House of Commons - International Development

Select Committee on International Development Written Evidence

Memorandum submitted by Chequepoint Money Transfer

Some suggestions for possible changes in legislation and regulation over the UK money transfer market which may have a positive impact in improving and increasing the flow of remittances to the developing world:

INTRODUCTION

Chequepoint is pleased to have an opportunity to contribute to the deliberations of the committee in relation to its work on migration and development.

Chequepoint recognises that as part of your enquiry, the committee has already received a presentation from Dahabshiil money transfer, which, like ourselves, is an independent money transfer provider. We have read their evidence with interest; however, we feel the committee needs much more information if it is to have a fuller picture of the influences which are shaping the UK money transfer market today.

As a money transfer company which provides a service to more than 70 developing countries worldwide, including the following African countries (Sierra Leone, Ghana, Nigeria, Gambia, Zimbabwe, South Africa, Morocco, with more starting soon), Chequepoint has long recognised that remittances are enabling people resident in the destination country to improve their standard of living (eg through access to health care) and to take advantage of new opportunities (eg through access to education).

Chequepoint feels that the impact of remittances has for too long gone unnoticed by policy-makers in the UK and elsewhere in Europe; we believe that remittances will play a crucial and expanding role in the future as source of much needed funds in the developing world. Remittances must be factored in as a key element in the formulation of longer term European aid policy for developing countries.

According to World Bank figures, the total volume of remittances sent worldwide in 2002 was USD$80 billion. Sending money home dwarfs the $USD16 billion of net government and bank lending. In the western hemisphere alone, foreign earnings from expatriate remittances now provide capital flows that have nearly quadrupled in the last ten years.

Because remittances have been neglected as a source of investment in developing countries, there are no figures which give an indication of the annual outflows of remittance funds from the UK and other Western European countries to Africa and Eastern Europe. In the context of this information vacuum, we refer the committee to what has happened in the United States, where remittances flow extensively to South and Central America and the Caribbean. We believe that what has happened here is analogous to what is presently happening in terms of remittances flowing from Western Europe to Africa and Eastern Europe.

According to the Washington Inter-American Bank, remittance payments from the US to Latin America and the Caribbean topped £32 billion in 2002. Remittance payments from South Americans working abroad matched the total amount of direct foreign investment made by trans-nationals working in the region. In several countries (Mexico, Jamaica, El Salvador, Nicaragua, etc) 10% of the country's GDP is generated by foreign worker remittances.

It is estimated that in the coming decade Latin America and the Caribbean may receive as much as $300 billion dollars. Such flows would exceed by far the aid donated through international organisations and government initiated programmes. And it seems certain that the impact of remittances on the livelihood of those who receive them is much more significant that the impact of government directed aid, which may be lost or mis-applied by the governments which administer them.

In short, remittances are already having a major impact in allowing the individuals who receive them better access to education and health care.

For many people in Western Europe, the key issue of our times is the increasing numbers of migrants who are arriving here from less developed countries in Africa and Eastern Europe. Governments are all too aware of the social policy implications and are trying to manage migration flows. In this context, it clearly makes sense for European governments to re-double their efforts to put in place policies which help to reduce the push factors in less developed countries and regions. A clear policy which harnesses the remittance outflows from migrants already arrived must be central to maximising financial investment in the developing world.

For these reasons, the mechanisms by which migrant workers send money back to their countries of origin are crucial to the debate. Based on a lack of objective information, UK policy makers such as the International Development Committee may have assumed that the UK banks are going a large part of the way to meeting the needs of this market.

Chequepoint believes this is not the case. We are certain the UK banks do not want to meet the needs of ethnic minorities and newly arrived migrants, the very group which most urgently needs to send money remittances back to their countries of origin. The UK banks make it difficult to open a bank account without ID and proof of address, and these proofs of identity are not always readily available to workers who may be regularly changing both jobs and accommodation. Many ethnic minority and newly arrived workers have been permanently relegated to the status of `unbanked'.

Even if this kind of worker does manage to open a bank account, the banks do not offer a money transfer service which meets their needs. Transfers are expensive (£20 minimum fee is normal and rates of foreign currency exchange are poor), slow (the transfer may take three weeks to arrive) and the network of payout locations in the receiving country may be limited (for example, cash payout may be unavailable or available only at extra cost). Contrast this with the independent money transfer sector, which can deliver a cash payment in the destination country cheaply and quickly (often within a few hours).

In an environment where the UK banks are uninterested, at best, in transfer business, consumers are turning to bespoke money transfer companies. Here they have a choice between oligopolistic suppliers such as Western Union and Moneygram and the independent money transmitters such as Chequepoint.

As the committee has already discovered, there are some major differences between the oligopolistic suppliers and the independents. Price is a crucial one but not the only one; for a money transfer of £100, WU will typically charge £14. Independent money transfer companies will charge £5 for a transfer of this amount. Workers on the minimum wage will, for understandable reasons, wish to seek the most cost effective means of getting their money home. On the basis of price, the choice of most ethnic minority and migrant workers is to turn to the independent money transfer operators (of whom there are about 2,000 outlets in the UK). Newly migrants may also prefer to use a service which is run by members of the same ethnic group as themselves, as for example Dahabshiil money transfer and Somalia.

Yet for companies in the independent money transfer sector to operate, they are entirely reliant on the UK banking system. Each money transfer operator is obliged to open a bank account—they are trapped, they have no other choice. The entire independent money transfer market therefore operates at the behest of the banks.

So, whilst the UK banks may not be too concerned to cater to the money remittance market directly, they do have an interest in scrutinising those money transfer companies which they allow to operate. They may seek to close down those companies which they consider to be too successful, and they can use entirely arbitrary and often spurious grounds to do so (for example, supposed failure to maintain a proper AML policy, although there is no evidence that the money transfer industry is deficient here). Independent money transfer companies have no right of appeal and even no right to know why they have been denied a service.

The situation is made even worse by the relatively small number of UK clearing banks which are willing to provide services to money transmitters. If a bank such as HSBC decides that it will no longer provide a service, the viability of the UK money transmitters sector as a whole is placed at serious risk. This is not a hypothetical situation. Specific instances of such conduct can be provided.

Bearing this in mind, Chequepoint is trying to co-ordinate the development of an Association of independent money transfer companies which will represent the interests of this group, disparate by reason of the wide range of ethnic minorities it serves. Working with the UK government, we would like to make representations to the banks to establish a code of conduct in their dealings with the independent money transfer companies.

We want to highlight to government in the strongest terms, that, for the on-going viability of the UK money transfer market, it is essential that independent money transmitters are seen as a special category; Chequepoint believes the banks should be obliged to answer to an independent authority if they intend to remove banking facilities from an independent money transfer company.

In the event that the UK banks are not able to provide the assurances which the independent money transfer needs, we ask the UK government to use its influence to assist in the setting up of alternative financial structures (examples of which we would be happy to provide) to guarantee the future of the independent UK money transfer industry. Chequepoint believe that the relationship with the banks is one vital regulatory change which the UK government should endorse now if it is to realise the full potential of remittances to deliver much needed impact in the developing world.

There are a number of other areas where additional government scrutiny and action is required if the efficiency of the money transfer sector is to encouraged and the potential of remittances as a development aid is to be maximised. The key areas for action include efforts to increase competition within the discrete money transfer segment of the market by removing obstacles, costs and difficulties. Among other things, this might include looking at the monopoly which Moneygram presently has in relation to money transfer at major UK post offices (3,000 branches). If post offices are intended to provide services to the broader community, tolerance of a monopoly money transfer provider cannot be acceptable.

In relation to regulation of the money transfer industry, we recognise and welcome the principles of light touch regulation employed by HM government in relation to anti-money laundering compliance. We would support the extension of such an approach to other countries in the EU (which perhaps the UK government could lead). We further believe that for the purposes of monitoring money transfer transactions, the government should encourage money transfer companies to pool information on those who are sending money transfers. This would enable for enhanced scrutiny of transactions sent by the same sender through more than one money transfer company. This may include setting a common industry standard for software compatibility.

We also wish the committee to maximise its engagement to make the most in development terms of remittances being sent from the UK to Africa/Eastern Europe. For example, what about a co-ordinated initiative across government to develop private-public partnerships whereby the government could offer tax reliefs on person to person remittances? Government could also match-fund charitable donations made from remittances to education and health projects in developing countries. Chequepoint believes that such a UK government initiative will enhance the possibility of meeting Millennium Development Goal targets. A summary of our suggestions to the committee is included.

Suggestion 1: The International Development Committee has already acknowledged the substantial size of the world remittance market (World Bank estimate: USD$80 billion). The UK government should take a lead in assembling information on the size of outflows of remittances from the UK and should encourage other European governments to do the same. Chequepoint believes this data is a vital tool to enhance knowledge and understanding of the substantial sums under discussion and their importance in development terms.

Suggestion 2: Chequepoint asks that the International Development Committee use its influence to ensure an open, accessible, transparent and competitive UK banking sector. At present, the attitude of the banks to ethnic minorities/recent migrants (the unbanked) is ambivalent at best and hostile at worst. If the true potential of money remittances as a development tool is to be realized, the UK government (in partnership with independent money transfer companies) must take an initiative with the banks to agree a code of practice that provides an assurance the UK banks will continue to work with the independent money transfer sector and will not withhold services unreasonably. In the event that the UK banks are not able to provide the assurances to the independent money transfer sector which are required, we would ask the UK government to use its influence to assist in the setting up of alternative financial structures (examples of which we would be happy to provide) to guarantee the future of the UK independent money transfer industry.

Suggestion 3: We hope the International Development Committee will recognise the contribution of the UK's independent money transmitters to meeting the needs of money transfer consumers. We hope the Committee will use its influence to help us to set up an Association of independent money transfer transmitters to represent this important, but (for reasons of ethnic diversity), still disparate, group.

Suggestion 4: The International Development Committee should give consideration as to how it can encourage more competition in the UK money transfer market place, particularly by breaking down the unnecessary monopolies that exist. All the evidence is that more remittances will flow to developing countries as a result.

Suggestion 5: We welcome the principles of light touch regulation which is employed by the UK government and feel it should be extended to other EU countries. We further believe that for the purposes of monitoring money transfer transactions, the government should encourage money transfer companies to pool information, where possible. This would enable for enhanced scrutiny of transactions sent by the same sender through more than one money transfer company. To this end, we encourage the UK government to set a common industry standard for software compatibility.

Suggestion 6: We hope that the International Development Committee/UK government will work with the money transfer industry to devise a private-public partnership to maximize the potential of remittances and so help the government meet its Millennium Development Goal targets. We hope the Committee will be advocates of the benefits of this approach to HM Treasury.

CHEQUEPOINT—A LEADING FINANCIAL SERVICES PROVIDER

First, some information about our company.

Chequepoint has been a leading international financial services brand for 30 years. Chequepoint was founded by Felix Grovit in England in 1974 where it pioneered the stand-alone bureau de change business. This initial success in London enabled the concept to be expanded into other key tourist destinations.

Chequepoint and its associates now operate in over 70 countries and offer a wide range of financial and tourist services including foreign currency, money transfer and travel tours. The company has more than 100 wholly owned branches worldwide and access to many other branch networks through correspondent banking relationships.

In today's travel and remittance related market-place, the Chequepoint brand has achieved significant global recognition. This success has been built on the company's commitment to providing customers with value, consistency of service and reliability.

Chequepoint has been offering a money transfer service for ten years and (either through directly managed branches or agents) now has a presence in a number of European countries: UK, Ireland, Netherlands, Spain, Czech Republic and Sweden. In the UK, Chequepoint offers the money transfer service through 25 directly managed branches in London and a network of 100 agents, also mainly in London.

Over the last two years, the volume of money transfers process by Chequepoint worldwide has risen by 250% and Chequepoint expects to handle 1.25 billion Euros in volume of transfers by the end of 2004. We pay out through 40,000 outlets around the world. Chequepoint offers a service which meets the needs of the majority migrant groups in the UK.

The countries to which we offer a service include: Africa (Nigeria, Ghana, Sierra Leone, Zimbabwe, South Africa, Morocco), Eastern Europe and the former Soviet Union (Poland, Czech Republic, Romania, Bulgaria, Albania, Russia, Lithuania, Latvia, Ukraine, Armenia, Georgia, Kyrgystan), South America (Colombia, Ecuador, etc), the Southern Hemisphere (Australia, New Zealand). In appendix a), we provide a summary of the distinct groups which use Chequepoint money transfer.

Chequepoint is the third largest provider within the discrete UK money transfer market. Our competitors include Western Union and Moneygram as well as smaller, country specific operators such as Dahabshiil Transfer Services. UK banks also provide money transfer services. Chequepoint is aiming to play a leading role within the independent money transfer sector, which caters particularly to the ethnic minority/migrant worker (most of whom are unbanked) segment of the UK remittance market. According to HM Customs and Excise figures, there are 2,000 outlets operated by independent money transfer companies in the UK.

1. Remittances—A vital tool for international development

Chequepoint is certain that the impact of remittances has for too long gone unnoticed by the UK and other European governments; we believe also that remittances will play a crucial and expanding role in the future as source of much needed funds in the developing world. Remittances must be factored in as a key element in the formulation of longer term European aid policy for developing countries.

We believe that what has happened here is analogous to what is presently happening in terms of remittances flowing from Western Europe to Africa and Eastern Europe.

For many people in Western Europe, the key issue of our times is the increasing numbers of migrants who are arriving here from less developed countries in Africa and Eastern Europe. Governments are all too aware of the social policy implications and are trying to manage migration flows. In this context, it clearly makes sense for European governments to re-double their efforts to put in place policies which help to reduce the push factors in less developed areas. A clear policy which harnesses the remittance outflows from migrants already arrived must be central to maximising financial investment in the developing world.

Although the US remains the biggest buyer of Latin American labour, Europe is fast becoming a preferred destination for workers seeking jobs abroad. According to the IADB, remittances from the EU to Latin America topped $2 billion in 2002, more than double their level in 2000.

At least 500,000 Latin Americans—mainly from Ecuador, Peru, Colombia and the Dominican Republic—are currently working in Spain, the source of almost half of Europe's worker remittances to the Americas. Smaller, but fast-growing communities of Peruvian and Argentine workers remitted nearly $300 million from Italy.

Chequepoint notes that a comprehensive picture of remittance outflows from the UK and European market to Africa and Eastern Europe is not yet available. Chequepoint has already had contact with HM Treasury, which is carrying out some much needed work on the UK money remittance market. We believe it would excellent news if the International Development Committee could use its influence to highlight the importance of this initiative from a development perspective.

2. UK clearing banks—A vital player

Chequepoint money transfer recognises the fundamental importance of the UK clearing banks in the future development of the UK money transfer industry. Based on a lack of objective information, UK policy makers such as the International Development Committee may have assumed that the UK banks are going a large part of the way to meeting the needs of the ethnic minority and migrant market which needs to send remittances home. Chequepoint knows that this is not the case.

We are certain that the UK banks do not want to meet the needs of ethnic minorities and newly arrived migrants, the very group which most urgently needs to send money remittances back to their countries of origin. From the start, the UK banks make it difficult to open a bank account without ID and proof of address, and these proofs of identity are not always readily available to workers who may be regularly changing both jobs and accommodation. Many ethnic minority and newly arrived workers have been permanently relegated to the status of `unbanked'.

In an environment where the UK banks are, at best, uninterested in transfer business, consumers are inevitable going to turn to bespoke money transfer companies. Here they have a choice between oligopolistic suppliers such as Western Union and Moneygram and the independent money transmitters such as Chequepoint.

As the committee has already discovered, there are some major differences between the oligopolistic suppliers and the independents. Price is the crucial one; for a money transfer of £100, WU will typically charge £14. Independent money transfer companies will charge £5 for a transfer of this amount. Workers on the minimum wage will, for understandable reasons, wish to seek the most cost effective means of getting their money home.

However, on the basis of price, the choice of most ethnic minority and migrant workers is to turn to the independent money transfer operators (of whom there are about 2,000 outlets in the UK). Yet for companies in the independent money transfer sector to operate, they are entirely reliant on the UK banking system. Each money transfer operator is obliged to open a bank account—they are trapped, they have no other choice. The entire independent money transfer market therefore operates at the behest of the banks.

So, whilst the UK banks may not be too concerned to cater to the money remittance market directly, they do have an interest in scrutinising those money transfer companies which they allow to operate. They may seek to close down those companies which they consider to be too successful, and they can use entirely arbitrary and often spurious grounds to do so. Independent money transfer companies have no right of appeal and no right to know why they have been denied a service.

Bearing this in mind, Chequepoint is trying to co-ordinate the development of an Association of independent money transfer companies which will represent the interests of this disparate group. Working with the UK government, we would like to make representations to the banks to establish a code of conduct in their dealings with the independent money transfer companies.

We want to highlight to government in the strongest terms, that, for the on going viability of the UK money transfer market, it is essential that independent money transmitters are seen as a special category; Chequepoint believes the banks should be obliged to answer to an independent authority if they intend to remove banking facilities from an independent money transfer company.

In the event that the UK banks are not able to provide the assurances to the independent money transfer sector which are required, we would ask the UK government to use its influence to assist in the setting up of alternative financial structures (examples of which we would be happy to provide) to guarantee the future of the UK money transfer industry.

Suggestion 2: Chequepoint asks that the International Development Committee use its influence to ensure an open, accessible, transparent and competitive UK banking sector. At present, the attitude of the banks to ethnic minorities/recent migrants (the unbanked), is ambivalent at best and hostile at worst. If the true potential of money remittances as a development tool is to be realized, the UK government (in partnership with independent money transfer companies) must take an initiative with the banks to agree a code of practice that provides an assurance the UK banks will continue to work with the independent money transfer sector and will not withhold services unreasonably. In the event that the UK banks are not able to provide the assurances to the independent money transfer sector which are required, we would ask the UK government to use its influence to assist in the setting up of alternative financial structures (examples of which we would be happy to provide) to guarantee the future of the UK independent money transfer industry.

3. UK Independent Money Transmitters—recognising and valuing their role

Chequepoint is an independent money transmitter and, as such, is a member of a group of money transmitters which is largely run by, and run for, the benefit of the many minority ethnic and migrant workers in the UK. The independent money transfer industry would like to work with the UK government and industry regulators on a number of levels.

Some examples of possible shared objectives might be:

— to establish a code of practice with the UK banks to ensure that they do not close down the accounts of independent money transmitters in an arbitrary way and to ensure they are fair and transparent in their relationship with our sector;

— to increase awareness of the importance of effective competition within the industry and its impact on commission charges and the level of funds sent to developing countries;

— to define a system for reporting transaction volumes (perhaps on a quarterly basis?) to increase data on the volume of transactions flowing through the UK money transfer market;

— to get feedback on suspicious money transfer transactions which have been reported ;

— to widen recognition among the general public of the steps which money transfer companies have taken to improve standards of anti-money laundering compliance;

— to develop a wider awareness of the positive role which money transmitters play in the global economy in transferring financial resources from richer to poorer countries.

To maximise the potential of the independent money transmitters segment, Chequepoint would like to take the lead in setting up an independent money transmitters association, to represent shared concerns. We have already spoken to HM Customs and Excise to see their assistance and, as a member of the Money Service Business Forum, we know that they are committed in principle to seeing such an organisation come into being.

However, for reasons which we do not entirely understand, their involvement has been stalled for a number of months. We would welcome any assistance which the International Development Committee could provide to move this process forward.

4. Increasing competition in the money transfer market—How UK government can help. Chequepoint believes that the remittance system will work better if obstacles, costs and difficulties are removed.

Multiple factors affect the cost of money remittances. To gain a clear understanding of these costs, it is first necessary to understand the remittance process and the participants in the remittance chain. The remittance participants include:

— the sending customer—in the UK;

— the money transfer company—provides the service for sending the money remittance (may include a directly managed network of branches to take remittance orders over the counter from customers);

— the agent— receives the remittance order over the counter from the customer;

— the correspondent—distributes or pays the remittance to the intended beneficiary;

— the beneficiary—usually a recipient in another country.

The money transfer company must factor in the costs of establishing and maintaining an infrastructure sufficient to process remittances in a manner that complies with customer expectations and regulatory requirements. There are several salient infra-structural expenses that account for a substantial portion of recurring expenses for money transfer companies. These include:

1. the cost of developing and updating technologies,

2. the cost of internal accounting for the transaction (booking an Account Receivable from the Agent, and Account Payable to the correspondent),

3. the cost of a collection platform to collect the sterling amount of transfers and commissions paid in by the customer to the Agent,

4. the cost of maintaining a viable Compliance program,

5. the cost of maintaining a directly managed branch network.

From the agent's perspective, the agent must recoup operational costs, including overhead expenses such as rent, payroll and others. In fact, rent and payroll contribute a great deal to the Agent expense structure.

The money transfer company also carries a Point of Sale cost (POS) that includes commission payments to agents where senders pay in the transfer amount and to overseas correspondents who deliver the money to the beneficiary. This cost also includes up to four days in interest finance charges covering the interval between the time the sender pays in the transfer amount and the time the money transfer company collects it at his or her bank account.

Also, the agent and the correspondent relationship affect the actual costs paid by consumers. In turn, these costs are affected by circumstances surrounding the private party negotiations with both correspondents and agents, and the level of competition present in each of the respective markets.

Lastly, the foreign exchange rates applicable to each market greatly impact the costs paid by consumers. Those rates are generally set by the foreign correspondent operating in the countries where remittances are paid out and are generally passed through to the consumer, after handling costs are deducted by the money transfer company, the correspondent, or both.

As in any business or industry, the most effective means to achieve costs reduction is to foster competition. Greater competition would improve the service to the consumer with respect to all three of the performance standards which the consumer cares about: price, speed and security.

Chequepoint believes that one of the major weaknesses of the UK money remittance arena is that the market is dominated by two international companies which have to date created a quasi cartel which, some would argue, has reduced competition and therefore prevented commission charges finding their true level. Based on HM Customs and Excise registrations for money service businesses, Chequepoint estimates that there are 5,000 Western Union agents and 3,500 Moneygram agents. By comparison, there are 2,000 outlets operated by independent money transfer companies in the UK.

Customers therefore have the choice of using Western Union, Moneygram, a number of smaller independent money transfer operators or, perhaps, the UK clearing banks.

On small send amounts, for example, the effects of market domination by the two oligopolistic players is particularly marked. For sums up to £100, a charge of 14% is not uncommon. By contrast, smaller independent operators, charge 5%. The foreign exchange rates of independent money transfer companies are generally 10 to 20% more favourable to the consumer than those of the oligopolistic large company. Some price comparisons are set out in appendices b and c).

We believe that the UK government has scope, relatively easy, to recognize and take action to reduce the monopoly in one area where it has a controlling interest, the Post Office, which, at present, has an exclusive agreement with Moneygram for the purposes of money transfer. We hope the UK government will investigate whether this exclusive agreement is in the interests of the money transfer consumer.

Separately, we believe that attention should be paid to paid to the way in which Western Union is exercising a monopoly in requiring that it's high street agents should sign an exclusivity agreement. We believe this is against the interests of true competition.

We believe that an attempt to increase competition is important, because evidence suggests that increasing competition will have a great impact on the total volume of remittances received in the developing country. As previously, there are no statistics available from the European market place but, as evidence, we can refer to research carried out by the Inter-American Development Bank, which shows that reducing commission charges on a money transfer transaction by 50% would increase the flow of remittances from 7% to 10% of GDP in the receiving country.

Suggestion 4: The International Development Committee should give consideration as to how it can encourage more competition in the UK remittance market place, particularly by breaking down the unnecessary monopolies that exist. All the evidence is that more remittances will flow to developing countries as a result.

5. Regulation—setting an industry standard for money transfer software

Worldwide, the level of regulation has steadily increased for this industry during the past 10 years, particularly post 9/11. We understand that the UK government aims to maintain a regulatory light touch, and we believe that this is in the best interests of consumers and the long term development of the money transfer sector. We would be pleased if the UK government would take the lead in the EU in sponsoring a unifying law for the regulation of the money transfer business, because there is a huge spectrum of regulation at present.

We further believe that for the purposes of monitoring money transfer transactions, the UK government should encourage money transfer companies to pool information on those who are sending money transfers. This would enable for enhanced scrutiny of transactions sent by the same sender through more than one money transfer company. This may include setting a common industry standard for software compatibility.

In terms of a specified software package which delivers a high level of compliance with regulatory requirements, we would draw the attention of the committee to the Worldcash software—(patent application pending). Developed by Chequepoint in house, the software achieves unprecedented advances in technology while offering, for example, tracking and reporting of single or multiple transactions to comply with regulatory needs. The efficiency of the software has been independently audited by international law firm Clifford Chance.

Chequepoint feels that the Worldcash software sets a benchmark in terms of the technology which should be in place to allow the processing of money transfer transactions. We would welcome the chance to demonstrate the Worldcash software to legislators, regulators and those involved in crime prevention.

6. Money remittances—working with Department For International Development to maximise potential at the grassroots in developing countries

We are pleased that the committee has recognized the significant importance of remittances in terms of development. The money which migrant workers send back to their families has a great potential to enhance opportunities and improve quality of life.

Chequepoint believes remittances have further significant benefit which should be of interest to those concerned with International Development. We believe that remittances have within them the means to assist expatriate workers who feel a commitment to the future of their homeland and who wish to make a direct financial investment toward small infra-structural or charitable projects.

As a company, Chequepoint has already taken the lead in supporting charitable projects in the countries where we work. For example, we are providing funds to an orphanage at Manso Agoroyesum in the Ashanti region of Ghana. It is home to 33 orphans aged between 12 and 17 years under the care of Miss Paulina Opei, a matron at St Martin Hospital. Additionally, we are financially supporting Kwaku, a mentally disabled teenager who lives in the village of Hwenampori near Bibiani in the Wiaso district of Western Region. Kwaku's aged parents are crippled and beg for alms at a local market. None of his four siblings has ever set foot in a classroom.

As the next stage, we will allow migrant workers sending money with Chequepoint to earmark a portion of an individual transaction to a specially designated country fund (eg Sierre Leone, Ghana) and even to a specific project in a particular geographic location. The projects will be small enough for the migrant to identify with the benefits generated for the local community and might include schools, irrigation systems, health clinics, etc.

One of the key fundamentals for the success of this initiative will be to identify suitable projects in the target countries and also to ensure that these were promoted to migrant workers in the contributing countries. We are certain that DFID and its voluntary sector partners could help us to identify suitable projects in developing countries.

And, of course, this initiative has the potential to go much further. It would be excellent if DFID would be willing to match-fund, in some way, the contributions made by expatriates. It would be even more advantageous if HM Treasury could be persuaded to see person to person money remittances as some sort of donation and could be encouraged to make them tax-deductible. A full range of options would arise from more detailed discussions with HM Treasury.



© Parliamentary copyright 2004	Prepared 8 July 2004