Few countries depend on money sent home quite like Tonga. Across Australia, New Zealand, the United States and elsewhere, Tongans working abroad regularly transfer part of their earnings back to relatives in the Pacific kingdom. That money pays for groceries, school fees, electricity, housing and countless other everyday expenses.

Remittances are consequently not a peripheral part of Tonga’s financial system. They are one of its foundations.

This gives fintech a particular purpose in the country. Tonga does not need technology simply to make banking more convenient. It needs digital finance to make one of its most important economic lifelines cheaper, faster and more resilient.

Tonga is home to around 100,000 people spread across more than 170 islands, although only a fraction are permanently inhabited. Nuku’alofa, on Tongatapu, is the economic and financial centre. Tourism, agriculture, fisheries, construction, government services and remittances underpin the economy, while Bank of South Pacific (BSP), ANZ and Tonga Development Bank are among its important financial institutions.

Economic growth reached 2.7 per cent last year, supported by reconstruction, tourism, remittances and grants. Growth is projected to moderate to 2.3 per cent this year as reconstruction spending normalises.

Tonga’s problem is not simply its size. Its geographic isolation, outward migration and vulnerability to natural disasters make delivering financial services considerably more difficult than in larger economies. That is precisely where fintech becomes useful.

Remittances are unusually important to Tonga. Large Tongan communities live in New Zealand, Australia and the United States, creating financial connections between households in Tonga and relatives thousands of kilometres away.

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