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UNDERSTANDING HOW REMITTANCE MARKET FUNDAMENTALS WILL AFFECT REMITTANCES AND BANKS

Worker remittances constitute a critical flow of foreign currency into Latin America and the Caribbean. Remittances exceeded US$58 billion in 2006, greater than the total value of development fund inflows to the region. In at least six countries, remittances account for 10 percent of GDP. The market is so vast that it could easily accommodate new players and business models. Mexico accounts for roughly 40 percent of remittances to the region, and serves as an important barometer. In 2006 it reported only 15 percent annual growth and first semester 2007 data indicates virtually no growth.

LATIN AMERICAS’ SECURITY SECTOR: WHERE CRIME PUSHES GROWTH

Security is growing to be a major industry in most markets around the planet and Latin America is not lagging behind. Priorities throughout different areas of the globe on security issues differ: while industrialized nations are concerned with terrorism, developing nations are mostly concerned with crime. The general trend in security in Latin America is to protect the white collar class from violence derived from the disparity of wealth in the region.

Fire arm murders in Latin America are triple the global average. Thirty out of every 100,000 people are murdered annually in the region. Kidnappings in Latin America, although highly disguised by the local authorities, represent of 60% of all kidnappings worldwide.

MEXICO’S “TOP-OF-MIND” TRANSPORTATION AND WAREHOUSING COMPANIES

Telephone interviews with 50 manufacturing company executives in Mexico City, Monterrey, Guadalajara and San Luís Potosí (22% of them decision makers for logistic providers contracting) revealed that, in Mexico, the “top-of-mind” leaders for transportation and warehousing companies are: FedEx, followed by DHL and K+N tied for second, and UPS in third place.

Due to entry-barriers regarding regulation and high capital investments required for needed technology and fourth-party logistics providers (4PLs), the logistics services market functions as an oligopoly. In value-added by transport, storage and communications as a share of GDP (a proxy for logistics costs), Mexico is among the worst in the OECD, only ahead of Finland, the Czech Republic and Turkey.