June 17, 2011
Over 70 representatives from commercial banks, money transfer operators, telecoms, civil society organizations, government ministries and donor agencies in Samoa came together to discuss improving remittance services.
The event was made possible through an information exchange focusing on cheaper, faster remittances that was organized by the Central Bank of Samoa in partnership with the Pacific Financial Inclusion Programme (PFIP).
Remittances are very important to the economy and the people of Samoa. Currently they represent over one fifth of GDP, which is equivalent to about three times the official overseas development assistance received each year by Samoa. It was noted that while prices for these services have come down significantly over the past years, the average cost of sending a remittance still hovers around 20% of the value of the money sent, or about twice the average global price for sending money elsewhere in the world.
The Central Bank of Samoa has become a leading advocate for greater access to formal financial services in Samoa, and has made the issue of remittance services central to their platform. Governor Leasi Scanlan opened the event noting that, “remittances services are some of the only formal financial transactions many Samoans make, and therefore ensuring they are of a high quality and provided at a low cost will help many deserving Samoans”. The message was clear, that providers need to focus on improving services to clients now.
In Samoa, money can now be transferred around the country with the ease of sending a text message, and there are now companies that are offering very reasonable exchange rates for remittances. Mike McCaffrey, of the Pacific Financial Inclusion Programme explained, “Improving remittance services is no longer a technological issue, those pieces of the puzzle are here. The issue now is formulating partnerships to improve access to these products and to build awareness of them.”
Three different presenters shared information supporting this initiative. Professor Rodney Wolff from the University of Queensland, provided insight as to how the senders of remittances in New Zealand and Australia are choosing which remittance services to use, and different qualities of those services that they value. He noted that the speed and cost of the service are important, but the ease of using it for both the sender and receiver are almost just as important.
The Chief Technical Officer for Digicel, Alex Abraham explained how their new mobile money system, which allows people to make financial transactions over the mobile phone, enables people to make domestic remittances to any of their 30 agents around the country in seconds. They are now formulating partnerships to expand their agent network, and are interested in partnering with organisations who will allow them to also offer international money transfer services.
Ross Peat, CEO for a company based in Auckland called KlickEx, provided perspective on technological trends around the world from which Samoans can benefit. His company KlickEx is now consistently the low cost leader for remittance services from both Australia and New Zealand to Samoa, and he briefed the participants on the model they are using to reduce costs to just a few percentage points of the value of the remittance. “We created an auction platform that allows buyers and sellers of currency to transact with each other at very low exchange rates”, explained Peat. KlickEx as well is now focusing on partnerships with organisations here in Samoa to help make this product available in more locations.
The closing statements for the event was made by CBS Deputy Governor Iosefo Bourne, who made the point that while these services need to be cost effective, they also need to be sustainable for the provider. There is a real business case for improving the quality of remittance services in the country, and those who grasp this opportunity will not only be doing good business, they will be also supporting the development of their country.