Some US$10 billion is remitted to the Caribbean annually but weaker currencies in relation to the Greenback and lower oil prices are restricting the ability of many migrants to send money back to family and friends, according to the World Bank’s migration and development report.
With the Canadian dollar hovering around 70-71 cents to the U.S. dollar, many Canadians who have been sending money back to their families and friends are cutting back.
An executive at Jamaica National Money Transfer Services in Canada said the lower dollar has negatively impacted their remittances.
Paula Fennell, manager of business development and agent coordination, told The Camera that despite rates comparable to other money transfer services, those who usually send money to Jamaica are “watching the rates every day, hoping that it will increase.”
Fennell noted some people with immediate family in Jamaica continue to send money on a regular basis despite the lower dollar value.
But, she added, other clients who usually send remittances to help in a home or business construction “are holding off, only if it’s very important, then they would send.”
Migrant farm workers from Jamaica also use their services and are holding steady, according to Fennell. That group is known to always seek the best possible rates.
Recently one farm worker from St. Lucia commented on the fact that his family depends on his income and now they are “short changed” as a result of the devalued dollar and the fact that they work for minimum wage. A typical Canadian remittance amount now results in a much lower amount once converted to local currency in the Caribbean.
While, remittances are typically made by residents in developed countries to developing countries, Fennell said she has seen a shift in that norm.
“We see quite a bit of money coming up from Jamaica. People are sending money to Canada and of course people are taking money from their accounts in Jamaica.”
Western Union, another big money transfer business, is also seeing fewer transactions. Western Union also operates Cash Money and offers loans and cashes cheques.
According to a representative at one of the branches, a number of their customers are not sending money as before but accessing their loan and cheque cashing services instead.
The World Bank reports that remittances to developing countries were expected to reach $435 billion in 2015, registering a modest growth rate of 2% from 2014. This represents a significant slowing in the growth of remittances from the rise of 3.3% in 2014 and 7.1% from 2010.
During a discussion on correspondent banking in Kingston, Jamaica, recently, Caribbean stakeholders including former Barbados prime minister Owen Arthur agreed there is a need for unified Caribbean efforts to combat the growing move by large, mainly U.S.-based international banks to sever relationships with smaller Caribbean-based financial institutions, including money services businesses.
Arthur acknowledged that while Caribbean countries are not the only ones affected by the move by large banks to “de-risk” their operations, they must form strategic alliances and add their voice to the cause as well as commit the resources necessary to strengthen their position to resist any unfair application of global regulations and standards.
He added that de-risking, which involves closure of accounts in categories of financial institutions deemed high-risk for money laundering and terrorism financing, diminishes the Caribbean’s access to global financial markets and impacts the flow of nearly US$10 billion in remittances to the region annually.