By Krista Ferguson: Pacific Media CentrePacific peoples will get a boost in financial literacy and save some money thanks to a new website-based programme with handy remittances advice.
Pacific Island Affairs Minister Georgina te Heuheu launched www.sendmoneypacific.org at the Otara Markets at the weekend.
“Pacific families in New Zealand are entitled to a fair go,” says Te Heuheu.
Transparency, fairness and speed of remittances are important – the cost is a burden on low income families.
“If $25 is lost for every $100, this is a loss to both the family in New Zealand and the family in the Pacific,” she says.
A joint NZAid and AusAID-funded project, the website provides a comparison of the fees charged by money transfer operators to send money from New Zealand to other Pacific countries.
It also compares the time it takes for the money to arrive.
Client manager for the website developer, Developing Markets Associates (DMA) Ltd, Jonathan Capal says it is a joint initiative that followed on from World Bank studies that looked at remittance costs for transferring money from one country to another.
“This region has the highest remittance costs in the world,” he says.
“In the UK it costs less than 5 percent to transfer money to India. In New Zealand there is a cost of up to 30 percent, including fees and foreign exchange, to send money to the Pacific.”
Heavy loss
Remittances to the Pacific region amount to more than USD$425 million a year, according to a media release by the minister.
Ministry project manager for the Pacific Remittance Project, Kim Hailwood, says it is estimated that NZ$80 million is lost a year on remittance fees to the Pacific Region.
Three-quarters of Pacific Islanders living in New Zealand send money to family in the Pacific Islands, says Hailwood.
“Money sent to the Pacific outstrips aid.”
The minister says remittances are a critical flow of money into the Pacific and provide an important safety net for some families.
“The money sent helps Pacific communities to be strong and sustainable,” says Te Heuheu.
The website shows that sending $200 from New Zealand to Fiji would cost $5.98 using a Westpac pre-paid card and $34.13 through Western Union.
The calculation was based on figures updated on March 20.
Taking note
Both Westpac and the Western Union deliver the money in less than one hour. Other money transfer operators can take up to three days, according to the website.
Money transfer operators have taken note since the website went live, says Capal.
“No-one likes to be seen as the most expensive,” he says.
“Some banks are starting to update us with offers that are relevant to remittance costs.”
Te Heuheu says: “In the end it’s a benefit to the banks as well. If they provide a good service, they will get good business.”
Westpac spokesperson Craig Dowling says it took the World Bank to dig out the scale of the issue. Banks attended forums coordinated by the World Bank and the Ministry of Pacific Island Affairs, he says.
The World Bank demonstrated how exposed Pacific communities are to these fees. A considerable amount of pressure was put on banks by the World Bank around this issue, he says.
The fees were contributing to a massive burden that could be alleviated, he says.
“A 25 percent fee is definitely too much,” he says. “It’s now up to banks to decide where this lies in their priorities.
“Our parent company, Westpac Banking Corporation, has a large footprint in the Pacific so we wanted to demonstrate our commitment to those communities.
Competitive advantage
It becomes a competitive advantage having the lower cost remittance product, he says.
“We decided we could move more quickly than our competitors. Westpac introduced a new card for remittances to the Pacific last year.
“We think there will be a competitive response. Western Union changed some of their rates when Westpac announced their new remittance product,” says Dowling.
He says a broader response by banks is needed to have a full effect.
“Why hamstring the whole Pacific community,” he says.
Westpac has also used the Otara Markets to promote its remittance product.
“Uptake has been okay, but there is a long way to go,” he says.
Capal says that internet use by different Pacific peoples varies. Samoans have a higher internet uptake compared with Tongan and Solomon Islands communities.
Because of the lower internet access, DMA will be regularly updating printed material to be handed out at churches and community groups, he says.
The website generated interest before the launch.
“It’s been notably picked up by bloggers in Papua New Guinea,” he says.
DMA expect the number of hits, currently several hundred a day, to at least triple following the launches in New Zealand in the weekend and Australia next Friday.
The website is part of a wider Pacific remittances project involving a partnership between the World Bank, Reserve Bank, Ministry of Pacific Island Affairs and the Pacific Cooperation Foundation (PCF).
PCF programme manager Tina McNicholas says the foundation is co-funding the education phase of the project.
“Phase two is much wider than the website. The focus will be on financial capability and a community education campaign,” she says.
McNicholas says she hopes that the website will also have an impact on the high level of fees “we’ll be able to pass on savings to families in the Pacific.
Picture: Pacific Island Affairs Minister Georgina te Heuheu (left) and project manager Kim Hailwood. Photo: Krista Ferguson.
Krista Ferguson is a student journalist on the Asia-Pacific Journalism course at AUT University.
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