Wringing some savings out of dial-up
Many people in Latin America who receive money from immigrant relatives in the United States don't have bank accounts, making it difficult to save some of the $30 billion sent back to them, international banking officials said last week.
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According to a report in the Associated Press, relatives spend much of the money on essentials like food and utilities. But after those bills are paid, there aren't enough institutions in which to open bank accounts and build wealth, especially in rural areas, said Donald Terry of the Inter-American Development Bank.
Seventy-seven percent of Central Americans who receive remittances from a relative in the United States don't have a bank account, along with 64 percent of Mexicans and 45 percent of Ecuadoreans, according to a study released Monday by the Pew Hispanic Center and sponsored by the development bank.
Banks not only would enable more people to build savings, but give them more incentive to invest in wealth-building opportunities like homeownership, said Terry, whose group is encouraging more institutions to expand services in those areas - for example, by simply opening an ATM machine.
Using banks could also reduce the amount paid in fees to wire the money home - the method that most immigrants use to send money to Central America and Ecuador, said Manuel Orozco, a project director at the Inter-American Dialogue, a Washington-based center for policy analysis.
Those fees have declined in recent years. For instance, the average Western Union fee to wire $200 to a Latin American country this year was $10, half the fee charged in 1999, Orozco found in a report released last month.
But it's still cheaper to send money through a bank if available. Orozco said the average fee on $300 transferred through an ATM machine was about $6.
Overall, the roughly $30 billion sent to Latin America through remittances far exceeds the U.S. foreign aid flowing to all nations - $17.2 billion this fiscal year.
The Pew report was based on surveys of residents in El Salvador, Ecuador, Guatemala, Honduras, and Mexico, with a separate survey of Hispanics living in the United States.
Posted by Craig at December 3, 2003 08:37 PM