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For Tongans, Guaranteed Way to Send Money Home is Priceless

For Tongans, a Guaranteed Way to Send Money Home is Priceless

Working overseas is tough. But it can be even tougher for workers trying to send their hard-earned money back home to help relatives. Sione Tau, a Tongan who has been picking strawberries in New Zealand for eight seasons, knows this all too well. Until recently, he had to go through the cumbersome process of withdrawing cash from his bank, negotiating with a remittance agent, and paying a high fee, before money could be sent to his wife in Tonga.

Half of Tonga’s adult population, like Tau, work outside their country, and their stories are very similar. Their burdens have grown in recent decades because of the perceived risks and regulations related to anti money-laundering and countering financing of terrorism (AML/CTF). Because many banks consider the providers of remittance services to be high risk, prices of remittances have increased. Tau and his peers were sometimes forced to turn to the grey market for a solution, but too often it involved high fees, unfavorable foreign exchange rates, and greater risk that the money could go missing.

The Ave Pa’ Anga Pau (Send Money Securely) voucher, a cashless, compliant, and stable remittance product, is an alternative channel Tongans are now using to send money home. Developed by IFC and the Tonga Development Bank (TDB), with support of the Australian and New Zealand Governments, the mobile- and computer-based product provides a secure route for same-day transfers to Tonga six days a week.

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“This low-cost remittance system allows you to move your money from the bank account in New Zealand to your bank account in Tonga and cash it at any of our branches from Monday to Saturday,” says Leta Havea-Kami, CEO of TDB.

There have already been close to 5,000 transactions, worth over AUD$2 million, with the Ave Pa’ Anga Pau voucher, since it was officially launched in February 2017. Typically, these remittances are used to cover essentials, pay for education and health care, support small businesses, and help the broader community.

Havea-Kami says TDB is also making use of the remittance voucher as part of a new loan program that began late last year, to help migrant workers picking fruit in New Zealand pay for local costs of the seasonal worker program before they depart. About 120 seasonal workers have signed up for loans, using the remittance voucher to make their repayments, now worth in total about $130,000.

And Havea-Kami says since the remittance voucher entered the market, the cost of sending remittances has fallen from about 7.5% to around 5%.

The World Bank Group has been working in Tonga and other Pacific Islands since 2010 to reform and modernize payments and remittances legislation. This provided IFC with a foundation to work with TDB and a New Zealand-based technology company to develop the remittance voucher product. Subsequently, IFC sought regulatory approval by the New Zealand and Tongan authorities, a key step in designating it as a legal retail product in New Zealand.

Multiple benefits
The Ave Pa’ Anga Pau remittance voucher doesn’t require a fee—an important factor for customers who work long hours to save as much as they can. Users benefit from a competitive exchange rate, which helps their money stretch even further.

Receiving the remittance is also streamlined for those back home: for example, Tau’s wife, Elizabeth, no longer must drop everything and rush all the way to town to collect the money. “I can simply walk over to the next village to get the money from the TDB bank branch there, or have it deposited straight into my savings account,” she says. The money sent from her husband has been used to buy a lawnmower, washing machine, stove and fridge and help meet their children’s school obligations. It’s also given Elizabeth the freedom to join a weaving group, making large mats and barkcloth, known as “tapa” for sale, to help raise more money for the family.

The Ave Pa’ Anga Pau voucher has also made life easier for Alipate Fihaki, who works as a volunteer teacher at a boys’ boarding school, Tupou College, in Tonga. His parents send him money from New Zealand to help him with living expenses. Since the product is accessible via mobile, it’s convenient anywhere and anytime. “I can flip out my smartphone and check if the money is in before heading to one of the branches,” he says. “It’s challenging to find the time to get out to town just to get money, when I’m trying to do my work.”

The product was geared specifically to the needs of citizens in Tonga, a small island nation in the South Pacific, where remittances comprise more than one-third of the GDP. Remittances are also a major source of foreign exchange.

“The Tongan economy would not have survived without remittances,” says Tongan government liaison official, Sefita Hao’uli. “We don’t have much in the way of natural resources. The most valuable resource we have is our population. We are able to earn foreign currency from people we couldn’t afford to give jobs to.”

Technology that Improves Lives
Innovations in technology have helped the Ave Pa’ Anga Pau voucher become a valuable resource for the Tongan government, economy, and people, since its creation. The product’s robust back office system automatically scans every transaction. This mitigates AML/CTF risk and expands the market for foreign exchange in Tonga, which had been traditionally dominated by commercial banks.

Now, TDB is offering Tongan businesses foreign-exchange solutions at a competitive price, which is significant for a country that largely imports from its neighbors.

Apart from the benefits to national institutions, the individuals and communities feel the impact directly. The “trickle-up” effect of these remittances can’t be underestimated, according to Hao’uli. “This is money that goes straight home to Mom, and is spent in the villages,” he says. “The entire village benefits from this.”

The innovation was made possible under the Pacific Partnership. IFC, Australia and New Zealand are working through the Partnership to stimulate private sector investment and reduce poverty in the Pacific. For more information: visit

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