Project Greenback 2.0: New Initiative for Improving Remittance Services
Albanian Daily News
Published March 22, 2018
Remittances are still a significant source of income in Albania, estimated at 9 percent of the country's GDP. With high transfer costs and lack of proper services however, they are not leveraged properly. In response to this the World Bank announced on Wednesday a new initiative to increase awareness and improve services in this sector. Project Greenback 2.0 was launched at the Bank of Albania as part of the Remittances and Payments Programme funded by the Swiss State Secretariat for Economic Affairs (SECO) with the purpose of improving retail payments and the efficiency of remittance flows into several countries.
"By increasing financial literacy and improving financial services for both senders and receivers this programme contributes to improve the efficiency and the functioning of Albania's financial market and economy", said Swiss Ambassador Christoph Graf during his speech. "A full success can, however, only be achieved if both providers of remittance services and authorities in the country are involved, including local governments", added Ambassador Graf.
First Deputy Governor of the Bank of Albania, Ms. Elisabeta Gjoni in her opening remarks emphasised the importance of migrant remittances for the Albanian economy both in macroeconomic terms and at the microlevel for the families. She mentioned the contribution of remittances in consumption for more than one third of Albanian families which channel these funds for goods, education, healthcare and to a lower degree for investment.
"Today remittances are gaining special attention at an international level in the context of sustainable economic development. Furthermore, given that they are particularly important for the Albanian economy, we invite everyone to continue this fruitful cooperation we have had so far in order to achieve a successful completion of this project," Ms. Gjoni said.
In terms of the potential that remittances represent, Deputy Governor Gjoni emphasised the need of more active participation from the banking and financial sectors while considering a potential expansion of their activities. She highlighted the need for cost reduction for incoming migrant remittances - currently much higher than the objectives set by international organisations (G8, G29, United Nations, and World Bank). Ms. Gjoni concluded by thanking the World Bank for the effective cooperation in the context of payment systems for a series of concrete projects and the Swiss State Secretariat for Economic Affairs SECO for financing specific projects, as well as the Swiss
Ambassador to Albania for his active support for Bank of Albania projects. Whereas Ms. Johanna Jaeger, World Bank representative, focused on the benefit offered by these incoming flows for families in the context of well-being dhe the elimination of social inequalities. Ms. Jaeger also stressed the need to reduce transfer costs for migrant remittances in Albania.
On behalf of the project, Céu Pereira, Senior Financial Sector Specialist at the World Bank, said: "Greenback 2.0 was designed to help remittance senders make wise choices when sending money back home,"
Project Greenback 2.0 selects 'champion cities' to change financial and remittance habits and raise awareness of best practices. In Albania it started in Berat with a focus group study in order to learn how remittances are transferred and could improve. The findings from focus groups with returning migrants were presented at the event indicating that they mostly use unregulated channels and in some instances money transfer operators to send money back home.
The project works by linking senders and receivers of remittances, public authorities and service
providers. It selects cities for implementing financial education activities and establishing market-led
good practices. For many migrants, the high costs associated with transfers and lack of awareness of different remittance channels means wasted time and resources. By involving service providers in this sector, the project will encourage them to adjust their offerings to migrants' needs.
Until now the project has improved financial behavior among migrants in cities such as Turin in Italy, Montreuil in France and Johor Bahru in Malaysia. A more efficient use of remittances and reduced costs have been reported among migrant communities in these cities. Albanian migrants bear higher transfer costs reaching almost 8.5% of the amount sent while the average cost in Europe and Central Asia is 6.6% and the global average is 7.1%.