Remittances and the Pacific
Remittances are transferred funds between individuals across borders. It’s performed by some of the 272 million immigrants across the globe, sending a total of $589 billion back home in 2021. Cash wrapped in love.
Dilip Ratha, an economist specialising in migration and remittances, describes remittances as “the hidden forces”' of the global economy, larger than foreign direct investment (FDI) and foreign aid combined. In fact, remittance to the Pacific is three times the amount of foreign development aid into the regions. This speaks to the power of how we continue to care for our aiga, giving more support than we’ve ever received internationally.
Covid-19 unsurprisingly exacerbated global economic instability. Once economies began to ‘bounce back’ with consumer spending and returns to production, migrants across the world followed suit and returned to work. The significance of this? While FDI fell 30% in 2020, remittances increased by 1.7% and to 7.9% in 2021. Why? Because FDI is motivated by profit margins, whereas remittance is founded on workers looking to support their families. So even in a recession, remittance continued to flow.
The attachment of fees to transfers means there is a measurable cost for remitting. Transaction fees and foreign exchange market rates allow for profit to be made off of immigrants supporting their families. $200 in wages with a transaction fee of 5% takes $10 off the money sent back home. And that’s not counting exchange rate changes.
The impact of this is massive. According to RNZ, Aotearoa’s “recognised seasonal employer workers paid about $400 a season [each] in remittance transaction fees.” Historically, the Pacific has some of the highest transaction and foreign exchange rate fees in the world, while also having the highest dependencies on remittances for their economies. A predatory trend which has slowly declined due to increasing awareness over the years.
Remittances are a demonstration of agency, as we thrive in the environment other countries' governments assert upon us. We know of the exploitation of migrants, stripped of their rights and support networks (the Dawn Raids have not been forgotten), imported and then despised, but miraculously always maintaining their greater purpose. The incredible courage to seek a life for yourself elsewhere, with determination to enrich your families. There’s no bigger motivator than family, and we have great influence with the work we do for one another, flowing into our communities & home nation.
In Nov 2021, The Reserve Bank stated their intentions to improve the financial inclusion of Pacific Nations through strengthening institutions which facilitate remittance payments, due to difficulty accessing banking services throughout the regions. This interest was also due to the acceleration of cryptocurrency throughout the region. Both cash and crypto are classified as ‘informal’ flows of cash—as they are unregulated, unaccounted for, and not taxed. Expanding financial inclusion across the region would incorporate both formal and informal inflows of capital into a securitised method of movement from Aotearoa to the Pacific, creating a greater understanding of the influence these remittances have had on the nation.
Remittance originates not from desire to profit, but from resilience of character. Migrants across the globe continue to persist in these difficult times and to provide for one another, as we know and as we always have done. An economic marvel. But anyone who cares could tell you: This is just what families do for one another. We’ve never forgotten home.