Live wires: Latin Americans living in Spain drive a big business in sending money home.
Living in Spain since 1992, Nicaraguan migrant Melida Martinez sends home each month between US$370 and $500 through an agent called UniGiro. There she pays a fixed commission of $6.20 for each remittance of less than $3,700. The decision to go to Spain wasn't an easy one, for the typical reason--her family is far away. "When I left for Madrid, I left behind three daughters," says Martinez. "One of them, who studied international relations, hasn't been able to find a job." The money she sends home pays the bills, as well as the college tuition of the youngest girl. "This money is very important. It pays the water, the light, the groceries. It pays everything," Martinez says.
The total of all Latin America-bound remittances from Spain is $2.25 billion, according to Spain's Central Bank, Banco de Espana. A study by the nonprofit Fundacion de las Caja de Ahorros shows that the total sent abroad by foreigners in Spain rose a surprising 560% during the past seven years. In 2005, the world total for remittances sent by Latin Americans hit $53.6 billion, a rise of 17% from the previous year. Money sent from the United States accounts for 75% of that figure, but total remittances from Spain grows every year.
Not surprisingly, most of the growth has tracked along with Spain's swelling foreign population. "Altruism is what's driving the phenomenon," says Enrique Alberola, head of the Latin American economies unit of the Banco de Espana. "More than half of the money sent by migrants living in Spain goes to Latin American destinations."
The more than 50 remittance agencies in Spain--Western Union and MoneyGram are the leaders--were the first to take advantage of the market. The big banks, eager to attract migrant business, also entered the fray by way of various products developed just for that segment of the public. "The decision by the banks had a positive effect of generating competition and, as a result, commissions charged for remittances have been declining," says Alberola.
The Catalan bank La Caixa was one of the first. In 2002 it positioned itself in the Spanish market as a strong competitor to the remittance agencies, launching a creative initiative known as multichannel transfers that allow a customer to send money not only via the bank itself by also through ATMs (using a special envelope for remittances) and by text message from a cellular phone.
Remittances by cellphone was introduced to the bank's customers last year, thanks to an agreement among various financial entities in the main countries of origin of Spain's foreign residents, among them Argentina, Bolivia, Brazil, Colombia, Ecuador, Peru and the Dominican Republic. The Latin American institutions taking part are Banco de Credito and Mibanco, in Peru; Caja Social and Bancolombia, in Colombia; BHD, in the Dominican Republic; Macro-Bansud, from Argentina; Sol, in Bolivia; and the Brazilian superbank Banco Itau.
In 2005, La Caixa managed 800,000 transactions, up 83% from the year before. Done through 5,000 offices and 7,000 ATMs in Spain, most headed to Ecuador, 21% of the total.
BBVA, Santander, Banco Popular, Caixa Catalunya and Caja Madrid, among other banks, charge fixed rates that vary from $7 to $14 for each remittance of up to $1,200. The banks aren't dawdling, offering services to attract loyal clients to their remittance-handling offices. Yet the traditional agencies so far say they don't yet feel the competition directly.
"The traditional banks are copying what we are doing. Even so, 80% of the money that immigrants send to their countries of origin passes through our offices," says Gonzalo Valiente Calvo, vice president of the National Association of Remittance Agencies. "We are cheaper; we charge between 5% and 7% of the value of the money sent." To be a bank customer, in addition, means you have to have documentation that proves you are a legal resident of Spain. As a result, remittances agencies represent a simple and safe way to send money each month home to Latin America.
"In the United States, Mexicans can use their Mexican identification to send money home to their families," says Miguel Angel Martinez Rolland, an economist who tracks international finance for Spain's Economy Ministry. Often, before going to an agency, migrants use even simpler methods to send money home. "In the beginning, migrants chose to send money in envelops in the mail, but the letters usually get opened before they arrive and the money doesn't get there," says Martinez Rolland. "As an alternative, they try using the remittance agents. Those that get legalized to live in the country begin to use the banking system."
According to the Institute of Economy and Geography, part of the Ministry of Education and Science, the average salary for a migrant in Spain is $1,080 a month. According to the Banco de Espana, the average remittance each month is $360.
Crisis. "The amount sent home rises when there is an economic crisis [in the home country], like, for example, when there is a hurricane or a natural disaster," says Martinez Rolland. Remittances have transformed some economies in the region; they now represent a fifth of economic output in Haiti, El Salvador and Nicaragua, and on average 2.5% of all Latin American economies, according to a study by Instituto Elcano, a private foundation in Spain.
The 2004-2005 Latin America Annual from the institute makes it clear that remittances are the region's most dynamic new economic element. "Remittances are today the basic structural element of the Latin American economy," says Inigo More, a consultant and president of Remesas.org, a group that studies migrant remittances as a source of development for the receiving countries.
"This model dissolves the borders that delineate nations, obliging Latin American governments to act in favor of their citizens living in foreign lands," says More. "Not because they are compatriots, but because their economies depend on it."
PRISCILA GUILAYN * MADRID
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|Date:||Jul 1, 2006|
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