BY SERGIO BENDIXEN AND DONALD TERRYbendixenonline.com. For the past decade, we have been working together in more than 30 countries on the issue of remittances. Those funds — typically $100, $200 or $300 each month — have become a virtual “river of gold,” adding up to more than $300 billion a year to developing countries, more than all foreign aid and foreign investment combined. Remittances are now widely recognized as key contributors to social and economic development in many poor countries.">BY SERGIO BENDIXEN AND DONALD TERRYbendixenonline.com. For the past decade, we have been working together in more than 30 countries on the issue of remittances. Those funds — typically $100, $200 or $300 each month — have become a virtual “river of gold,” adding up to more than $300 billion a year to developing countries, more than all foreign aid and foreign investment combined. Remittances are now widely recognized as key contributors to social and economic development in many poor countries.">

Cuba Headlines

Cuba News, Breaking News, Articles and Daily Information

Remittances and Cuba

BY SERGIO BENDIXEN AND DONALD TERRYbendixenonline.com. For the past decade, we have been working together in more than 30 countries on the issue of remittances. Those funds — typically $100, $200 or $300 each month — have become a virtual “river of gold,” adding up to more than $300 billion a year to developing countries, more than all foreign aid and foreign investment combined. Remittances are now widely recognized as key contributors to social and economic development in many poor countries.

But, not yet in Cuba.

Relatives abroad send money to family members quietly, through “ mulas” for fear of being charged with aiding the Castro government, while recipients take care in using the funds to avoid being labeled “capitalists.”

All this could change dramatically over the next few months — indeed, the process may have already begun. In January, as a gesture signaling efforts to improve relations with Cuba, President Obama relaxed the restrictions on remittances to the island for the second time in his administration.

The trend toward greater flexibility represents a historic opportunity for Cuba and its people. Cubans living abroad have already been sending home hundreds of millions of dollars a year, mostly from the United States, despite previous U.S. government policies restricting the flow of remittances to Cuba. Family matters.

As in other countries around the world, remittances represent a lifeline for families who depend on this money to cover basic daily needs or to provide a “cushion” for emergencies, including hurricanes or other natural disasters.

At this point in time in Cuba, where the government has announced that almost one million people are to be shifted from the government payroll by the end of March, these remittances could also facilitate the inevitable wrenching transition to the private sector. Experience over the past decade, particularly in Latin America and the Caribbean, has shown that person-to-person transfers are often used to fund small business investments.

Cuba is no different: Limited research has shown that more than a third of Cuban recipients would like to invest a portion of their remittances in some form of business enterprise. Remittances to Cuba are already providing important support to the incipient growth of the micro and small enterprise sector, the most likely source of employment for a growing number of Cubans.

Next month’s Cuban Communist Party Congress provides a historic opportunity for the Castro government to acknowledge the new U.S. remittance policy, and match it with a gesture of its own, to the benefit of the Cuban remittance recipients. Today, remittance delivery in Cuba occurs within a closed and controlled space. According to the Inter-American Dialogue, in 2009, Cuba had the lowest number of remittance service providers in Latin American, and the cost to remit was the highest. According to Cuban regulations, U.S. dollars sent to Cuba can only be paid out at limited locations, where they are further burdened with heavy foreign exchange taxes. This policy discourages the sending of money and stifles formal remittance channels, resulting in the rise of costly and insecure transfer methods.

As many countries in the Western Hemisphere have come to recognize, governments play a key role in fostering secure and efficient remittance delivery. In Cuba, the first steps toward enabling a policy framework for transparent and accessible remittance transfers could include the elimination of disproportionate taxes on small foreign exchange transactions and the encouragement of alternative payment networks throughout the country. Equally important would be a change in government policy to affirmatively encourage the investment of remittances, free of any restrictions.

A commitment from the Cuban government to allow all remittances to enter the Cuban economy freely, unburdened by taxes or other cumbersome regulations, could result in remittances reaching $2 billion to Cuba in the coming years. Relatives abroad would be more likely to send larger amounts if their money could be used to start businesses, meeting the Cuban people’s immediate needs and also contributing to the economic development of the communities where they live.

It could also positively change the relationship of Cuba to its diaspora. The time for the Castro government to act is now.

Source: www.miamiherald.com/2011/03/19/2128051/remittances-and-cuba.html

Related News

Comments