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Financial News

Nov 2012 Financial News

GraceKennedy responsible for half of Jamaica's remittances, says Wehby

Nov 26, 2012

GraceKennedy's chief executive officer Don Wehby revealed that half of Jamaica's remittances or some US$1.1 billion passes through the conglomerate's network annually but it wants to retain more.

He also voiced victory at blocking lottery scammers using GK's remittance network. GraceKennedy operates the Western Union franchise.

Remittances into Jamaica totalled some US$2.2 billion last year and "Grace controls over 50 per cent of that market", said Wehby addressing a Stocks & Securities Limited investor forum in Kingston.

"So GraceKennedy as a company, in terms of US dollars, we have US$1.1 billion going through our network."

He said a future service involving online payment on phones, otherwise called mobile wallets, would grow the group's remittance fees.

"The question that we have to ask ourselves is, how can we retain as much as possible, and I submit to you that if First Global Bank and Western Union work together with a store card and mobile wallet, then that is the answer," he said.

First Global is a GK subsidiary.

GraceKennedy expects the pace of foreign exchange flows to continue despite the stated clamp-down on the lottery scam within its Western Union network. GK shut down its 14 Western Union offices in Montego Bay for two weeks in August to update its network to effectively block the transfer of funds garnered from the lotto fraud scheme.

Scammers call North America residents requesting remittance deposits to transfer fictitious lotto winnings.

"Significant software changes were implemented on the network to determine if a transaction would compromise our system," Wehby told Sunday Business immediately following the forum, carefully choosing his words in consultation with his Chief Financial Officer Frank James.

Neither executive would go beyond that comment to describe the software's defence measures.

GraceKennedy owns 75 per cent of the remittance business and Western Union 25 per cent. The American company bought into GraceKennedy Money Services in 2007.

Principled stance

"I have to be careful what I say, but we were trying extremely hard to curtail the lotto scam," Wehby said earlier while parrying questions from the SSL forum audience.

"The FTC called us and they said 'The complaints we are getting about the lotto scam are increasing over the year'. And we made the decision that we were going to take the principled stance and close our locations for two weeks and put in new measures and we have done so. Remember, a lot of the remittance business is driven by technology coming from Western Union. A core system of changes were made and we have really strengthened the system to eliminate the lotto scam from any use of the Western Union network," the GraceKennedy CEO said.

GK represents Western Union in eight countries including Jamaica, Trinidad, Guyana and the Eastern Caribbean countries. It has "done business" with Western Union for 21 years.

"We are market leaders in every market we are in (and) we are ready to expand the group into non-English speaking Caribbean and beyond that," said Wehby. "Why can't we have a Western Union in Ghana?"

Wehby told shareholders that food and drinks sales growth within Ghana grew 300 per cent year-on-year, coming from a small undisclosed base. Grace wants to tap into the new prosperity found in Ghana and most other African nations which have seen sustained GDP growth in the high single-digits.

"The Jamaican economy has not grown more than two per cent annually in the last 15 to 20 years. When I say to my shareholders that I want to grow at 10 per cent in US terms, the answer is in front of us: We have to go overseas," he said of Ghana which offers the largest population with culinary habits similar to Jamaica at nearly 25 million.

Wehby insisted that Western Union continues to see growth.

"Remittances are still up above last year," he said of the impact on inflows.

Jamaica Gleaner
Sunday November 25, 2012