Concerted efforts and wide consultations by the World Bank, the central banks of various Pacific Islands countries and commercial banks in New Zealand and Australia that have operations in the Pacific Islands have finally borne fruit: the cost of remittances and money transfers between the two ANZAC nations and the rest of the Pacific Islands has now become far cheaper than it was ever before.
Last month, the New Zealand Government’s Minister for Pacific Islands Affairs, Georgina Te Heuheu, launched an online initiative that does not directly reduce costs of such money transfers, but compares the costs charged by different money transfer companies.
A team monitors the costs being charged by all companies in the business of money transfers and gives people a choice besides giving them a fund of information and advice relating to the activity at no charge.
The website address is www.sendmoneypacific.org.
Money transfer costs have been among the highest in the Pacific Islands region. While these costs have been plummeting elsewhere across the world with the rise of volumes and competition between firms engaged in the business, the Pacific has seen the opposite happen.
This has been of great concern to the World Bank and it has been working in the region through its Sydney office over the past couple of years to reverse this trend.
Remittances are now the biggest source of income for several Pacific Islands like for many other countries around the world. Some US$425 million comes into the islands every year according to the New Zealand Government estimates. At the high commissions that are being charged by money transfer firms, an estimated US$80 million, on an average, is lost.
Such a loss has been particularly distressing as the effects of the economic meltdown begin to bite. Job losses in New Zealand and Australia as well as the United States will see a drop in remittances from people of Pacific Islands origin living and working in those countries.
Any measures to save up on commissions and costs of transfers would be a valuable effort.
The website promotes a free flow of information, choice and gives a fair go to Pacific Islanders wishing to transfer funds to their families in the islands, the minister said during the launch of the website in the Auckland suburb of Otahuhu which is heavily populated by Pacific Islanders.
The website, jointly funded by NZAid and AusAID, not only compares commissions charged by different companies but also details the comparison of time it would take the money to reach different destinations through different operators.
A cursory comparison soon after the launch of the website showed stark contrasts in the way different companies operated. For instance, sending NZ$200 to Fiji from Auckland showed commission and other costs of NZ$5.98 using a Westpac pre-paid card as against NZ$34.13 through Western Union. These are based on figures updated on the website on April 8.
Incidentally, products like the Westpac pre-paid card have become quite popular particularly with the temporary migrant workers from the Pacific Islands working in New Zealand under the Registered Seasonal Employer (RSE) scheme since their launch last year.
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