Global News: Want lower fees to send money abroad? Here’s what the federal parties say they’ll do about it
Posted October 8, 2015
More than $2 billion in remittances were sent from Canada to the Philippines last year, according to World Bank estimates.
Posted October 8, 2015
In a rural area of Kenya, $10 can be enough to buy medicine that could save a life. So for a Canadian resident sending a portion of his or her paycheque to family back home, each $10 lost in fees to wire money home makes a huge difference, says Pascal Apuwa, a Canadian citizen from Kenya.
But $10 is just the tip of the iceberg when it comes to foreign remittance fees, he explained.
Using a private remittance service, Apuwa said it would cost him $40-45 in fees to wire $200 back to his town, Korogocho, on top of what he’d lose from the market exchange rate.
“By the time people get the money [at] home, it’s almost half,” he told Global News, saying people like him have to “sacrifice to be able to send anything that we can get.”
And it’s not like there are many choices on the receiving end. He said in his village you have to use a company like Western Union to transfer money, otherwise recipients would have to travel to bigger centres to have access to a bank — something that also costs more money.
Now a Calgary resident, he was living and studying in the Vancouver-area when he first got involved in advocating for reforms to the remittance industry, through the group ACORN Canada. After eight years, the battle continues.
But, the issue has made its way into the federal election campaign.
Liberal leader Justin Trudeau plans to reign in Canada’s foreign remittance industry and help prevent Canadian residents from being “gouged” when they send money to their families overseas
Trudeau made the promise in the Liberal Party’s final campaign platform released Monday, just two weeks before Canadians head to the polls to elect a new government.
The Conservatives addressed the issue earlier this year in their Economic Action Plan, promising $6 million over five years to “introduce measures that will help enhance access to low-cost remittance services. The government also indicated plans to set up a ‘remittance price comparison website.’”
And at the G20 Summit in Brisbane, Australia last year, the government “re-committed to reduce the global average cost of sending remittances to 5 per cent” of the amount a customer is sending.
Global News contacted the Conservative Party of Canada to ask how it would proceed with these commitments if reelected. A spokesperson referred Global News to the details stated in the Economic Action Plan.
Canada has one of the highest outflows of remittances per capita in the world.
The World Bank estimates more than US $23 billion worth of remittances were sent overseas from Canada in 2014, with China ($.4.2 billion), India ($2.7 billion) and the Philippines ($2 billion) being the destinations for the largest sums of money.
Depending on where you’re sending it to and which company or bank you’re transferring money with, the costs at the outset can range from just a couple of dollars to a quarter of what you’re sending.
Transferring a sum of $200 from Canada to China, for example, can cost anywhere from 4.8 per cent to 12 per cent, depending on the service or bank used.
From Canada to the Philippines, it can range from 2.7 per cent to 10.8 per cent.
And if you’re sending money to India from Canada, the cost can be anywhere from 3.7 per cent to almost 26 per cent.
According to the World Bank, the global average for remittance costs is 7.68 per cent of the amount sent, down from a 10 per cent average in 2011.
According to World Bank estimates, it’s expected remittances sent to developing countries will total $440 billion this year.
If the average came down to 5 per cent, the World Bank estimates a further $16 billion a year would make it to recipients in developing countries.
But Apuwa and ACORN Canada don’t want a 5 per cent average; They’re calling for a 5 per cent cap.
“A cap means that [it’s] all-inclusive fees,” he told Global News. “It’s not 5 per cent, plus the exchange rate, plus everything else,” said ACORN’s president, Marva Burnett.
At the moment she’s not hopeful change is on the horizon after the election and said promises are not the same as action.
“Why shouldn’t we just think it’s lip service?” she said in a phone interview with Global News. “The fact of the matter that a bill was introduced in Parliament and it went nowhere.”
She’s referring to a private members bill introduced by the NDP’s Peggy Nash in April. Bill C-665 aimed to amend the Bank Act to put a 5 per cent cap on remittance fees.
“By capping the rates charged at the percentage of the total cost, low-income Canadians sending small amounts of money will not have their remittances eroded, allowing more money to be received for education, food or even a toy for their children,” Nash said at the time.
The bill only made it to first reading and didn’t go anywhere before the last session of Parliament came to an end in June and the election was called Aug. 2. That means the bill is dead and would have to be reintroduced once a new session of Parliament opens under a new government.
Although private remittance companies are operating a business, Burnett said they’d still stand to make millions of dollars even with a 5 per cent cap. But putting that cap on could mean billions more dollars making it to recipients in other countries.
Article by Nick Logan for Global News