Ripple Effects on Remittances

ACORN ACORN International canada Citizen Wealth Financial Justice Remittances
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New Orleans       One thing leads to another.  Easy to say, but hard to endure, especially when it comes to the economic damage that keeps spreading from the pandemic shutdowns.  This is the real trickledown economics, and it’s not a good thing.

In this case, I’m talking about remittances from migrant workers and immigrant families living and working in Europe, the United Kingdom, Canada, or the United States.  Figure it out.  With 22 million unemployed in the United States and millions elsewhere around the world, you don’t have to be a world-class economist to realize that with work shut down, workers are not going to have the money left over to send back to families in Latin America, Africa, and elsewhere.

ACORN’s Remittance Justice Campaign has worked to bring this issue forward for years because the costs from most money transfer organizations, whether Western Union, Money Mart or the host of smaller outfits, are often exorbitant.  The World Bank’s goal of a 5% charge is mostly just an empty exhortation, if that, and doesn’t include the cost of conversion or larding on of other fees at the back end of the transfer.  Additionally, its exercise of setting a goal for costs is just that, an “exercise,” since, when queried by ACORN, its response has always been that it is the job of each nation’s central banking system to police any rate setting.  Our efforts to legislate in various countries have also not been successful to date.

It matters though.  Speaking to ACORN Honduras organizers recently, the entire conversation was about hunger.  Where we were mapping the promised food rations, we found the effort increasingly meaningless as we recognized that most of the support is going to San Pedro Sula and Cortez, the port city on the Gulf of Mexico, where the coronavirus outbreak has been most severe.  Unemployment has soared.  Many of the manufacturing plants, the maquilas, located around San Pedro Sula and owned by foreign interests have closed and some may not come back.  There is no national unemployment insurance or safety net.  There have been food riots in Cortez and other cities.  Salvador, Honduras, Guatemala, Mexico, and even Nicaragua depend on remittances as a major percentage of their GNP.  The bottom is falling out.

Africa is in the hot water.  According to reporting by The Economist, transfers from one company from Britain to east Africa have dropped by 80% and from Italy to Africa by 90%.  In Lesotho, remittances are 16% of GDP, in Nigeria 6%, and in Senegal 10% where the remittances originate in Italy, Spain, and France.  The hawala system of person-to-person money transfer that depends on money being flown into countries and exchanged, especially in the Middle East and south Asia, has also been decimated with planes not flying.  “Bankers in Somalia, where remittances are worth 23% of GDP, say they are running out of notes.”

The hunger won’t be limited to Honduras. It will be global and, tragically, will likely take more lives than the virus.  Globalism now seems to end at a nation’s own borders.  It is unlikely that there will be any worldwide effort from richer countries to bail out poorer ones, with their economies now on the ropes as well.  Despite the rhetoric, people-to-people remittances far surpass foreign aid, and with countries tightfisted, and families reeling, this is a horror exploding without ready relief.

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Thanks to WAMF.