Record remittances reaching fewer households
Crystal, at twenty-something, is unabashed about her lifestyle.
She is one of thousands of Jamaicans who depend on remittances from overseas for living expenses.
But Crystal, whose real name is masked to protect her privacy, does not totally fit the imagery that central bank statistics evoke of remittance recipients as households or family members receiving funds from relatives working and/or resident overseas.
She is a social media influencer resident in Kingston, but depends on money transfers from partners to finance her stylish lifestyle. The pandemic, however, has been forcing her to adjust.
“At first with the pandemic, it affected me but now it’s kind of okay,” she says.
“Years ago, I basically had generous people sending me money and also my ex. But I got blocked from Western Union and MoneyGram and had to use other payment methods, like banks to get cash.”
Crystal’s experience speaks to a trend that consumer confidence polls have started to detect.
Remittances, which represents the largest flow of foreign exchange into Jamaica, are not only on the rise but consistently setting new records since the pandemic.
On the face it, the larger flows should mean more persons are recipients, but in the confidence surveys released this year, there has been a notable drop in the number of households that say they are benefiting from remittances.
“At the moment it is something that we have noticed very carefully, and we are concerned,” said pollster Don Anderson, whose firm Market Research Jamaica conducts quarterly business and confidence surveys on behalf of the Jamaica Chamber of Commerce and the Jamaica Conference Board.
Market Research Services has been tracking remittances in the surveys for 12 years. Its most recent survey for the first quarter of 2022 suggests a 10-point drop in recipients since the pandemic. It found that 25 per cent of households received remittances in the period, down from 29 per cent in 2021 and 35 per cent in 2020.
“We cannot yet identify what the factors are. I think we will have to independently assess the situation from surveys we do on a normal basis,” Anderson said on Tuesday at the release of the quarterly survey results and confidence indices.
Prior to the pandemic, between 33 per cent and 38 per cent of households were saying they receive remittances.
The falloff is significant, especially juxtaposed against the expanding remittance market that has seen a 45 per cent jump in inflows over the two years of the pandemic, central bank data indicates.
In 2020, remittances jumped a new record of US$2.9 billion, up from US$2.4 billion, then overtook that in 2021 with inflows valued at US$3.5 billion.
Crystal is not focused on those big numbers, however.
She’s been making plans to start her own online business.
“I am supposed to meet with someone today to join my company,” she said on Friday. “I expect to start earning more cash from my business and reduce my need for remittances.”
Both the central bank and remittance service providers have theorised that the market has benefited from two new factors: reduced travel under the pandemic, which meant that cash that would normally have been passed on in-person by visiting relatives was being sent via official remittance channels instead; and the rise of online remittance platforms, making it more convenient to transmit cash.
Anderson will seek to uncover whether persons are understating their financial position, or if the rise in the official remittance data relates in part to business transactions that enter the remittance pool inadvertently.
Remittances are essentially a gift sent from one party to another, or ‘the transfer of wealth from one pocket to another’, a remittance expert explained, speaking on condition of anonymity because he was not authorised to comment. It isn’t supposed to be payment for a good or service, even if the funds are sent through one of the six major money transfer service providers, the person said.
The Bank of Jamaica, BOJ, which oversees the remittance market, had indicated before the world faced the pandemic that it was studying how it counts remittances and whether it should adjust that model for a more accurate count.
The central bank has not said what, if anything, came of that study.
On Tuesday, Anderson indicated that his team was interested in finding out answers to questions such as ‘why is this reduction taking place’, and ‘where is it taking place’ and ‘household income’.
“We are in the field at the moment, and we are going to try to find out from consumers what we can by adding a question somewhere along the line,” Anderson said.
“We have to probably independently assess the situation in surveys that we do on a normal basis,” he said.
The pollster said Friday his team will be asking the clarifying questions in the current round of surveys being conducted for the second quarter confidence indices.