Migrants’ Remittances Are A Cash Cow

Migrants' Remittances Are a Cash Cow

By A. D. McKenzie
PARIS, Jun 9, 2010

Immigrants in France send some eight billion euro (9.6 billion US dollars) a year back to their countries of origin, often paying exorbitant fees – though the French government has announced moves to lower tariffs.

Noting that remittances by migrants totaled more than the national development aid budget, French immigration minister Eric Besson endorsed an agreement Wednesday between money-transfer company MoneyGram International and local French firms.

The agreement aims to expand fund-transfer services to tobacco shops, the largest network of sales points in France that already sell such products as top-up cards for mobile phones and tickets for the bus and metro.

“We want to render a service to immigrants who live legally in France and to promote development in the country of origin,” Besson said.

But some migrant groups see the moves as a new way for wealthy countries to shift responsibility for supporting development.

“The aid budgets of rich nations have been decreasing steadily over the past years, and now there is this emphasis on saying that migrants should contribute to the growth of their home countries,” said Violaine Carrre, a senior researcher for the French-based Group for Information and Support to Immigrants (GISTI).

She said that while it was a positive thing that the monopoly formerly held by Western Union in the money-transfer sector was being broken in France, the measures raise certain questions.

“Is the solution now to make migrants themselves pay for development?” she asked.

According to rights groups, many companies see migrants as something of a “cash cow” in the 400-bilion-dollar remittances market.

Banks charge excessive rates for transferring money, and most money-transfer companies require minimum fees of 20 percent of the amount sent, even for small sums.

Besson says increased competition will be good for migrants and the financial markets. Last month, he met with the main money-transfer companies and received commitments from some of them to lower rates and to expand services.

Later, at the Africa-France summit, where French officials and leaders from 38 African countries focused on economic ties, Besson held discussions with migrant groups and financial firms to press his new priority of “reduced rates”.

Bessons ministry also runs a website (www.envoidargent.fr) to allow migrants to compare tariffs and learn about the new channels in what he called “transparency” measures.

While the government is focusing on funds sent by “legal” immigrants, a large number of the remittances also come from undocumented migrants, according to financial analysts.

Official studies show that several regions of Mali, for instance, depend almost entirely on remittances, including funds from “sans papiers”, as undocumented migrants are called here.

Asked by IPS whether the new agreements would help such people, Besson sought to distance the governments tough immigration policy from the latest measures.

“To transfer funds, you need to present ID documents, so the question is resolved by this,” he said.

Herv Chomel, MoneyGrams vice president for international markets, told IPS that migrants did not need to show a French residence permit to do transactions via the company, but that a passport or valid identity document was enough.

“Even tourists can transfer funds,” he said.

But he added that non-bank transfer points were essential for both migrants and the “receivers” of remittances as many did not have bank accounts.

MoneyGram sees providing increased services to migrants as a means for its own expansion. With annual turnover of almost 1.2 billion dollars and profits last year of 18 million dollars, the company is extending its reach even as immigration grows. The United Nations has put the number of immigrants worldwide at 200 million.

France itself has six million immigrants, or 10 percent of the population. According to government figures, immigration from Africa and Asia has grown 45 percent since 1999, and most remittances are sent to these regions.

The funds sent “home” account for 10 million transactions per year, with France being the fifth source country in the world for remittances, according to MoneyGram.

Before arriving in France, the companys chief executive officer Pamela Patsley was in Africa on Tuesday to sign accords with First Bank of Nigeria and to initiate services in 500 agencies throughout the country. MoneyGram has also concluded recent agreements with the Bank of China and with Visa.

The firm already has 200,000 agencies around the world, and the French agreement will create 2,500 new sales points in France, according to Patsley.

She told journalists that she was “delighted” to celebrate these two “important” steps.