Role of remittances

Monday, 7 March 2011 00:17 -     - {{hitsCtrl.values.hits}}

By Uditha Jayasinghe

Daily FT met up with MoneyGram International Regional Director –South Asia Harsh Lambah to talk about the organisation’s presence and intentions in the region as well as how they are planning to capitalise on the passion of cricket. Following are excerpts of the interview:

Q: What does MoneyGram hope to achieve by tying up with the ICC?

A: We are the official money transfer partners of the World Cup and have a contract with them for the next five years. Our sponsorship will also extend to the Champion’s Trophy that will take place in Sri Lanka in October 2012, so we are looking for a long and mutually prosperous partnership with them.

Q: Why cricket?

A: Well, everyone knows how passionate the South Asian region is about the game and it seemed to be the most effective way to get the message of our services across to the people and create awareness of our business. From a market perspective India has the largest share with annual remittances reaching US$ 55 billion and given the current trends it’s reasonable to expect that the numbers will only increase. As the second largest player in the world we are looking to expand by providing our services to these people and cricket is the best platform to do so.

Q: What are your expectations from Sri Lanka?

A: With the end of the war the economic prospects of Sri Lanka have increased remarkably and we expect the number of migrant workers to increase. We have a very strong relationship with all the major banks and they have been expanding aggressively, especially in the north and east and we are also keen to attract more customers by creating awareness of MoneyGram services.

At the moment outside of Colombo the Eastern Province provides us with the largest revenue and we expect this market to grow. Every time a new branch opens it creates hype about our brand and we already have a strategy with the banks on how to tap into increased remittance growth in the north and east. We have introduced programmes such as ‘cash to cash’ and take smaller commissions than Western Union. The latter has 17% of global market share while MoneyGram has 4% but we are confident that we can tap into the enormous potential of the industry.

Q: Migration is a double-edged issue. On one hand the country needs foreign exchange, but brain drain is also a concern. What are your views on this?

A: It is up to the governments of respective countries to outline programmes to deal with this challenge. MoneyGram only concentrates on providing the best services to people to get their hard earned money across to their families at home.

Q: There are also concerns of money laundering and other illegal activities. How does MoneyGram deal with these challenges?

A: MoneyGram works with the regulators of every country we operate in to make sure that all transactions are above the law. We work extensively with international organisations to ensure that best practices and international legal measures are followed. MoneyGram reports to International Finance Units (IFU) that monitors the legal aspects of money transfers. We take every possible precaution to ensure that our transactions are done according to local regulations as well as international laws.

Q: How do you feel the Middle East crisis will affect the remittance market?  

A: You would be amazed at how versatile workers from South Asia are, they can be found everywhere! If jobs in the Middle East are scarce then they will simply find employment elsewhere. MoneyGram is very bullish about remittance growth in this region and we are fully confident that our expectations will be fulfilled. At present our largest market is the US but with economic power shifting to Asia there could be a change in remittance flows; however the growth momentum will be maintained.