Ethnic Minority Families in London Send Money Home to Fight Poverty

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By Adebayo Somuyiwa

Published: November 6, 2009

Ethnic Minority Families in London Send Money Home to Fight Poverty

By Adebayo Somuyiwa/London

A New survey reveals a third of ethnic minority families in London send money home to Africa and Asia to fight poverty.

More than a third of ethnic minority households, who responded to a UK-wide survey, sent an average £870 back home to their families living in some of the poorest parts of Africa and Asia in 2008, according to a new report published today by the Department for International Development. The research is the most comprehensive look at the private money transfer habits of Britain’s Asian, African, Caribbean and Chinese communities. Nearly half (45%) of the UK’s ethnic minority population live in London.

 Gareth Thomas, Minister for International Development said: “Sending money home to families in developing countries plays a vital role in helping to tackle poverty, but until now there was little detailed information on what contribution ethnic minorities in the UK made.
“This new survey fills this gap, and improving understanding will help banks, community groups and financial service providers offer more options to people wishing to send money home to relatives.”

 Tony Olabowale, who lives in London, sends money to his family in Nigeria. He said:
“I send money to my family in Nigeria as often as I can afford to. The money helps to pay for food and medical bills which really make a difference to their lives. It’s important that I can send this money safely and that it arrives quickly. I’d like to see the commission charges come down so that more of the money gets to my family. Lower commission charges would enable more people to use this method of transfer. With a higher volume of transfers banks would make money and the sender and receiver are happy.”

Finding shows that about 38 per cent of ethnic minority households who responded to the survey sent an average of £870 back home last year, the equivalent of an overseas holiday;
of the 50 plus developing countries receiving money from the UK, the five largest recipients were Nigeria, India, Pakistan, Jamaica and Ghana. The average income of the senders, according to finding, is £22,000 and 70 per cent are between 25-44 years old;
 In almost 50 per cent of cases people were sending money to their parents, another 25 per cent to other close relatives like cousins and 15 per cent were sending money to spouses and children.
Investigation revealed that  31 per cent of senders said the money would be used to buy food, 21 per cent said it would help with medical bills and 17 per cent reported the funds would help pay for schooling; and  80 per cent said the money would make a real difference to the lives of their relatives back home.

A typical South Asian family sent an average of over £1000 back home in 2005 but African households are not far behind with £910. Those communities sending below the £870 overall average included Black Caribbean and Chinese. The reasons for the differences are likely to be different family structures, migration and employment patterns.

The research found that the most important factor for people when deciding how to send money home was whether it would arrive safely. But almost a quarter of those questioned did complain that charges seemed too high.

Many poor countries receive more in money sent back by relatives than they do from overseas companies investing in the local economy. For instance, Ghana receives around 10-15 per cent of its national income from remittances sent from around the world, compared with around 3 per cent from foreign investment. The survey also indicates that 15 per cent of people exclusively used informal methods, such as sending money with friends or relatives travelling back home.

 The Department for International Development helped set up the UK Remittances Task Force which includes members from the British Bankers’ Association, Barclay’s bank, the Post Office, MoneyGram International, VISA Europe and ICICI Bank. The task force is looking at reducing barriers and costs to remittance flows, improving data and reducing barriers for firms to enter the remittances market. It will present its findings in a report to the government early next year.
Remittances help reduce poverty. According to reported research by the World Bank remittances have helped cut the share of poor people in Uganda by 11 per cent and by five per cent in Ghana.

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