Steve Quayle News Alerts

November 25, 2003
By Sandra Hernandez, Staff Writer

At the end of each month, Fort Lauderdale construction worker Fernando Flores wires $800 back home to Hidalgo, Mexico -- a lifeline that keeps his brothers afloat.

He is hardly alone. A study released Monday confirms the money Flores and other immigrants send home is keeping families from going hungry and Latin America's economies from sinking.

Almost 6 million or 42 percent of Latino adult immigrants in the United States send money home, and those remittances added up to a $30 billion boost to the economies to the south, according to a study released Monday by the Pew Hispanic Center and the Inter-American Development Bank. That figure is up from 2002, when foreign-born Hispanics in the United States sent about $25 billion to relatives back home.

While the growing numbers reflect a staggering increase that now makes the flow of money from north to south the largest single remittance channel in the world, it also reflects how until recently this billion-dollar a year industry existed below the radar of government and banking officials.

The study, based on interviews with 9,000 immigrants in the United States, shows that the cash sent by individuals far surpasses the official U.S. aid including loans sent to Latin America and the Caribbean, a figure that totaled $5 billion in 2000.

"Remittances dwarf any form of foreign assistance from both the U.S. and through the Inter-American Bank and the World Bank," said Donald Terry, manager of the Inter-American Bank's Multilateral Investment Fund, or MIF. "If the remittances were to stop, some economies of Latin America would collapse."

The report comes at a time when increasing attention is being paid to immigrants and the economic role they play at home and abroad. As U.S. aid goes east to Iraq, Afghanistan and Israel, Latino immigrants in the United States are keeping the shrinking economies of their countries afloat on their sweat.

One reason for the explosion in the flow of remittances is Latin America's economic slowdown. The region's economy slipped during the 1990s, failing to produce enough jobs and pushing thousands of Latin Americans to migrate to the United States and elsewhere.

Families in Latin America and the Caribbean are being sustained by relatives in the United States who often earn less than $30,000 a year, but still manage to send an average of $100 to $300 at least once a month, the study found.

"These families are one big transnational unit," said Roberto Suro, director of the Pew Hispanic Center. "These families are separated by geography but their emotional ties and economic ties are very much intact with the family members here supporting the family back home."

Mexico, with the largest immigrant population in the United States, is the largest recipient of remittances in the region. Mexicans living abroad sent more then $10 billion last year, with about $1 billion from Florida, according to experts.

While remittances continue to play a significant role in Central America and Mexico where civil wars and economic turmoil pushed thousands to leave, the money also is playing an increasingly important role in South American countries such as Ecuador, the study found.

South America's once stable economies became vulnerable as foreign investment dropped. Depressed markets and political turmoil in places such as Colombia, Venezuela and Argentina pushed workers to emigrate as a way to help relatives back home, according to experts.

In Ecuador, the political crisis and depressed oil market has led to a recent exodus of immigrants who are leaving in order to send money back home, the study found.

Almost 14 percent of all adults in Ecuador receive remittances, according to the study.

In four countries in Central America -- Guatemala, Honduras, El Salvador, and Nicaragua -- remittances account for 10 percent of their gross domestic product, Terry said.

In El Salvador, which is expected to receive about $2.2 billion this year, remittances exceed foreign aid and private investment, Terry said.

But the report reveals only a partial story.

In South Florida, where growing numbers of Colombians, Venezuelans, Mexicans and other Latin Americans have moved in recent years, remittances are a way of life.

"Just about everyone I know sends money back home," said Hernan Segura, 49, a Colombian immigrant who moved to Weston 16 months ago. "The money helps pay for everything -- food, schools, everything."

A thin man, Segura works three jobs including a few hours as a landscaper and full time as a janitor to send $500 monthly to his wife and two teen-age children in South America.

Like many immigrants, Segura relies on money transfer companies to send his monthly remittance.

"I don't really trust the banks. I don't want any problems," said Segura, adding that in Colombia, where kidnappings are commonplace, $500 in a bank account could attract unwanted attention.

"It is just easier and I feel more comfortable with it,'' Segura said.

In fact, nearly 70 percent of senders use wire or money transfer companies such as Western Union or Money Gram to send money south, the report found.

"The No. 1 reason people use money transfer companies is they can't open a bank account because they don't have [immigration] papers," said Sergio Bendixen, the Coral Gables-based pollster who oversaw the interviews used in the study.

That fear is what keeps Julio Pacheco, an undocumented immigrant, from going to a bank when he sends money to his family in Hidalgo, Mexico.

"I don't have papers and I don't want any problems so I don't go to the bank," Pacheco said during a break from his job at a Fort Lauderdale construction site.

For other immigrants, wire transfer companies offer a cheaper and more efficient way of sending money home, especially to rural areas.

"The No. 2 reason is [immigrants] fear the monthly fees and they don't ever get together the minimum deposit to open the account. And in some banks ... they have found delays they don't find with some of the money transfer companies," Bendixen said.

While the increase in remittances is good news for Latin America, this booming business is also capturing the attention of Wall Street and local merchants who hope to grab a share of this lucrative market.

"When we started out in 1999 we were doing about 12,000 transactions per month and now we are doing about 25,000 to 26,000 transactions a month," said Alejandro Murcia, president of Efectivo Money Transfer Corp.

Last year, the Doral-based company transferred about $78 million from immigrants in Florida and other states to Latin America.

These staggering figures are also attracting the attention of legislators, some of whom worry immigrants may be paying more than they should to send money home.

This year, U.S. Rep. Luis Gutíerrez, D-Ill., co-sponsored a bill that would require financial institutions including money transfer companies to disclose the costs of wiring money and the exchange rates used in any transaction.

The bill's authors said it would allow immigrants to shop around and compare fees and exchange rates before they send money.

The proposal is in the Committee on Financial Services in the House of Representatives and unlikely to go to a vote before next year.

Still, talk of new regulations and new laws seems distant to some immigrants who say they will stick to the routine that has made them a part of their families' lives back home.

Sandra Hernandez can be reached at shernandez@sun-sentinel.com or 954 385 7923.

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