Migrant remittances a big business in cash-starved Venezuela

  • economic environment

May 24, 2018-

The giant metal pots in the kitchen of a drab Bogota cafeteria are filled with simple dishes like vegetable rice. But Edgary Granadillo’s delicate arrangement of the plates he sets before rushed lunchtime office workers hints at the finer dishes he once served.

The former executive chef at a beach resort in Venezuela once commanded a staff of 65 cooks and made regular appearances on television cooking shows.

Now he is laboring for $10 a day, with one sole aim: to send money back home.

“The wages there aren’t enough,” Granadillo, 30, said, his dark, somber eyes keeping a careful eye on a bubbling saucepan of fish head soup. “People need to rely on a Venezuelan outside the country, who can send something, in order to survive.”

As the number of Venezuelans fleeing their country’s deepening economic and humanitarian crisis climbs, a burgeoning lifeline for those back home is emerging—remittances. Skirting strict currency controls, dozens of transfer operations, mostly small-scale businesses run by a handful of exiles entirely online, have opened abroad to help emigres convert their dollars and pesos into Venezuelan bolivars that arrive within minutes in a relative’s Venezuelan bank account.

The remittances are big business. Independent experts estimate Venezuelans now send at least $1 billion a year to friends and family members that they’ve left behind.

That money is critical at a time when Venezuela’s minimum wage is now worth less than $2 a month, and the government of President Nicolas Maduro, who won a new six-year term Sunday in a contested vote many fear will spur even more people to leave, is taking note. Most remittances sent to Latin America come from migrants in the US, who send money to Mexico, Cuba and other nations in Central America and the Caribbean. In 2016, those money transfers valued $74.3 billion—in some cases, contributing more than 10 percent of a nation’s gross domestic product.

Venezuela historically had been a receptor of migrants, and thus a country people sent remittances from, but that has changed.

“The majority—100 percent, and if not 100 percent, more than 99 percent—of Venezuelans who leave the country are doing so in order to send money back to relatives,” said Yulia Torres, founder of an Instagram account called “Venezuelans in Bogota” that has attracted more than 40,000 followers.

“They might not ask you for it, but they absolutely need it,” she said of relatives back home.

To keep their accounts flush with bolivars, money changers must wade into Venezuela’s murky black market, where they sell dollars held in accounts abroad at 100 times the official rate, which only state agencies and privileged insiders have access to.

At a typical transfer shop, Venezuelans who operate the business maintain personal bank accounts within Venezuela while opening new ones in foreign currencies abroad. Migrants in Bogota, for example, deposit pesos into the business’ Colombian bank account and the exchange operators transfer an equivalent amount of bolivars from their own Venezuelan account to that of the indicated relative.

Ecoanalitica, a Venezuelan financial consulting firm, estimates about $1.1 billion in remittances were transferred to Venezuelans last year, a number analysts say could be higher given the difficulty in calculating informal transactions. Even on the lower end, that would mean upward of 4 million Venezuelans, or around 15 percent of the population, receive help from abroad.

“Increasingly middle class households need remittances in order to survive,” said Jean Paul Leidenz, a senior economist at Ecoanalitica. “But we cannot just depend on remittances for hard currency income. Because they never enter the economy.”

Published: 24-05-2018 07:57

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