Tongan remittances: Channels, costs, and the potential gains from switching

Crawford School of Public Policy | Development Policy Centre

Event details

ACDE Seminar

Date & time

Tuesday 30 April 2024
2.00pm–3.30pm

Venue

Seminar Room 7 JG Crawford Building and Online Zoom

Speaker

Ryan Edwards, Deputy Director, Development Policy Centre

We combine new survey data with a market audit of remittance costs to examine the inward remittance market in Tonga, where remittances are almost equal to half of the country’s GDP. We find that, contrary to popular belief, there are plenty of low-cost options for remitting to Tonga and other Pacific countries, and that cost rankings are generally stable over time. Households’ remittance channel choices lead to higher realised costs due to the large gaps between high and low-cost service remittance service providers (RSPs). People choose high-cost providers mainly for their perceived ease of use but can gain more than 2 percent by switching to the lowest-cost provider. A recent shift from cash to online transfers and mobile money is mostly explained by exposure and information: migration experience, regular remittances, and being from the more developed main island. Together, the gains from switching and malleability of RSP choice highlight the large unrealised gains from interventions to help people more quickly shift to lower-cost RSPs.

Updated:  19 May 2024/Responsible Officer:  Crawford Engagement/Page Contact:  CAP Web Team