Sending money home crucial for many immigrants

Published: Saturday, Dec. 31 2011 8:21 p.m. MST

Rena Lakai, a Salt Lake caregiver, sends about $500 a month back to family members in the Kingdom of Tonga.

Laura Seitz, Deseret News

On a typical weekday, Rena Lakai gets up early and goes to work as a caregiver in Salt Lake, showing up at about 9 a.m. at the homes of her elderly clients, making them food, doing their laundry and then sitting and talking with them until about noon, when her job is done.

Lakai's mind is never far from her family, and each morning as she goes about the duties of her job, she can imagine life on Vava'u, an island in the South Pacific part of the Kingdom of Tonga. If she closes her eyes, she can even smell the rich fragrance of dirt that six of her siblings till every year to farm kava, which is used in a popular drink.

The tiny island nation is beset with poverty, which is why Lakai's six siblings have taken in eight children to feed, clothe and put through school, along with their own. They often ask Lakai help to pay the bills. And so every month, she goes to a nearby Walmart and wires a Moneygram — about $500 a month — to Tonga. On the rural island it takes one of her siblings about an hour and a half to get to the nearest Tonga Development Bank where they can withdraw the cash.

This scenario plays out every day throughout Utah and across the United States, especially in areas with large immigrant populations. It's an important, but often unrecognized, part of the family support structure in many developing countries. It is also an often-overlooked way in which the United States contributes to the developing world.

While the U.S. spends only 0.21 percent of its Gross National Income on official development aid, nearly twice that amount, more than $50 billion, leaves the country in remittances. The U.S. leads the world in remittances — transferring nearly twice the amount abroad than the runner-up, Saudi Arabia. Total world official development aid, $128.7 billion in 2010, pales in comparison to the $325 billion in remittances that go to developing parts of the world. And because of technology, transparency in pricing and competition, sending remittances abroad is getting cheaper.

Lakai is typical of those recently immigrated Americans who send money to family in their ancestral homelands. The oldest of 12, and born in American Samoa, Lakai has lived in Utah for about two years with her parents, a brother and sister and aunts and uncles.

She is part of the more than half of Tonga's population that lives abroad, mainly in nearby Australia and New Zealand as well as the United States. One in four Tongans live in Utah.

Her family's reliance on her work in the U.S. is the norm for many on the island. According to the Migration Policy Institute, a non-profit think tank in Washington D.C., remittances are 30 percent of Tonga's GDP.

Easier to send money

Neil Hamlin is the managing director of Money Move It, a New Zealand company that facilitates online money transfers to more than 30 countries, including Tonga. "We believe you should be able to send money anywhere, any time, for pretty much nothing, and that's what we are working towards. The reason that we exist is because banks were drastically overcharging."

Today, it can cost $10 to $15 to simply do a bank transfer, when only a few years ago it cost around $25.

But sending money to Tonga from Australia or New Zealand using Money Move It is even cheaper — less than $1. The money can be picked up instantly at a Tonga Development Bank, which has branches located around the country, or transferred to a bank account in a couple of days.

Jonathan Capal is the Australian regional manager of Developing Markets Associates Limited (DMA), and has created the site Send Money Pacific, which enables people to compare prices of sending money to the Pacific islands.

Capal thinks that the increased competition and transparency for migrants is upsetting established banks, causing them to slash fees because of competition.

Get The Deseret News Everywhere

Subscribe

Mobile

RSS