Sending money back home

AFTER decades of emigration, it is now estimated that 1.75 million West Indians or persons of West Indian ancestry live in the United States. This connection has had significant social and cultural repercussions for both regions but, perhaps even more important, has been the relatively unrecognised contribution which remittances from immigrants make to a number of WI economies, including that of Trinidad and Tobago. While they left their native land to seek a better life in the US, West Indian immigrants have not forgotten family members they left behind and many have been sending money back home on a regular basis.

This, in fact, has been the case with emigration from the Caribbean and Latin America and their remittances now amount to a formidable figure. According to the Washington-based Inter-American Development Bank, remittances to Latin America and the Caribbean in 2002 total more than US$32 billion, an increase of 18 percent than the previous year. These sums accounted for more than ten percent of Gross Domestic Product in Jamaica, Nicaragua, El Salvador and Honduras. Mexico is the region’s largest recipient, capturing $10.5 billion. In the case of Trinidad and Tobago, remittances totalled US$51 million in 2002 compared to US1.2 billion for Jamaica and US$100 million for Guyana, representing 16.6 percent of that country’s GDP. IDB estimates indicate that if these flows continue to grow at a moderate rate of seven percent a year, the Caribbean and Latin America could receive more than US$400 billion in remittances during this decade.

The importance of these remittances, particularly to the struggling economies of the Caribbean and Latin America, cannot be underestimated. Because of this, it is time for these countries to examine the relatively high cost of making these remittances with a view to having them reduced. Anthony Bryan, Professor of International Relations at the University of Miami notes that remittances are important financial “capture” which governments and banks in the Caribbean have not yet come to fully appreciate. “Family support is but one aspect. The investment, business development and local goods consumption aspects are yet to be looked at closely.” One official estimate puts the total cost of transmitting remittances to the Caribbean and Latin America at US$4 billion or 12 percent of the amounts sent back to home countries. Bryan related: “I have had discussions with one large Caribbean bank about opportunities to capitalise on this market since they can offer more competitive transfer rates and banks can gain significant financial benefits when they integrate this segment of the population into the formal financial system.”

Here, we think, is an opportunity for Caribbean and Latin American banks not only to expand their businesses but also to facilitate the flow of these vital funds. In an age when billions of dollars are transferred from one place to another across the globe at the press of a button, the technology must be there to serve this purpose. Mexico has apparently set the pace in this regard where banks, as money transfer agents, issue special debit cards to be used by recipients of these funds. And recently Citibank and the Bank of America introduced new programmes utilising ATM technology to transfer remittances by issuing debit cards and “smart cards” to designated persons in Mexico upon the enrollment in a special US programme of those sending the money. For troubled economies such as Jamaica and Guyana — and even TT to a lesser extent — these remittances are important. The cost and method of sending them should not be a problem.