Proposed drop in cost of money transfers spells savings for Samoans
An expected reduction in the costs of sending money to Samoa from overseas will help local recipients of remittances, the Central Bank of Samoa (C.B.S.) has said.
Australia and New Zealand have been in talks about lowering hefty money transfer fees to several Pacific Islands, documents released under freedom-of-information laws in New Zealand show.
The Bank's Governor, Maiava Ataliana Ainuu-Enari, said that due to the high frequency and small amounts of most transfers incoming to Samoa a reduction in fees will be highly beneficial.
“The increase in the value paid out in Samoan tala to the recipient of these remittances in Samoa is key to maximising the hard earned cash by Samoans overseas," the Governor said.
The plans are part of a push to meet a UN Sustainable Development Goals to lower global remittance costs to 3 per cent. In the Pacific, they remain at 10 percent and above the global average of 7.1 percent.
New Zealand's Reserve Bank signed a Memorandum of Understanding with the Ministry of Foreign Affairs and Trade (M.F.A.T.) in March, documents released by the M.F.A.T. show with the department saying that subsidies may be the only way to effectively offset costs.
“For local money transfer agents abroad and the banking system, it means that they have to be cost effective and efficient in terms of transaction costs for these remittances, while at the same time have to meet anti-money laundering and counter terrorism standards that are one size fits all in nature," Maiava said.
“The reduction in remittance costs should also ensure a healthy competition between the local money transfer operators and banks, which should benefit the recipients of remittances.”
Maiava said the push for lowering the effective transaction cost for sending remittance from Australia and New Zealand to Pacific Islands has been long recognised by the World Bank and development partners in the early 1990s.
She added this is why an online monitoring website was set up through the Send Money Pacific that monitors these transaction costs to ensure they are kept at a minimum.
The plans by Australia and New Zealand to lower money transfer fees part of a push to meet UN Sustainable Development Goals, which include a commitment to reduce remittance costs to less than three percent by 2030.
C.B.S. earlier this year said remittance is Samoa’s largest form of foreign exchange earner with the 2017/18 financial year recording about $503.73 million tala in earnings.
New Zealand is still Samoa’s largest source of remittances with 40-45 per cent or $203.87 million tala of the total remittances for the last financial year.
Australia’s inflow of private remittances amounted to $162.28 million tala and the United States $87.88 million tala for the same period.