Remittances and deportation: rumblings of a category 5 hurricane

President Donald Trump’s policy, threats, and executive orders on immigration have sent shockwaves throughout the United States. Undocumented residents, even in sanctuary states and cities, are living in a state of uncertainty and panic. There are approximately 1.2 million people of Jamaican origin in the United States (Census 2020). The vast majority are black.

Florida’s Governor Ron DeSantis’ new rules require senders of remittance to show proof that they are not undocumented immigrants. 26.81 per cent per cent of Jamaicans in the United States reside in Florida, this is second to New York with 27 per cent of the Jamaicans in the United States. Other Republican-controlled States like Texas, Georgia, and the Carolinas could adopt this policy. These five states account for 38 per cent of Jamaicans. These policies will unsettle migrants and adversely impact remittance flows to Jamaica.

Remittance ranks second to tourism among Jamaica’s sources of gross foreign exchange inflows. But, unlike tourism, it has no promotional costs, no foreign input costs, and no profit outflows. Gross remittances to Jamaica are estimated to average between US$3.4 and US$3.6 billion per annum. About 80 per cent of those flows are from the United States. One in every three families in Jamaica is estimated to receive remittances. In 2023 the Government of Jamaica conducted a study on the modernisation of the remittance sector.

The study found that while the average remittance transfer was approximately US$300, the most frequent transfer was US$100. These small transfers are classified as contractual or obligatory primarily for direct consumption by the recipient or beneficiary for food, prescription medication, healthcare, school fees and/or education support (lunch money, transport).

SOCIAL SAFETY

These transfers essential form a social safety need for the poor and most vulnerable. Equally important is the stimulus for the local economy especially in rural Jamaica. Remittances are spent immediately and in full in the local shops, markets, bars, pharmacies, doctors’ offices, etc., setting in train a virtuous circle of transactions in the local community. The shop/market replaces its stocks from the vendors who repurchase from the farmer who employs labour to help in replanting. It is this circulation that stimulates economic growth. Reduction in these flows will therefore have negative social and economic impacts. How will those families get food? To whom will those vendors sell their produce? Who will employ the casual labour?

The potential for social disorder and an increase in crime is high. Cuts in aid and grant funding loom, potentially restricting the Government’s capacity to respond.

There has been much discussion in the local media about those with criminal records among the repatriated nationals. However, it is important to recognise that most forced re-migrants have no criminal record here or in the United States. This is so even though the Trump Administration now defines infractions such as overstaying as criminal for the purpose of deportation. Many have skills, work experience, and strong work ethics – qualities needed to push production and productivity.

The government must lead by example and not exhibit any discrimination against these persons in its hiring practices. We recommend the development of a directory of the skills, experiences, and interests of those forced returnees willing to provide such information. We recommend further, that the Government uses its Consulates and other facilities to encourage its undocumented migrants, not only in the United States, to remigrate rather than risk deportation. This would, among other things, allow the possibility of moving with some of their savings.

The returnees with criminal records pose a special, and possibly costly challenge. We do not have the expertise to advise on the specific actions and policies to be deployed . to effectively resettle them. We note, however, that they are living souls, with human needs, who cannot all be summarily despatched to meet their maker.

MITIGATING THE REMITTANCE CHALLENGE

As the new policies in the United States become entrenched, both discretionary and contractual remittance flows are likely to fall. Jamaica must strategise, adapt and pivot to successfully mitigate the fall-out.

These four lines of action could be considered.

First, the recognition that (a) the real value of remittance inflow is about three times that of tourism, (b) many more stable and higher-earning members of the Diaspora do not contribute significantly and systematically to remittance flows, and (c) an increasing number of migrants are professional or skilled persons who are recruited with their immediate family members. This requires a new approach to interfacing with members of the Diaspora to encourage their contribution to Jamaica’s social and economic development.

Second, the creation of a position of Remittance Czar. This position, at the level of Ambassador, should be placed in the Ministry of Finance or JAMPRO. This czar would be charged with interacting with the diaspora community to convince them to invest more in Jamaica and to explain the mechanisms in place to facilitate their participation. Also, to interact with the recipient community to educate them on the potential benefits of certain non-cash transfers.

Third, broadening the definition of remittance to include not just cash transfers for consumption and other immediate needs but investments in light capital goods like farm and construction tools, school buses, health and other insurance payments, and school fees including for certificate courses in skill areas in high demand.

Fourth, the Government and private sector need to ensure that the maximum amount of the reduced social remittance inflows gets into the hands of the recipients. One strategy would be to reduce the various elements of transaction costs. Another is for the Government to reduce the costs in the regulatory and customs arrangements by simplifying and reclassifying some of the items.

Deliberate and proactive action must be the policy mantra.

Ambassador Byron Blake is former deputy permanent representative of Jamaica to the United Nations and former assistant secretary general of CARICOM. Ohene Blake is former deputy CEO of Trade Board Limited, and former board director of Jamaica Tourist Board and Trevor Hamilton is an international business consultant. Send feedback to columns@gleanerjm.com