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December 14, 2007

Germany Helps Migrants Send Money Home Affordably

Photo: Colourbox

Last year, migrants in the European Union sent 27 billion euros ($39.5 billion) home. However, high banking fees meant financial institutions kept a large part of the remittances. A new German government Web site aims to help.

Nearly 463,000 Berliners are foreigners, around 14 percent of the German capital's residents, and many of them support family members back home in their native countries. Debo, a young Nigerian man, is one of them. It is often the case that only half of the money he sends to his family actually reaches them.

Debo wires his earnings through Western Union, which specializes in foreign money transfers. The money gets there quickly, he says. That contrasts with the practice of some German banks, through which such transfers can take as long as three weeks.

Money transmitters do differ, and a new Web site that the German government established together with the German Society for Technical Cooperation (GTZ) and the Frankfurt School of Finance and Management shows how. The site, Geldtransfair.de, compares the conditions of 40 banks and other financial service institutes for transferring money outside the European Union.

"The point is to reduce the costs by ensuring transparency and competition among the providers of services," said German Minister for development Heidemarie Wieczorek-Zeul.

If transferring money cost as little to the developing world as it normally does between industrial nations, billions of additional euros would be available to those countries, she said.

For starters, Geldtransfair.de shows the costs and conditions of sending money to the countries that are the recipients of the greatest amount of remittances from Germany: Albania, Ghana, Morocco, Serbia, Turkey and Vietnam. Fifteen more countries will be included within the next year or two, and the site is intended to pay for itself through ads.

The total sum of worldwide remittances -- $300 billion yearly -- is higher than that of foreign direct investments in developing countries. And it is twice as high as the amount of money officially paid as developmental aid.

Experts say that, at most, only half of the remittances are sent through banks. That is something that could change if financial institutions lower their fees. In Britain, the cost of transferring money to India has fallen by 40 percent since a similar Web site, sendmoneyhome.org, has been online.

But sites like Geldtransfair.de cannot improve weak financial structures in developing countries. The government must do much more to help migrants sending remittances home, according to German Finance Minister Peer Steinbrück.

"Everyone should be able to have a bank account to get access to financial services," he said, adding that that is far from a matter of course. (Deutsche Welle)

Links:

www.geldtransfair.de

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