketing. Understanding or the ability to quickly learn about the content placement, SEO nuances, etc. is required.

There is a limited amount of Search Engine Marketing.

You have to be good at what you do. Will quiz you, test you and ask you to showcase your credentials. I would not be interested in how large of a $ campaign you managed.

I’m more interested if you have a solid understanding of Internet Marketing Fundamentals.

Will strongly be looking for evidence of your campaigns with traffic stats where you have generic content driving decent traffic for a specific keyword. Forrest of domains where you have over time built inter-linked properties.

Proof of dominance in a particular niche., etc.

A basic test of tools (we deem to be important).

Rest assured all that is being asked of you to do, I do on a daily basis, so this is a field I understand very very well.

If you feel you can make an ass out of me and wing it – please seek solace elsewhere.

You will be part of the Executive Management team. So this is more than just being a marketer. Strategy, planning, upscaling business, etc. are all going to be part of your job description.

Team:

You will initially be managing this on your own and will be provided with an assistant as well as the necessary tools (subscription or otherwise) to manage the task.

The job initially will be work-from-home in Pakistan and then eventually after 3 months, start the process to move you and 1 spouse + 1 dependent to Istanbul, Turkey. You would then be required to work from the office (work from home option will be limited in Istanbul).

Advantages

The biggest advantages of this job are mentioned below:

  • Help you move to Istanbul.
  • Apartment allowance (1 bedroom apartment)
  • Health-care
  • You ONLY HAVE TO WORK 2/3rd of your time with us.
  • 1/3rd of your time is free to work on your own projects/business.
  • Provide you with a basic relocation package
  • Provide you with a basic salary package
  • Bonus and Profit sharing for the entire team on reaching goals.

If interested, fill out the contact form, select “digital marketer’ and provide the necessary information:

  • Your LinkedIn ID
  • Your social media ID (those that you want me to look at)
  • Your WhatsApp Number
  • Your Skype ID

Only shortlisted candidates will be contacted in the 1st week of August. If you did not get an email or call from me by the 1st fo August, 2018. You did not make the cut.

No matter how qualified you are. If you cannot follow instructions, I will drop you instantly. 

How Will Money Transfer Look Like In 5 Years Time?

In 2012, I answered a question on Quora, How will money transferring between countries look in five years? I did not edit or touch the answer in any manner for five years. Well, now that the 5 years are up and over with, let’s do a check on where I was right and where I was wrong on my predictions?

My answer can be viewed here, pasted below in Blue.

  • TRANSACTION & SETTLEMENT TIMES: The biggest change you would see is the ability to make the end-to-end transaction as near to real-time as possible for the two parties between which money is being remitted. The second factor is the near real-time settlement between the two financial institutions that were doing the remittance (i.e. Sender’s Bank and Beneficiary’s Bank).

VERDICT: Did not happen fully. Whilst transaction and settlement times have certainly improved, they are nowhere in real-time. That change is coming with all the new provider like Stellar, Ripple, SWIFT GPI, etc. that will enable real-time settlement, but the adoption has a long way to go.

  • ANTI-MONEY LAUNDERING: Money laundering would be more difficult (as more correlated reporting and systems integration of various financial institutions will make it so)

VERDICT: Predicted correctly. Laundering money today is extremely difficult within the confines of the regular fiat world.

  • KNOW YOUR CUSTOMER: The KYC would be inherently more advance. By more advanced, I imply that the KYC system would be able to tap into periphery system to verify what as already been submitted. Eg: A credit card KYC may query your bank account for address verification/name match.

VERDICT: Predicted correctly, but not there yet, so this is half-fulfilled. Open APIs are making it possible for KYC to be cross-examined and for it to be passported, but the world has a lot of catching up to do.

  • MOBILE: Money would be more mobile than it is today, and you guessed it – it would reside in/on your phone. Your phone would be in some crude sense a financial instrument. Expect to see a sharp rise in QR Codes. No more lengthy forms to fill out for money transfer/payments.

VERDICT: Predicted correctly. Mobile phones are ruling the world as far as interaction, mobility and payments are concerned..

  • SUSPICIOUS ACTIVITY REPORTING: SAR checks are currently performed in the US and in different countries (under various different nomenclature/taxonomy). To nib the money laundering bud, and to better have a more accurate visibility on suspicious transactions, it is my belief that SAR checks (albeit performed) would most likely also be cross-referenced across the border.

VERDICT: Partially correct. Whilst checks are done against lists, etc. countries still do not effectively share the data with one another for various reasons, security, reciprocity, local laws, privacy claims, etc. However, with FAFT in the equation, this is improving.

  • FINANCIAL ROUTERS/ROUTING: More companies will prop up providing financial routing services. Take money from your PayPal and credit it to your ATM card. Take money from ATM card to credit to your Visa card, Take money from your Bank and credit the money to Micro-Wallet payment company. For example, if you want to transfer money from your Prepaid VISA card to PayPal (and they are not connected), you will be able to do so. Or if you are traveling overseas and you buy a Deutsche Telekom SIM card (that does payments as well) and you want to transfer $50 to it from your Bank, you will be able to do so.

VERDICT: Predicted correctly. Today, quite a few companies are becoming liquidity providers and allow you to swap your asset or value from one network to another for a fee.

  • MONEY EXCHANGE COMPANIES: You traditional money exchange companies with walk-in customers will eventually consolidate and business for walk-in clients will diminish drastically.

VERDICT: Predicted incorrectly. The walk-in business still rules by far. Approximately 84% of the money transfers being done are vi walk-in clients, 6% via non-banking financial institutions (MNOs, MTOs) who are online only and remaining by licensed Banks (which includes both online & offline).

  • INTERNATIONAL PAYMENTS (CROSS-BORDER): International payments would become much more easier (as KYC, AML check would be a whole lot better). The Person-to-Person element would become more common and speedier, economical and reliable.

VERDICT: Predicted correctly.

  • EXCHANGE RATE: You would get a whole lot more competitive exchange rate on your international transactions (I believe less than 1% exchange parity between Interbank and Open-Market rate).

VERDICT: Predicted correctly.

  • MICRO-PAYMENTS: Yes, the world will finally have a micropayment setup. One that allows micro-payments in multiple currencies.

VERDICT: Predicted correctly (partially), however, micropayments still have a long way to go. Long, long way to go.

  • VIRTUAL CURRENCIES / CREDITS: More and more companies will start to offer exchange and settlement of virtual currencies and credits that may be specific to a social network, gaming network, etc. Even Bitcoins. This could also be part and parcel of the Financial Routers.

VERDICT: Predicted correctly.

 

Apple files for Money Transmitter Licenses as Apple Payments

Apple Payments

Apple’s own payment system, presumably ApplePay under the company Apple Payments will be coming soon. Just when periodically checking filings for MTL (Money Transmitter Licenses), I came across the California filing for Money Transmitter Licenses by Apple.

 

To be 100% sure it was Apple the iPhone company and not some other ‘Apple’, I cross-checked with the NMLS Database.

Sure enough, it is Apple (see the website and email address for Apple Payments):

This presumably stems from the Person to Person Apple Pay feature Apple rolled out last year. Stepping up the game for PayPal and Facebook Messenger which are also in the P2P payments space (whilst Venmo, another PayPal company) is still king.

 

Using Smart Contracts to Crowd Source via an ICO for the Real Estate Sector

ICO + Smart Contracts + Real-Estate

There are many ways to utilize an ICO for a real-estate backed project. In the early days of this whole blockchain revolution, real estate was always touted as one of the main use cases for it. When Hyperledger first came out – in the initial days when both the Dans (Dan O’Prey and Daniel Feichtinger) were essentially working on the project – I had an idea for a crowd-sourced real-estate project.

Now that this whole Ethereum and ICO market is blooming, my idea can actually be implemented. It is only a matter of time before someone launches an ICO using this technique.

Investors invest in a project to gain returns. Let’s take the example of Dubai because there are many real-estate projects coming up there.

Here is something a builder like Nakheel or Emaar could use to utilize Ethererum’s smart contract capability as well as crowd-funding for its projects.

For purposes of keeping the mathematics and concept simple, we will denote everything in US Dollars.

Let us assume that Emaar wants to build a set of townhouses.

  • Each town-house has a market value today at US$ 2.5 Million,
  • Emaar wants to build four of them, for a grand total of $10 Million.
  • Emaar also needs two years to build this quad-house.
  • Emaar needs the money to build this project (truth be told, I would not be surprised if they actually needed the money, anyhow, I digress).
  • The maturity period on this ICO is 24-months.

So Emaar does an ICO. The ICO is an Emaar ICO (so the reputation is already established by the party wanting to do the ICO). This is no Tom, Dick, Harry, Jane, Mary, Joe doing it. This is Emaar.

Emaar issues ETT (Emaar Townhouse Tokens).

  • The total token supply is 10 Million. Each ETT = 1 US Dollar
  • The ICOs are equally placed in four contracts.
  • Each contract corresponds to one house (i.e. 2.5 million ETTs)
  • At the end of the maturity period, the tokens will be sold as follows:
  • Each contract holding 2.5 Million ETTs will be returned at a value of $1.1 US$ (i.e. a 10% gain) back to the holder, i.e. The 2.5 Million ETTs are now valued at US$ 2.750 Million. This is called the Min_Street_Value.
  • This US$ 2.750 Million is the minimum street price of the house at the end of two years for which a buyer would be committed to after the token sale has concluded.

i.e. some person or entity will step forward and place into it the smart contract, US$ 2.750 Million worth of Ethereum tokens which will be cashed out on the last day of the 24 month period.

This is extremely important: So regardless of what happens in the future, each token holder is guaranteed a return of 10% and their principal back in full.

Any other person can come in and place a higher bid and this bid (in Ethereum) would have to be higher than the Min_Street_Value bid. So person X places a bid for ETT of $1.2, i.e. 2.5 Million ETTs = US$ 3.000 Million

The contract is programmed as such:

At the end of Maturity_Period the Ethereum Smart Contact will check if there is a buyer that has put in coins and a bid that is higher than the Min_Street_Value. In this case, there is a bid from person X for $1.2 per ETT – so that contract will automatically execute (if there is no bid higher than $1.2 per ETT) in the system.

  • This pretty much guarantees three things:
  • The money is never lost in this ICO as there is buyback guarantee
  • There is a physical asset backing this ICO
  • There is a proper name of repute backing the ICO
  • There is a guaranteed buyback price for this ICO

If the property price will be higher by the time it comes to completion, then the buyers who are interested can bid for it – via their bank etc. and place the money via the ETT coins into the blockchain + smart contract.

Not only does this scenario utilize the crowd-funding aspect of the ICO, it also looks at micro (or fractional) ownership of an asset for a small while – before a final buyer comes and claims the asset at a market value price.

The 2017 DATA Report: Financing the African Century | ONE

This year’s DATA Report reveals that the poorest are receiving a declining share of global financial resources. Although global ODA reached a record high of $140.1 billion in 2016, people most in need are in danger of being left behind. The proportion of aid to the least developed countries (LDCs) is in a downward spiral, falling from 32% in 2013 to 28% in 2016, while the share of aid to Africa declined from 33% in 2015 to 32% in 2016. Meanwhile, donors are spending an increasing share of aid to support refugees and asylum seekers in their own countries. Providing shelter and safety to refugees is the right thing to do but it shouldn’t come at the expense of the poorest in Africa.

The world’s poorest countries are receiving a declining share of global financial resources.

Source: DATA Report 2017 | ONE

Unified Payments

Three years ago, I had this dream. Of the following company. Now it is slowly being turned into reality. Stay tuned.