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A hidden world of money transfers

2007-08-23 05:59:45

By Dominic Casciani

BBC News home affairs

You may never take notice of them - but they are everywhere these days in the UK's big cities: the money transfer shops.

And the incredible growth of these businesses is one of the clearest signs of the role migration to the UK has been playing in the complex world of globalised economics.

While the UK government this week publishes its latest annual figures for migration, the money transfer shops and their customers will be quietly getting on with business.

It is these businesses - from the multinational corporations to the small community agent which are the link between many migrant workers in the UK and the families they are trying to support back home.

Every day thousands of people in cities like London use these services to send money to loved ones.

Ali, from Afghanistan, was one of half a dozen queuing at lunchtime in a money transfer shop in west London.

He was sending some 200 (300 euros; $400) to help a friend - a typical sum sent through the largest agents.

He said that his compatriots in the city - not all of whom are here through legal channels - had only one raison d'etre: to earn to send money home.

"Lots of people, especially the Pashtun people from the south of Afghanistan, they just work and send money, they haven't got a life here, they don't want to have a life here," he said.

"When they come to London some of them will work nine months non-stop, day and night, and then for three months they go away to see their families.

"And then they come back - they're just here for the money."

How much money?

Exactly how money is being transferred as "remittances" has proved impossible to establish - but there are estimates.

WHO SENDS HOW MUCH A YEAR?

Up to 100: 9% of senders

100- 200: 13%

200- 300: 9%

300- 400: 6%

400- 500: 11%

Source: ICM/DFID survey

The World Bank has talked about a figure of some US$250bn ( 125bn) worldwide - but that does not even start to take into account the huge network of informal transfers.

The UK's estimated five million plus immigrants are thought to send home approximately $2bn ( 1bn) but even that is guesswork.

Professor David Seddon, formerly of the University of East Anglia and now an independent consultant, has studied remittances and says the market is enormous - and enormously complicated.

Studying just one area of north London in 2006, he found a rapid growth in money transfer businesses serving an increasingly diverse range of communities.

Critically, he said, while the major multinational players like Western Union had a branded presence, many migrants were going to small community agents who combine money transfer with another high street business - such as cheap foreign phone calls or a grocery shop.

High street operators

"The high street [community] operators are proliferating. Some of them serve just one part of the world," he said.

"Then there is a third level of operators on markets or in private houses.

"If you are a Bangladeshi woman who can't speak much English what works for you is an operator where you can buy your veg or do your other shopping and also send small sums home, maybe 20 or 30."

An ICM survey for the UK's Department for International Development found 62% of those questioned used high street agents - but 45% sent money back informally through a relative or friend travelling home.

The sums are small - a third of respondents sent 300 ($600) or less back in two or three lumps over a year.

However, while the principle of remittances is altruistic and strengthens ties among migrant diaspora around the world, Mr Seddon warns that it inescapably affects those sending the money.

"What determines how much gets sent is how much people think they can afford - but they are often bankrupting themselves," he said.

Jarek is a young worker from Poland who saves as much as he physically can to send home to his girlfriend.

He is thinking about their future - not least because the present is not exactly the most comfortable environment.

He said he works up to 60 hours a week in a factory on less than minimum wage after costs, picking up work where he can through an agency.

But when he comes home he gets to work on building websites. The website business makes more money - but he needs the factory work to make the sums add up.

So what sacrifices does he make to send cash home?

Jarek said he lived in a flat with nine other Polish workers, two to a bedroom. They were each paying 55 ($109) a week rent.

His only luxury was his 10-a-month ($20) internet connection, essential for his dotcom dreams.

"It's harder than in Poland but I think about money and the future - it will be better," he told me.