Joseph Afrane wears a Santa hat in December to cheer up customers at the supermarket where he is a security guard.
Joseph works six days a week until 11pm. Once a month he travels to First African Remittances in Balham and transfers money to family in his native Ghana.
An estimated 10 per cent of the world’s population has given or received a remittance. Joseph’s cash is part of the UK’s £15bn annual outflow, the majority of which goes to developing countries.
Every pound matters, so Joseph was interested when – as his local councillor – I told him about the transfer tax campaign launched this week by Tessa Jowell. The eye-catching campaign targets the high fees charged on money transfers, particularly to Africa.
Jowell says: ‘People who earn money to send to other countries are being ripped off by an excessively high ‘transfer tax’ – with fees and charges of up to 20 per cent being creamed off by banks and the two big transfer companies, MoneyGram and Western Union, who control the market.’
The G8 pledged to take action to reduce fees to a maximum of five per cent by November 2014. ‘But nothing has happened. If they had acted, consumers in the UK would save £145m a year in charges on transfers to Africa alone.’
More than a third of Londoners were born overseas. Last month I officiated at a citizenship ceremony in Wandsworth town hall, welcoming new British citizens from America, Russia, Ethiopia, Libya, Pakistan, South Africa and New Zealand. Men and women from 118 different countries took the oath in Wandsworth last year.
The idea of moving to Britain for a better life and sending money home is, of course, not a new one. My father’s generation of Irishmen worked hard enough that in the 1960s remittances made up three per cent of Ireland’s gross national income.
Britain’s overlapping waves of migration have left a complicated picture. Jowell points out, ‘The majority of people transferring money abroad are not mostly migrant workers, but second and third generation established communities who maintain a strong link with relatives abroad.’
The campaign calls for transfer companies to halve the highest fees in the run-up to Christmas and then look at a more permanent reduction. This is reasonable but large operators will point to the costs of dealing with overseas partners and the burden of regulations to counter money laundering. MoneyGram and Western Union would be wise to cooperate: Jowell has already labelled them ‘the international Wonga’.
The World Bank predicts that remittances to developing countries will total £278bn this year. This is more than three times the global aid budget.
Importantly, Jowell views the campaign as a fight for Londoners’ consumer rights rather than an international development issue. ‘At a time when our national discourse is dragged ever rightward by Nigel Farage and his band of discontents, it is important that as progressives we stand up and defend the benefits that migration brings to the UK, and stand beside them if they are being ripped off.’
The campaign, Jowell’s first since she declared her intention to run for mayor of London, is bold and deserves to succeed. It bypasses ‘community leaders’ – and indeed the Labour party itself – to reach out directly to London’s cooks, cleaners and nurses.
In the longer term, technology may solve the transfer tax issue. Three-quarters of adults in sub-Saharan Africa do not have access to a bank account and many have found their own alternatives.
In Kenya, 75 per cent of adults use M-Pesa, a form of mobile money sent from phone to phone by text reports the Economist. It is estimated that up to half of the country’s GDP flows through it.
Back in the supermarket, Joseph complains that his friends in Croydon are charged a third more than he is to send money back to Ghana. One of his colleagues joins in to say he sends money back to Pakistan and a third supermarket worker says he remits to Bangladesh. They compare fees, which vary widely.
All three were pleased that Labour was campaigning on the issue. ‘The Labour party can help people support their families,’ says Joseph. ‘Cut the fees, everybody will benefit from it.’
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