Good news first.  Our report, “Mega Troubles for Microfinance” www.acorninternational.org, picked up some friends in high places, which [...]]]> Phoenix  Winning any kind of global financial justice for low-and-moderate income families is admittedly a slog, but misery loves company, and I cannot resist keeping you in the loop as ACORN International pushes forward on these campaigns.

Good news first.  Our report, “Mega Troubles for Microfinance” www.acorninternational.org, picked up some friends in high places, which felt very nice, though we will have to see if it develops into real progress.  A letter from the Swiss international development agency indicated that they were in agreement with us that microfinance does not reduce poverty, and in line with our recommendations they had already scaled back involvement.  They were still hopeful about microcredit, though we are not sure what that really means other than saying that the poor should save, which is not exactly a development program.  Similarly when we issued our report the head of the United Kingdom parliamentary committee which has oversight over development joined in our argument heartily and indicated that they will take the report up more seriously now that the summer is past.  All very encouraging since we feared that we might burn at the stake for heresy!

On the other hand there is Western Union.  A long, as these things go, direct conference call between leaders of ACORN International and ACORN Canada with representatives from the Loveland, Colorado based king of remittances was difficult and indecisive.  Western Union conceded that there fees were not the 5 to 6% they claimed in their correspondence, but tried to argue that they were transparent nonetheless even though perhaps not fully.  If you can follow that sentence, you must have been behind the looking glass with us.  Their primary argument continued to rest in a defense of competition, which essentially is to say that they charge what the market will bear, until the market changes, and in response to ACORN International’s three reports on these questions tried to argue that there were 16,000 remittance channels so our dozen countries might just be out of luck.  We have pleaded with them for a direct face-to-face meeting in hopes of making real progress, and they agreed to consider it, but promised nothing.

Meanwhile we are pursuing meetings of the major countries who are soon looking at development issues to see if there might be a way to push ahead on financial justice for the global poor at those forums.  Optimism is boundless, but reality continues to intrude.

Buenos Aires One of the flash points in the USA immigration reform debate continues to be over the demand from farmers for help in their fields from migrant agricultural workers.  Recently  they left the Republican (and Obama Administration) consensus in droves as US-farmer organizations and Congresspeople bridled at the fact that employers, i.e. [...]]]>

Buenos Aires One of the flash points in the USA immigration reform debate continues to be over the demand from farmers for help in their fields from migrant agricultural workers.  Recently  they left the Republican (and Obama Administration) consensus in droves as US-farmer organizations and Congresspeople bridled at the fact that employers, i.e. farmers, would have to pay steep fines for hiring undocumented workers.  The so-called bracero program has long been out of business in the US, which used to bring up seasonal workers from Mexico into the fields of California, Texas, and Arizona, and from the Caribbean to help in tobacco, cranberry, and other harvests in the Northeastern states.

ACORN International crack researchers led by Carleton University (Ottawa) volunteer, Amanda Sullivan, and ramroded by ACORN International and Edinburgh University (Scotland) super-summer intern, Melanie Craxton, stumbled onto a huge program though in Canada while researching remittance ripoffs as part of ACORN International and its federated partners on-going Remittance Justice Campaign (www.remittancejustice.org).   The Canadian SAWP is not an armed strike team, but 20,000 migrant workers from Mexico and the Caribbean Islands who are recruited through bi-national agreements and shipped up to the fields of Canada, largely in British Columbia and southern Ontario, as part of the Seasonal Agricultural Workers Program.  Needless to say conditions are regularly reported as substandard and exploitive by our long-time partners, the UFCW and its agricultural workers organizing program which has been in the fields for years with these workers.

In fact the Canadian government extracts a 25% of wages share for taxes and the like which will never benefit these workers who will return home after a maximum of eight (8) months in the field.  Neither does the Canadian government seem to care much about how much money they actually go home with even though ostensibly that is one of the goals of this cooperative labor exchange.  The workers are in fact even chosen according to the SAWP criteria because they have stable families, and that means invariably they send significant remittances (about 50% of wages while in Canada) back home to their families.

The money transfer organizations of choice according to our researchers interviews are Western Union and a smaller, somewhat cheaper company called Vigo.  Either way a huge chunk of their checks are extracted by these MTOs, way over the 5% maximum demand that ACORN International has made as part of the Remittance Justice Campaign and that Canada as part of the G-8 has claimed to adopt as a world standard.

Talking to SAWP representatives though was like visiting Mars.  Yes, Canada collected its taxes.  Yes, the migrant workers made remittances home.  No, the governmental representatives had no idea how much was extracted by the MTOs of the checks, despite these bi-national agreements with Mexico and Caribbean countries.  It is impossible to escape the core immorality, even venality, of this predatory governmental operation.  The Canadian government gets migrant help for its agricultural enterprises, profits from taxes that can’t benefit the workers, and then turns a blind eye as predatory fees are extracted from the laborers before they return home with what little is left.

ACORN International and its federated partners like ACORN Canada, ACORN Mexico, and ACORN Dominican Republic, have stumbled onto a scandal and are busily preparing demands to force immediate change in these practices along the lines we have continued to make in recent months for cost caps and desperately needed regulations.  Without a doubt this is an outrage that demands the authorities finally listen and act!

In a meeting won by actions at the ACORN Canada convention six weeks ago with top officials of the Finance Ministry our negotiators efforts to discuss the need [...]]]> New Orleans ACORN International’s global Remittance Justice Campaign (www.remittancejustice.og) continues to confront new, amazing, and mysterious challenges as ACORN Canada pushes forward in Ottawa and British Columbia.

In a meeting won by actions at the ACORN Canada convention six weeks ago with top officials of the Finance Ministry our negotiators efforts to discuss the need for regulation of remittances to prevent predatory pricing and achieve needed equity, transparency, and fundamental fairness was greeted about the same way as if we had started cursing loudly at the front of the church.  We had offended fundamental, conservative Stephen Harper government dogma about so-called “free markets” and laissez faire rapacious capitalism by banks and money transfer organizations, especially if the rip-off occurred with migrant workers and immigrant, “new Canadians” as they are called.

The Finance Ministry turned the conversation to “disclosures” in a patty cake, kiss-your-cousin shot across the ACORN bow.  Disclosures just won’t get it done, but….  There are some critical things that could be achieved by some real disclosures that include:

• simple language
• base rate from remitting institution to country for bank customer
• base rate from remitting institution to country for non-bank customer
• transparent fees at receiving end if any or a guarantee that there are none.
• disclosure of exchange rate at time of remittance transfer
• disclosure of pricing regime compared other electronic transfer procedures to prove this is not discriminatory pricing

We might save billions just by letting that little light shine.

On the western side of Canada an action by ACORN British Columbia demanding remittance justice provoked an email response from Englwood, Colorado, a Denver suburb, and headquarters of Western Union.  Spokesman there told the Burnaby News-Leader:

“’Many people worldwide have no access to formal financial services. We invest in rural areas and urban locations alike to offer consumers an option to send and receive remittances and better manage their finances.’  Increased consumer choices for sending money have led to lower costs across the industry, the company said.”

Wow!  Here is what that statement translates to in normal everyday English:

“We enjoy near monopoly advantages in many global markets because there are no other financial service alternatives, so we charge whatever we damned well please to send and receive remittances, because we can.  The only reason we will lower costs is if a competitor crowds into our monopoly market and forces us to have to do so.”

At ACORN I guess Western Union thought it was important to remind us that with no regulations and little competition, rapacious corporate greed can pretty much stand on its hind legs and flip off its customers, their organizations, and entire limp wristed, uncaring governments at their whim and will.  Hello!

ODECU of Chile

it card scams are the bad penny perfected in the United States that is turning up now elsewhere in the world.   These practices are not the foul play of bad actors as predatory lenders always claim, but intrinsic elements of corrupt, exploitive business models.  The economic success stories in [...]]]> New Orleans Cred

ODECU of Chile

it card scams are the bad penny perfected in the United States that is turning up now elsewhere in the world.   These practices are not the foul play of bad actors as predatory lenders always claim, but intrinsic elements of corrupt, exploitive business models.  The economic success stories in Brazil and Chile now seem threatened by the avarice of casual corporate corruption matched as usual with light to non-existent regulation and consumer protection regimes.

In Brazil the debt to income ratio has risen from 22% to 40% in only five years from 2006 to 2011 according to a study quoted by Alexei Barrionuevo in The New York Times. In Chile in 7 years the ratio has goen to 70% according to the Central Bank.   There’s no question the model is predatory with interest annual interest rates reaching 220% in Brazil and no limits anywhere it seems.   The situation is especially intense at retail chain, freely issuing cards to working and moderate income customers to access basic consumer goods, and then routinely adjusting the terms and levels of the interest rates on the debt without any notice to the customer.

These cards were supported by transnational banking big boys like UK’s HSBC and Spain’s Santander and Itau-Unibanco, all of which, especially HSBC, absolutely knew better, but couldn’t resist the rip-off, knowing that they could get away with it.  When confronted by the prosecutor’s office in Brazil, the banks ignored appeals to fully compensate customers.

It was shocking to read that there are no only no limits to the level of interest rates in Chile, but also no way for an individual to be able to file for personal bankruptcy and get their act together.  Unfortunately, when ripped, there’s no way for them to run – or reorganize.  Stefan Larenas of the Organization of Consumers and Users of Chile, speaking about the Equifax-owned, unregulated Dicom credit score outfit in that country, was quoted ominously that, “If you are in Dicom, if you are not in hell, you are on the way there.  It is a true social stigma here.”  Seems a bad score not only bars you from any future loans, but is also seen as a legitimate reason to block you from future employment, creating a debtor’s prison without walls.

Predatory financial injustice is a global issue with most central banks simply burying their heads in the sand, just as our Remittance Justice Campaign has uncovered everywhere, and leaving workers and families nothing but fresh meet for corporate crime.

M-PESA

New Orleans The bleeding edge hope for technology in handling finance is often seen as Africa and more specifically Kenya and very pointedly mobile phones.  To the degree a mobile phone system could obviate having bank accounts and ease the problems and costs of money transfer for remittances, this could be a good news [...]]]>

M-PESA

New Orleans The bleeding edge hope for technology in handling finance is often seen as Africa and more specifically Kenya and very pointedly mobile phones.  To the degree a mobile phone system could obviate having bank accounts and ease the problems and costs of money transfer for remittances, this could be a good news except for all of the “ifs,” “ands,” and “buts.” In Nairobi last week ACORN International and the Paladin Partners spent some time trying to get our minds wrapped around all of this to sort out the hype from the hope.

The key system is Safricom’s M-Pesa which is ubiquitous in Nairobi and by far the wide leader in the current market.  We saw their outlets everywhere including in Korogocho where we were organizing in the mega-slums.  Talking to the ACORN Kenya organizers about whether and how they used the system we got more mixed reviews based on the costs involved and the need for specific phone and SIM card access.  Importantly they estimated that in Korogocho less than half had any mobile phone and most only used the phone to receive messages without cost and had phones that were simple for text and phone without being able to access M-Pesa on the more what sounded like a more expensive Safricom platform.  The fact that Sammy Ndirangu’s phone was a “dual-SIM” phone somehow seemed important because he could work multiple networks to move between them whenever one or the other was cheaper.  Looking in the mobile phone stores about the city, none of these options were cheap.

Safricom has the lion’s share of the market in Kenya with 13 million subscribers.  Importantly, the company is a joint venture of sorts with equal shares of about 35% owned by Vodafone (based in the UK) and the government of Kenya.  There may be problems with this relationship and expanding access to the platform.

A piece in www.mobilemoneyafrica.com was illuminating.   Safricom’s competitors approached the Central Bank of Kenya with a proposal to create a seamless system for money transfers between networks.

“Though it is possible to send money across the networks, the transfer process remains complex and costs 10 times more than the price of sending money within a network, adding new dimensions to the factors that preventing consumers from changing mobile phone service providers.

Currently, recipients of money from other networks receive a Short Text Message indicating that money has been sent to them and have to go with the message to an agent of the operator whose platform was used to send the money for withdrawal.

Under the proposed structure, the CBK is being asked to establish a form of clearing house that processes all transactions from the four mobile money platforms M-Pesa, Airtel’s Zap, Yucash or Orange money and sends it directly to the recipient’s phone.

That should help remove the high charges that the operators levy consumers sending or receiving money from one network to another.

Consumers sending Sh25,000 from M-Pesa to rival networks such as Airtel must for instance part with Sh400 in transaction fee while the cost of sending and receiving a similar amount of cash from Airtel to rival networks is Sh200

Safaricom’s rivals reckon that a seamless platform will loosen each operator’s grip on the mobile money platform pulling down the cost barriers and allowing free movement of money in the economy.”

The exchange rate is roughly 80 Kenya Shillings to 1 US Dollar if that helps in understanding all of this.  The notion that regular Kenyans would be transferring Sh 25,000 or more than $300 USD when the largely unenforced minimum wage in the country is about $80 USD in the city and half of that in the countryside is also preposterous as our remittance studies have shown (www.remittancejustice.org), but you get the point:  internetwork charges are choking off the tool and its access and applicability to average Kenyans.

The fact that Safricom has the governmental connection and now controls 76% of the mobile market in Kenya doesn’t bode well for a quick fix here anytime in the near future.  Two of the main competitors in Kenya, Airtel and Yucash are India-owned companies, which leads to a natural next question of why hasn’t the mobile money transfer system gotten farther in India where it could make a huge difference?

Let’s look into that question on a later day, but in the meantime this “hope” for African financial systems and for lower costs for remittances still seems farther in the future than any of us might have wanted to believe.

Today in Toronto Kay Bisnah, President of ACORN International, also unveiled an extensive report underpinning [...]]]> Phoenix In Vancouver, Toronto, Ottawa, and Hamilton ACORN International and ACORN Canada joined today to dramatically step up the international campaign to achieve improved access and fair pricing for remittances from immigrant families and their relatives in their home countries.

Today in Toronto Kay Bisnah, President of ACORN International, also unveiled an extensive report underpinning the campaign called Past Time for Remittance Justice (a copy is available at www.remittancejustice.org or www.acorninternational.org). The report is the result of  months of work and research by a multi-national research team including a battery of student interns with ACORN International at George Brown College in Toronto as well other researchers in Baltimore, Little Rock, and New Orleans joined with ACORN International and its federated organizations and staff in Latin America, Africa, and Asia.  In a survey of costs focusing on major global banking institutions as well as Western Union and MoneyGram, ACORN International found that the costs are exorbitant and predatory and averaged more than double what the World Bank estimates current pricing.

President Bisnah is expected to ask Toronto Dominion at the release today in Toronto to set an early meeting with representatives of the organization in order to begin discussions on how remittance justice can be achieved as quickly as possible.  Members of ACORN Canada will be demanding similar meetings with HSBC at the Canadian headquarters of the bank in Vancouver, while members in Ottawa will be pressing the Bank of Montreal for a meeting as soon as one can be scheduled.   In Ottawa demands are also going to be made for Canadian regulators to take up the issue of remittances and begin creating a mandatory and effective system.

The grid in the report shows costs can in some cases suck out almost half of the money being sent to families in home countries by as much as one dollar for every dollar being transmitted.  In few cases were charges, commissions, and exchange rates taking less than twenty-five cents on the dollar.  The report calls into question World Bank estimates of an average 10% cost factor and while adopting the World Bank goal of no more than 5% costs, ACORN International calls for the changes to be immediate and comprehensive, including both sending and receiving fees.

Remittances are huge and involve an estimate of over $430 billion with 75% going from developed countries like Canada and the United States to developing countries.  Remittances are a substantial part of the gross national product (GNP) for many of the poorer countries and populations in the world.

ACORN International indicated that in coming weeks more banks will be targeted.  Beginning next week the demands will spread first to Lima, Mexico City, Buenos Aires, San Pedro Sula, Tegucigalpa, and Santiago (Dominican Republic) as well as Nairboi, Kenya and Mumbai, Delhi, and Bangalore in India.  ACORN International also intends to release the report and press demands with major banks headquartered in the United States, United Kingdom and elsewhere, as well as demand government accountability in the same locations.

The sum of remittances dwarfs all other forms of foreign aid and foreign direct investment in developing countries.  A reduction from a 10% average transaction cost to a 5% average would move more than $20 billion in remittances to aid families.  ACORN International believes there is nothing to justify existing charges, and seeks in the Remittance Justice Campaign to push charges to real and reasonable costs rather than the current global “highway” robbery of banks and transfer companies.

No doubt there will be a lot more to come, since these are big targets and this is a lot of money, but there is no question that justice must be come.