Source: Thomson Reuters Foundation
Any views expressed in this article are those of the author and not of Thomson Reuters Foundation.
More numerous by the day, people continue to risk their lives to reach more promising lands. It is estimated that this year more than 30,000 could lose their lives crossing the Mediterranean Sea alone. Many are escaping from wars and violence; many more are fleeing from poverty and misery.
The issue of migration is a permanent item on the political agenda. Providing people with real opportunities in their home country is part of the long-term solution. Remittances – the money migrants send home to their families – offer a tremendous opportunity to do that.
In 2014, remittances to developing countries reached $436 billion. This amount is impressive and exceeds Official Development Assistance by at least three times. The figure has been steadily increasing for years, and could soon reach $500 billion a year.
Remittances represent a lifeline for hundreds of millions of families, many of whom live in poor and remote rural areas in developing countries. This lifeline provides for basic necessities such as food, shelter and clothing. But this money also has immense potential to support development.
If families are given the option, the money received can be used for local investments, which in turn can create jobs and lead to better lives and a more promising future for their families and the communities they live in.
At IFAD – an international financial institution and a specialised United Nations agency based in Rome – we have long experience in investing in rural people in developing countries.
Often deprived of options and opportunities, the rural poor face difficult choices. People who migrate often experience extreme loneliness and hardship, as well as being uprooted from everything that is familiar to them. And increasingly, they take life-threatening risks.
In most cases, it is a necessity, not a choice. But if rural women and men could make a decent living from their labour, and if they lived in a vibrant rural economy, then maybe they wouldn’t look further afield and feel forced to leave their homes.
Investment in agriculture is the most effective and efficient way to spur development in rural areas. To this end, in the last decade we set up more than 50 projects to increase the development impact of remittances and enable rural women and men to develop their own income-generating activities and become financially independent.
For example, we support a project whereby 1,000 Filipino overseas workers have invested together in a poultry business back home. This created jobs locally but also provides the migrants and their family with a regular source of income.
Our experience shows that when given the opportunity, rural families save and invest – even if only a small part of their income – in activities that help improve their lives.
But remittances also play a broader role after a war or a natural disaster, in the reconstruction and the prevention of further displacements. Often the first or only reliable source of income for families, this money sent from overseas becomes essential for their survival.
In Nepal, before the earthquake happened, estimated remittances amounted to $6 billion representing a quarter of GDP. They now play an even more important role as families affected by the earthquake lack everything and need to rebuild their lives.
But too many hurdles still prevent migrants from sending money cheaply and efficiently and their families from making a more productive use of it.
Progress has been made over the last decade, just as remittances have increasingly attracted attention from high-level political leaders, private-sector operators and civil society.
For example, the average cost of sending money home has decreased from 15 percent to about 8 percent in five years. But this is still too high, and in many places, for example in Africa, costs are much higher. A report released on Monday shows that reducing these costs to just 5 percent would save migrants $2.5 billion in Europe alone.
Measures have been taken to enable remittance recipients to have better access to basic financial services such as deposit and credit facilities. But in rural areas this remains a challenge. Today, only about 10 percent of poor rural people have access to the most basic financial services.
Much more needs to be done to make remittances a more effective resource for development.
Unanimously proclaimed by 176 of IFAD’s current member states earlier this year, the first International Day of Family Remittances will be celebrated on June 16.
Its purpose is to recognise the fundamental contribution made by migrant workers to their communities of origin and to the sustainable development of their countries. It also reminds us of our responsibility to help them and their families make the most out of these funds.
Migration is part of our history. As we witness significant movements of people this century, I believe we need to support migrants to develop opportunities for themselves and their families at home so that one day migration is a choice and not a necessity.
Kanayo F. Nwanze, president of the International Fund for Agricultural Development (IFAD), will be opening the 5th Global Remittance Forum in Milan on June 16-19 bringing together heads of state, policymakers, private-sector stakeholders and civil society leaders.