Tuesday, 19 June 2018
Sending money home: nine reasons why remittances matter
Article reproduced with permission of IFAD.
The International Day of Family Remittances is observed every year on 16 June in recognition of the fundamental contribution of migrant workers to their families and communities back home and to the sustainable development of their countries of origin.
1. In 2017, approximately 200 million migrant workers sent US$481 billion back home to remittance reliant countries, of which US$466 billion was to developing countries. That’s over double the amount sent in 2007 and more than three times the amount of official development assistance from all sources combined.
2. A staggering one billion, or 1 in 7 people in the world, are involved with remittances, either by sending or receiving them. Between 2015 and 2030, an estimated US$6.5 trillion will be sent by migrants back to their country.
3. People send on average US$200 or US$300 home every one or two months. This can make up to 60 per cent of a household’s total income and represent a lifeline for millions of families.
4. About 75 per cent of remittances are used to put food on the table and cover medical expenses, school fees or housing expenses. At times of crises, migrant workers may send more money home to cover loss of crops or family emergencies.
5. The rest, about 25 per cent of remittances, representing over USD 100 billion per year, can be either saved or invested in asset building or activities that generate income, jobs and transform economies, in particular in rural areas. Remittances can be an engine of development.
6. Remittances matter enormously in rural areas. Around half of global remittances go to rural areas where 75 per cent of the world's poor and food insecure live. Globally, the accumulated flows to rural areas over the next five years will reach 1US$ trillion.
7. Remittances can be costly to send. Conversions and fees cost on average seven per cent of the amount sent. Sustainable Development Goal 10 aims to reduce transaction costs to less than three per cent by 2030. Technical innovations, in particular mobile technologies, digitalization and blockchain can fundamentally transform the markets.
8. Migrants make an invaluable contribution to the Sustainable Development Goals, through remittances and investments. In particular, they contribute to ending poverty (SDG 1), zero hunger (SDG 2), good health (SDG3), quality education (SDG 4), clean water and sanitation (SDG 6), decent work and economic growth (SDG 8) and reduced inequalities (SDG 10).
9. IFAD's Financing Facility for Remittances (FFR) aims to increase the impact of remittances by promoting innovative investments and ways of transferring money. The FFR empowers migrants and their families through financial education and inclusion and encourages migrant investment and entrepreneurship.
Find out more about the International Day of Family Remittances