Discussions are underway on a global scale aimed at lowering remittance costs for developing nations, with the Pacific region also taking part in specific initiatives to reach this goal. The Fiji Times has reported that the World Trade Organization (WTO) is working alongside the World Bank, International Labour Organization (ILO), International Organization for Migration (IOM), and the central banks from developing countries to advance the efforts.
Research from the Australia-based Lowy Institute reveals that average remittance expenses for Fiji and Vanuatu, both significant receivers of remittances, were 10.2 percent and 14.0 percent respectively between 2009 and 2022. The United Nations Sustainable Development Goal (UNSDG) 10 aims to cut remittance transaction costs to below 3 percent by 2030.
Christopher Miller, an economist at the World Bank based in Sydney, noted that no Pacific nation has yet achieved this target. He referenced the World Bank’s corresponding banking relationship (CBR) project in the region as a study focused on remittance costs. Highlighting Samoa’s average remittance cost of 8 percent, he emphasized that there remains substantial room for improvement to meet the UNSDG objective.
Miller identified three areas where authorities can have an impact on reducing costs. He mentioned economies of scale as a crucial element, noting that increasing transaction volumes through the CBR project could enhance bargaining power and drive down prices. The introduction of more competition in the remittance space, with several exchange operators already active in the Pacific, could also make a difference.
Additionally, Miller pointed to the need for increased investment in the digital economy. He explained that improving payment system infrastructure and achieving interoperability is essential, as transferring funds digitally is generally more cost-effective than relying on numerous physical agents. He cited Fiji’s recent integration of mobile network operators with the national payment system as a promising step that will facilitate reduced remittance costs by fostering greater competition.
Ambassador Xiangchen Zhang, the WTO’s deputy director general, indicated that discussions remain in the early stages following requests from developing nations for lower remittance expenses. He stated that the next step will involve submitting recommendations to the WTO’s Trading Services Committee to further the conversation on this issue.