A Changing World
COVID-19 has impacted supply chains and is crippling economies across the globe.
Larger countries who were key players in the global trade industry have shown their weak spots. They are now trying to focus on their own economic survival.
The global pandemic shows the importance of Business New Zealand resetting their focus when it comes to investment and importing.
Loss of Income
The Pacific has been affected heavily in two main areas of income – the loss of tourism dollars and remittances.
World Bank Group President David Malpass has spoken about how remittances are a vital source of income for developing countries.
He says “the ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies.”
Remittance flows to the Pacific grew by 2.6 percent to $147 billion in 2019. However, the World Bank predicts global remittances will decline sharply by about 20 percent in 2020. This is due to the economic crisis induced by the COVID-19 pandemic and shutdown.
The projected fall would be the sharpest decline in recent history and is largely due to a fall in the wages and employment of migrant workers.
Making remittances easier to access
Migrant workers are more vulnerable to the loss of employment and wages during an economic crisis in a host country.
This is why, the Pacific Islands Forum Secretariat and the governments of Vanuatu, Tonga and Fiji joined a global call to action to policymakers, regulators and remittance service providers to improve migrants’ access to sending and receiving remittances, and to reduce transfer costs during the ongoing COVID-19 pandemic.
The goal of the call to action, Remittances in Crisis – How to Keep Them Flowing, is to remove the obstacles that migrants and their families face when sending and receiving money, so that they can continue to cover basic needs and services such as food, housing, education and health care.
Keeping Costs Down
Before COVID seasonal workers would send remittances in cash, with receivers also collecting cash.
The lockdowns and ensuing restrictions mean that both sending and receiving locations are finding it more difficult to operate.
This is taking a grave toll on the economy with the flow on effect for small to medium businesses in the region.
In addition, costing around sending remittances is almost 10 percent, far above the goal the UN Sustainable Development Goal of reducing transaction costs to under three percent.
It is promising to see that there has been a rise in the number of digital transactions.
This is good on two fronts, it takes into the account the high likelihood of a restricted COVID lifestyle for the future and, digital transactions are cheaper.
Telco Partners to help Augment Digital
In Fiji, Vodafone partnered with the Pacific Financial Inclusion Programme. They offered to waive all fees from May 14, 2020 until July 13, 2020 for both domestic and international remittances that are made using the M-PAiSA payment platform.
This initiative builds on the longstanding Innovation Lab partnership between Vodafone and PFIP, a programme jointly administered by the United Nations Capital Development Fund (UNCDF) and the United Nations Development Programme (UNDP).
Now they are in discussions with the Tongan Development Bank to extend this into Tonga.
In Vanuatu, there has already been a considerable effort to drive down the cost and increase the ease of sending remittances over the past few years.
The National Bank of Vanuatu has undergone a digital transformation and developed features aimed at helping seasonal workers to send money home.
At the end of 2019 Vodafone Vanuatu launched a mobile money wallet offering cheaper domestic remittances.
Future-proofing the Blue Pacific
Tourism will always be a large source of income for the islands. But the key to survival, and to success, is being prepared.
The Blue Pacific needs to arm itself financially and prepare for the next crisis that may shut borders.
We should continue to work on digital options which will help in living in this COVID-world.