Remittances: Can we survive without them?
WHEN our folk migrated years ago we cried the "living eyewater". No one imagined they would return so much value. The money sent to relatives as gift is now a lifeline. What if it stopped? Last year a small thing happened. The decision by NCB to exit the Western Union partnership was barely noticed. It took down some players in the money transfer business, and firms which depend on a big bank as consolidator were hit. Things are worse for the money transfer industry.
The decision by Barclays Bank to exit money transfer may have serious repercussions for us, and Cabinet may have to intervene. Edward Philip George Seaga expelled Cuban Ambassador Ulises Estrada and Michael Manley declared US Ambassador Vincent de Roulet persona non grata, but we may now need to intervene in English politics and accept they may intervene in ours.
In past decades the porosity of the global financial system was abused and the money transfer industry was a culprit. The EU and US are now filling the gaps, which hide income and leach the wealth of one nation into the coffers of others. People have no divine right to send their wages abroad; "local wages to create local jobs" may gain traction and regulators block money transfer channels. As life gets harder expect nations to be xenophobic and less tolerant of migrants. Some protested last year about "unpatriotic" people who send cash abroad rather than plough it back to build Britain. Last month some called for an end to foreign aid and use the cash to help thousands in the 100 mph windswept coast or flooded Thames valley. Cabinet should note that hardship in our trading partners means pain for us, so we must be proactive in defending diasporic remittance channels. The diaspora must help by being active in UK and USA politics.
The longer a system lasts the closer it is to change. What's happening? Transnational crime and terrorism means foreign banks are risk averse as penalties are horrendous. Our cross-border lotto scams, drug trans-shipment, ganja double-standard, flaky agreements, indiscipline, and "it nuh nutten" spirit do not engender trust — we may be targeted. They say after 50 years of aid we got a fair share; we say we need more.
A spokesman for gays in the UK says of our entertainers: "They are unreliable, give their word and they backslide." They say it of the last Government and its Internation Monetary Fund charade — a deficit of trust. We are on the wrong side of history. The old guard may fight to hold on, but change always wins. You can't fight the future. Let's protect the money transfer channels.
There is pressure on global banks, such as HSBC and Barclays, and so the risk profiles of some portfolios are updated monthly. The result? National banks get blows and money transfer firms fail. Large diasporic groups from the Asian sub-continent are affected big time. One Bangladeshi firm has Barclays in court — a case affecting millions who depend on money transfer to eat; drink; live with famine, disaster, sheer poverty, flood waters that have not receded for months. What will they do? Aid agencies worry as remittances take a major burden off them. States in the Namib and Horn of Africa, which have intergenerational distress, suffer the most. So will we. Consider this, if we were productive we could feed millions of African brethren — yam, banana, cassava. Shame on us!
The benefit persons derive from remittances is major, but it also let Cabinets off the hook. We would have revolution already or prosperity, but for remittances. Two years ago HSBC ended banking for money transfer firms and many suffered globally, but not here. Barclays gave some 250 firms notice to close their accounts as it exits the money transfer business and now has a fight. Years ago small folk left Barclays to fight apartheid and support Mandela, today they fight to keep a Barclays account -- the world turns! India, Dubai, Emirates, with banks in Europe, have new clients, but for how long? The pathways serving the diasporas' remittances must be kept open. Help!
Can you imagine Jamaica without remittances? The Jamaica Post might have a renaissance and the days of sending money in letters or by postal orders return. Developing nations China or India have mass, but we lack the critical mass to sustain banks in the EU and US where due diligence is strict. Can we create a consortium of Caricom banks? "Wat CSME gud fah?" Claim Commonwealth privilege? Remit via Indian banks? As director of a financial institution in the UK I know "fit and proper" tests are invasive, painful and costly. How do we preserve our remittance gateways? Is the US$2-b haul we get worth Cabinet's intervention? At the UN, maybe? The mobile units shouting "migrants go home" have gone, but the volatility remains. We need a strategy.
We must also consider intuitive, user-friendly virtual money transfer solutions, though our diaspora is not tech-savvy as the lines to send money in Brixton may fuel more protest. What would we do if it were here? The outflows from the UK alone amount to some £40b and some US$500b globally; who is to say they may not hold on to this cash one day? If you track the debates on remittances in the British Parliament you know we should forge new solutions as the big signs "Send money home from here" may soon frighten the natives and fuel protest. Stay conscious, my friend.
Dr Franklin Johnston is a strategist, project manager and advises the minister of education. email@example.com