26 October 2011

Reducing the Cost of Remittances for Commonwealth Developing Countries


Joint Media Release with
Kevin Rudd MP
Minister for Foreign Affairs

Australia will make it cheaper for migrants from Commonwealth developing countries working overseas to send money back home.

Foreign Minister Kevin Rudd speaking in Perth at a Pacific Island Foreign Ministers Breakfast, today announced details of a $3.5 million package which provides practical support over the next two years to Commonwealth developing countries, including in the Pacific, to drive down the costs of remittances or sending money home.

"Every year migrants from developing countries working overseas give more money back to their home countries than developed countries give in aid," Mr Rudd said.

In Commonwealth countries such as Tonga and Samoa, remittance flows equal more than 20 per cent of gross domestic product.  Remittance flows to developing countries are expected to reach US$350 billion globally by the end of 2011.

"Our support will change lives.  It will mean more dollars make it home to pay for school fees, health care and to put food on the table," Mr Rudd said.

Parliamentary Secretary to the Treasurer, David Bradbury said Australia is an active supporter of lower remittance costs and has been promoting improved remittance flows, particularly in our region, through the Group of Twenty (G20) and the Pacific Islands Forum Economic Ministers' Meeting (FEMM).

"A major impediment to facilitating remittance flows is the relatively high cost of transactions. The global average cost of sending remittances is approximately 9 per cent of the total amount remitted.

"Already Australia and New Zealand’s website, www.sendmoneypacific.org, has contributed to reducing the average cost of sending $200 to Pacific island countries by approximately $6 or 3 percentage points between January 2009 and June 2011.  The assistance announced today will support developing Commonwealth countries in setting up their own mechanisms to increase transparency and competition in the remittance services market," Mr Bradbury said. 

Australian funding will also support the uptake of new technology, such as mobile banking services, to increase access to financial services for the poor and help improve the development impact of remittances.

26 October 2011