Efforts are underway to try and reduce the cost of sending remittances to countries in the region.According to Fijilive, the 'high cost of sending remittances to Pacific island countries including Fiji was among concerns raised at the Pacific Microfinance Week held in Fiji last week' which revealed 'that efforts have been put into trying to reduce this cost, with a website now available to compare costs across a number of money transfer services'.
The following is taken from Fijilive:
"The cost of sending remittances in the Pacific is high, representing between 15-25 percent of the amount of money sent. The World Bank estimates that the Pacific is losing up to NZ $80 million per annum through these costs," NZAID's Kerry Burridge said.
The world best practice was a cost of less than five percent, she said.
"The problem is of particular significance to Pacific Islanders because they send remittances frequently, albeit small sums of money. NZAID aims to reduce the costs of sending remittances to Pacific Island countries to 5-7 percent," Burridge added.
Those that are expected to benefit are Pacific islanders working in New Zealand and Australia, particularly seasonal workers.
NZAID joined partners to tackle this issue in two phases: reducing the cost of transaction fees on remittances and raising the financial capability of people sending and receiving remittances.
In partnership with AusAID, NZAID developed a website that compared the prices of sending remittances home, thereby bringing transparency to this activity and encouraging competition.
Another initiative at cost reduction was the Westpac Pacific Banking Remittance Card which used a two card system to transfer money. The remittance sender uses the primary card to send money and the holder of the secondary card is able to retrieve money using the card at any ATM.
"In order to avoid money laundering through the use of these cards, there is a limitation of one card per person and up to a total of $10,000 can be transferred in one year. The card is blocked once the $10,000 limit is exceeded," said Westpac's Anne Templeman-Jones.
"The Westpac card has brought costs of transferring money to Pacific Islands down to 3-4 percent," said Burridge. This is expected to save some $140 million through the reduced cost of sending remittances.
The next step in this initiative is the delivery of financial literacy services to Pacific seasonal workers as well as the receivers of remittances.