Sending money home
A. Every year millions of migrants travel vast distances using borrowed money for their airfares and taking little or no cash with them. They seek a decent job to support themselves with money left over that they can send home to their families in developing countries. These remittances exceeded $400 billion last year. It is true that the actual rate per person is only about $200 per month but it all adds up to about triple the amount officially spent on development aid.
B. In some of the poorer, unstable or conflict-torn countries, these sums of money are a lifeline – the only salvation for those left behind. The decision to send money home is often inspired by altruism – an unselfish desire to help others. Then again, the cash might simply be an exchange for earlier services rendered by the recipients or it could be intended for investment by the recipients. Often it will be repayment of a loan used to finance the migrant’s travel and resettlement.
C. At the first sign of trouble, political or financial upheaval, these personal sources of support do not suddenly dry up like official investment monies. Actually, they increase in order to ease the hardship and suffering of the migrants’ families and, unlike development aid, which is channelled through government or other official agencies, remittances go straight to those in need. Thus, they serve an insurance role, responding in a countercyclical way to political and economic crises.
D. This flow of migrant money has a huge economic and social impact on the receiving countries. It provides cash for food, housing and necessities. It funds education and healthcare and contributes towards the upkeep of the elderly. Extra money is sent for special events such as weddings, funerals or urgent medical procedures and other emergencies. Occasionally it becomes the capital for starting up a small enterprise.
E. Unfortunately, recipients hardly ever receive the full value of the money sent back home because of exorbitant transfer fees. Many money transfer companies and banks operate on a fixed fee, which is unduly harsh for those sending small sums at a time. Others charge a percentage, which varies from around 8% to 20% or more dependent on the recipient country. There are some countries where there is a low fixed charge per transaction; however, these cheaper fees are not applied internationally because of widespread concern over money laundering. Whether this is a genuine fear or just an excuse is hard to say. If the recipients live in a small village somewhere, usually the only option is to obtain their money through the local post office. Regrettably, many governments allow post offices to have an exclusive affiliation with one particular money transfer operator so there is no alternative but to pay the extortionate charge.
F. The sums of money being discussed here might seem negligible on an individual basis but they are substantial in totality. If the transfer cost could be reduced to no more than one per cent, that would release another $30 billion dollars annually – approximately the total aid budget of the USA, the largest donor worldwide – directly into the hands of the world’s poorest. If this is not practicable, governments could at least acknowledge that small remittances do not come from organised crime networks, and ease regulations accordingly. They should put an end to restrictive alliances between post offices and money transfer operators or at least open up the system to competition. Alternately, a non-government humanitarian organisation, which would have the expertise to navigate the elaborate red tape, could set up a non-profit remittance platform for migrants to send money home for little or no cost.
G. Whilst contemplating the best system for transmission of migrant earnings to the home country, one should consider the fact that migrants often manage to save reasonable amounts of money in their adopted country. More often than not, that money is in the form of bank deposits earning a tiny percentage of interest, none at all or even a negative rate of interest.
H. If a developing country or a large charitable society could sell bonds with a guaranteed return of three or four per cent on the premise that the invested money would be used to build infrastructure in that country, there would be a twofold benefit. Migrants would make a financial gain and see their savings put to work in the development of their country of origin. The ideal point of sale for these bonds would be the channel used for money transfers so that, when migrants show up to make their monthly remittance, they could buy bonds as well. Advancing the idea one step further, why not make this transmission hub the conduit for affluent migrants to donate to worthy causes in their homeland so they may share their prosperity with their compatriots on a larger scale?
Questions
Questions 1–7:
Reading Passage 1 has seven paragraphs, A–G.
Choose the correct heading for paragraphs B–H from the list of headings below.
Write the correct number, i–x, in boxes 1–7 on your answer sheet.
List of Headings
i. Stability of remittances in difficult times
ii. Effect of cutback in transaction fees
iii. Targeted investments and contributions
iv. Remittances for business investment
v. How to lower transmission fees
vi. Motivations behind remittances
vii. Losses incurred during transmission
viii. Remittances worth more than official aid
ix. How recipients utilise remittances
x. Frequency and size of remittances
xi. Poor returns on migrant savings
Example: Paragraph G xi
1. Paragraph A
2. Paragraph B
3. Paragraph C
4. Paragraph D
5. Paragraph E
6. Paragraph F
7. Paragraph H
Questions 8–13:
Complete the summary below.
Choose NO MORE THAN TWO WORDS from the passage for each answer.
Write your answers in boxes 8–13 on your answer sheet.
Countries are unwilling to enforce lower transaction fees as they are worried about 8 ……………….., and villagers lose out when post offices have a special relationship with one particular money transfer agency.
Each remittance might be small but the total cost of remittance fees is huge. Governments should 9 ……………….. on small amounts and end the current post office system or make it more competitive. Another idea would be for a large non-profit association, capable of handling complicated 10 ……………….. to take charge of migrant remittances.
Migrants who send money home are able to save money, too, but it receives little or no interest from 11 ……………….. . If a country or organisation sold bonds that earned a reasonable rate of interest for the investor, that money could fund the development of homeland 12 ……………….. .The bonds could be sold at the remittance centre, which could also take donations from 13 ……………….. to fund charitable projects in their home country.
ANSWERS
Questions 1–7:
1. x
- It is stated in paragraph A that: “Every year millions of migrants travel vast distances using borrowed money for their airfares and taking little or no cash with them. They seek a decent job to support themselves with money left over that they can send home to their families in developing countries. These remittances exceeded $400 billion last year. It is true that the actual rate per person is only about $200 per month …”
- This paragraph discusses how many migrants send money back (= remit) to their home country each year and the total amount of money of those transactions/remittances.
- The answer is – x (Frequency and size of remittances)
2. vi
- This paragraph discusses the reasons why migrants send remittances: “…The decision to send money home is often inspired by altruism – an unselfish desire to help others. Then again, the cash might simply be an exchange for earlier services rendered by the recipients or it could be intended for investment by the recipients. Often it will be repayment of a loan used to finance the migrant’s travel and resettlement.”
- Thus, there are several reasons why migrants are motivated to send money back home (= send remittances).
- The answer is – vi (Motivations behind remittances)
3. i
- It is stated that: “At the first sign of trouble, political or financial upheaval, thesepersonal sources of support do not suddenly dry up like official investment monies”.
- Thus, during times of difficulties (= trouble, such as political or financial crises), official investment ceases/stops/dries up. However, remittances from migrants do not stop, they continue in a relatively stable way, or even increase to help families back home in difficult times.
- The answer is – i (Stability of remittances in difficult times)
4. ix
- This paragraph discusses how people who receive remittances (= recipients) use (= utilise) the money: “It provides cash for food, housing and necessities. It funds education and healthcare and contributes towards the upkeep of the elderly. Extra money is sent for special events such as weddings, funerals or urgent medical procedures and other emergencies. Occasionally it becomes the capital for starting up a small enterprise.”
- The answer is – ix (How recipients utilise remittances)
5. vii
- It is stated in the topic sentence that: “Unfortunately, recipients hardly ever receive the full value of the money sent back home because of exorbitant transfer fees.”
- This means that recipients often don’t get the full amount of money that is sent to them by the migrants.
- The paragraph then lists the reasons why that may happen: “Many money transfer companies and banks operate on a fixed fee….Others charge a percentage….”
- Therefore, because of these bank fees for the transfer/transmission of money back home, people do not receive all the money sent to them by the migrants. Some of the money is lost because of the bank charges.
- The answer is – vii (Losses incurred during transmission)
6. v
- The paragraph discusses the ways to reduce transmission fees: “If the transfercost could be reduced to no more than one percent, that would release another $30 billion dollars annually […].
- In the rest of the paragraph different alternatives to lower transmission fees are suggested: changing the regulations to make them easier, more competition between money transfer companies, or a non-profit organisation to help migrants to send money home free of charge.
- to lower transmission fees ~ the transfer cost could be reduced
- The answer is v (How to lower transmission fees)
7. iii
- The paragraph discusses the investments that a country or an organization can make as well as the money that migrants, especially affluent ones, could donate to their country: “If a developing country or a large charitable society could sell bonds with a guaranteed return of three or four per cent on the premise that the invested money would be used to build infrastructure in that country, there would be a twofold benefit. Migrants would make a financial gain and see their savings put to work in the development of their country of origin.”
- Thus, by investing in these bonds, migrants would make extra money and also contribute to the development of their home country, because the investments would be targeted at building infrastructure there.
- The answer is iii (Targeted investments and contributions)
Questions 8–13:
8. money laundering
- Key words: unwilling, enforce, lower transaction fees, worried
- It is stated in paragraph E that: “There are some countries where there is a low fixed charge per transaction; however, these cheaper fees are not applied internationally because of widespread concern over money laundering.”
- enforce = apply (unwilling to enforce ~ not applied)
- lower transaction fees ~ a lower fixed charge per transaction
- worried about ~ concern over
- This means some countries do not apply a lower transaction fee because they are worried about money laundering.
- The answer is “money laundering”.
9. ease regulations
- Key words: remittance fees, governments, small amounts, end, post office, competitive
- It is stated in paragraph F that: “If this is not practicable, governments could at least acknowledge that small remittances do not come from organised crime networks, and ease regulations accordingly. They should put an end to restrictive alliances between post offices and money transfer operators or at least open up the system to competition.”
- end = put an end to
- make it more competitive ~ open up the system to competition
- This passage means that governments should ease regulations of small remittances, in other words they should change the rules to make it easier for migrants to send small amounts of money back home.
- The answer is “ease regulations”.
10. red tape
- Key words: non-profit association, capable ofhandling, take charge
- It is stated in paragraph F that: “Alternately, a non-government humanitarian organisation, which would have the expertise to navigate the elaborate red tape, could set up a non-profit remittance platform for migrants to send money home for little or no cost.”
- another idea ~ alternately
- non-profit association= humanitarian organisation
- capable of handling ~ have to expertise to navigate
- complicated = elaborate
- The “elaborate red tape” mentioned in the passage refers to complicated bureaucratic rules, and a non-profit humanitarian organisation would have the skills to understand and follow these rules.
- The answer is “red tape”.
11. bank deposits/the bank/a bank
- Key words: migrants, save money, little or no interest
- It is stated in paragraph G that: “Whilst contemplating the best system for transmission of migrant earnings to the home country, one should consider the fact that migrants often manage to save reasonable amounts of money in their adopted country. More often than not, that money is in the form of bank deposits earning a tiny percentage of interest, none at all or even a negative rate of interest.”
- able to save money ~ manage to save reasonable amounts of money
- receive = earn
- little or no interest ~ a tiny percentage of interest, none at all or even a negative rate of interest
- This means that migrants are able to save money; however, they get little or no interest from the money that they save in their bank deposits (the money they keep in the bank).
- The answer is “bank deposits/the bank/a bank”.
12. infrastructure
- Key words: country, organisation, sold bonds, interest, investor, fund, development, homeland
- It is stated in paragraph H that: “If a developing country or a large charitable society could sell bonds with a guaranteed return of three or four per cent on the premise that the invested money would be used to build infrastructure in that country, there would be a twofold benefit.”
- organisation = charitable society
- a reasonable rate of interest ~ a guaranteed return of three or four per cent
- This means that if a country or an organisation could sell bonds with a rate of interest of 3 or 4%, that money invested could be used to develop/build infrastructure in the home country of the migrants.
- The answer is “infrastructure”.
13. affluent migrants
- Key words: bonds, sold, remittance centre, take donations, fund charitable projects
- It is stated in paragraph H that: “Advancing the idea one step further, why not make this transmission hub the conduit for affluent migrants to donate to worthy causes in their homeland so they may share theirprosperity with their compatriots on a larger scale?”
- This means that the remittance centres (= transmission hubs) could be a place for affluent migrants to donate money to fund charitable projects in their home country. By doing this, they would share their wealth by giving money to charities in their home country.
- fund = donate to
- charitable projects = worthy causes
- The answer is “affluent migrants”.
