Apr 19, 2018 News
Remittances play an important role in Guyana’s economy. In fact, 2015 figures show that cross-border remittances to Guyana were equivalent to 9.3 percent of the nation’s Gross Domestic Product (GDP).
However, a crucial report by Central Bank notes that the cost of sending remittances to Guyana is unusually high, especially for Latin America. Officials of the Bank said that the average cost of an inbound remittance from the United States to Guyana was 8.7 percent in the second quarter of 2016. They said that this is well above the Latin American average of 6.0 percent and the global average of 7.6 percent for the same period.
Central Bank said, too, that the lack of competition in the remittance market is believed to be one of the factors contributing to both the high cost and limited access of remittance services.
Furthermore, the Bank noted that two large regional remittance companies dominate the market: Massy and Grace Kennedy.
The Bank said that each functions as an exclusive super-agent of a major international Money Transfer Organization (MTO). Likewise, the Bank said that each operates in Guyana through a network of around 50 exclusive sub-agents.
It said, “Massy and Grace Kennedy provide their agents with the equipment they need to conduct remittance transactions. The agents provide the liquidity, upfront, to conduct cash-in and cash-out remittance transactions for their customers.”
“The sub-agents are reimbursed, typically on a daily basis, by the super-agent with whom they work. Both Massy and Grace Kennedy conduct unannounced visits to their agent locations to monitor operations and performance.”
The Bank said that these two dominant firms, along with three other entities, are licensed as Money Transfer Agents (MTA) by the Bank of Guyana under the MTA Act.
Central Bank noted that the MTA licence only covers the provision of cross-border transfers. Other services provided by the MTAs, i.e., domestic remittance and bill payment services, are not covered by the MTA Act or any other legal provisions. Be that as it may, the Bank said that the provision of these other payment services is neither legal nor illegal.
The report by the Bank goes on to state that physical access to remittance services is relatively limited, and remittances remain almost exclusively cash-based.
In terms of access, the Bank of Guyana report said that remittance customers report that it takes an average of 20 minutes to reach an agent location. The report said that this is longer than it takes the average resident to reach an ATM or a bill collection office, and the same amount of time it takes to reach a bank branch.
Given the importance of remittances to the economy and as a source of income to residents, Bank of Guyana said that agent locations appear to be more difficult to reach than would be expected.
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