On average, remittances represent up to 60 per cent of a recipient family’s income, and typically more than double its disposable income. These funds allow families to build assets and deal with uncertainty.
Analyses of 71 developing countries show significant poverty reduction effects of remittances: a 10 per cent increase in per capita remittances leads to a 3.5 per cent decline in the share of poor people in the country’s population.
Recommended actions
Promote affordable and safe access to remittances from the first to the last mile, particularly in rural areas, which receive 40 per cent of all flows and where remittances count the most.
Provide value-added financial and non-financial services to remittance families to facilitate productive investment of their funds and further build assets for a more secure future.
In rural communities, half of remittances are invested in agriculture-related expenses.
Additional income increases receiving households’ demand for food, which increases domestic food production and improves nutrition, particularly among children and the elderly.
Investment of migrants’ income in agricultural activities creates employment opportunities.
Recommended actions
Expand and leverage the ability of remittance families to invest and engage directly in agricultural production, leading to improved food security. This can be achieved by strengthening the capacity of rural financial and non-financial service providers, particularly by promoting services for agricultural production.
Remittances invested in health care – access to medicine, preventive care and health insurance products – improve the health and well-being of recipient families.
Infants born into remittance families have a higher birthweight and are less likely to die during their first year.
Recommended actions
Develop incentives for enhanced health insurance products and improved channels of distribution customized to the needs of remittance families, including the possibility for migrant workers to directly pay premiums for their families.
Facilitate the portability of pension rights for migrant workers to their countries of origin.
Further mainstream psychosocial support into financial education programmes for migrants and families during pre-departure and post-migration, to help alleviate the negative effects of family separation.
One of the main reasons migrants send money home is to ensure access to better education for their children. Remittance-receiving households have demonstrably better educational participation than non-recipients, and invest about one tenth of their income educating their children.
Remittances lead to almost doubling school enrolment. Children from remittance families, especially girls, register higher school attendance, enrolment rates and additional years in school.
Remittances substantially reduce the probability of child labour participation.
Recommended actions
Facilitate the ability to save regularly on both the sending side and receiving end to pay for education fees back home, including direct bill payments from abroad to cover education expenses, among others.
Women migrant workers now comprise half of all remittance senders: 100 million in total. Remittances transform the economic role of women both on the sending side and receiving end through financial independence and better employment opportunities. While women remit approximately the same amount as men, women tend to send a higher proportion of their income regularly and consistently, even though they generally earn less than men.
Recommended actions
Recognize that 50 per cent of all migrant workers are women and empower them to overcome the traditional bias against financial independence and control. Invest in advisory services for women to meet entrepreneurial aspirations, improve income management and ultimately enable family reunification. Expand gender-sensitive financial services and sensitize remittance service providers on gender and migration dynamics.
To create social capital and pool funds to address local needs, migrants and/or their families often organize themselves into neighborhood organizations in their communities or through hometown associations (HTAs) abroad. HTAs identify development priorities and participate in technical advice and fund-raising activities. Community projects take into account sustainability concerns and community welfare.
Recommended actions
Support social capital with migrant groups that facilitate pooling of funds to water and sanitation infrastructure projects in places of origin. Promote partnerships between local authorities and migrant groups towards identifying water and sanitation priorities, and join design and fund-raising efforts for implementation. Create incentives for remittance families to invest in sustainable agricultural irrigation infrastructure that efficiently manages water resources.
Remittances have a positive impact on family assets and quality of life when invested in housing, and they are more likely to be used for home improvements than home purchases. Affordable solutions for poor households and their communities are available, including efficient cooking devices and clean energy solutions. Local community projects may apply clean energy technologies, particularly in remote rural areas lacking access to electricity.
Recommended actions
Promote the use of remittances for financing household solar energy projects, which could be expanded to the community with funding from the public sector (at local and national levels), the private sector and international financial institutions. Create incentives to support remittance families to invest in clean energy ventures to distribute solar power systems or affordable equipment using sustainable and affordable sources of power.
Money held by remittance-receiving families and migrants’ savings are maximized when coupled with financial and entrepreneurial services. Migrant workers have knowledge, skills and networks. Returnee migrants bring a wealth of experiences and talents that can be channelled for their communities’ betterment. Migrants’ investment in micro, small or medium enterprises generates employment and income in local communities.
Recommended actions
The financial inclusion of tens of millions of remittance families is a major opportunity to multiply economic impact in individual households, communities and the financial system. Promote financial education to stimulate the uptake of financial services by migrant workers, refugees and their families. Acknowledge the transformative effect of diaspora investment and recipients’ savings on livelihoods and communities, stimulating employment and income-generating opportunities, with the highest impact in rural areas
Reducing the cost of remittance transfers can increase disposable income for remittance- receiving families. By reducing average costs to 3 per cent globally, remittance families will save an US$20 billion annually. Civil society awareness and information campaigns are promoting better working conditions for migrant workers and cheaper, faster and safer remittances.
Recommended actions
Adapt regulations that are commensurate to relatively low-value transactions to avoid excessive, counterproductive and costly processes and support a proportional and predictable enabling environment for technological innovators. Develop national “whole-of- government” remittance plans in recipient countries to fully assess the opportunities represented by remittances and migrant investments in their local economies. Encourage RSPs on both sides of remittance corridors to incorporate competitive business models to lower prices.
As remittance families increase their purchase capacity and change their consumption patterns, they can do so by meeting individual needs and aspirations within the ecological limits of the planet. Migrant households are regular and heavy consumers of nostalgic goods (home country products). Trade of nostalgic goods and diaspora tourism imply significant revenue for countries of origin. Diaspora populations can act as a bridge to broader markets of nostalgic goods and local tourism.
Recommended actions
Develop awareness-raising programmes in remittance-receiving communities on the suitability of adopting environmentally-friendly consumption patterns. Promote the investment of remittances in family and community projects of sustainable and agro- tourism which, in addition to creating decent jobs, would foster local culture, handicrafts, agro-biodiversity and gastronomy.
Migration is increasingly becoming a consequence of climate change. Remittances and diaspora investment play a crucial role in mitigating its negative impacts and helping cope with income shortages due to weather-related shocks.
Remittances enable the adoption of more sustainable crops and non- farm activities.
Recommended actions
Support local financial institutions’ development and provision of remittance-related, weather-based insurance products to migrant families in rural areas.
Encourage investment from migrant groups in local enterprises offering products and services designed to better manage exposure to climate- related risks, such as drought and water shortages, floods and storm surge, heat waves, cyclonic winds, shifting precipitation patterns, wildfires and invasive pests, among others.
Through initiatives such as the Global Compact for Safe, Orderly and Regular Migration and the G20 Global Partnership for Financial Inclusion (GPFI), the international community now recognizes remittances as a vital support for hundreds of millions of people across the globe and works to strengthen their development impact on families and communities.
Recommended actions
Promote policy coherence among government institutions to create synergies across national priorities that integrate migrant workers and their contributions into development plans. Promote public-private partnerships that stimulate client adoption of technology-driven systems to change the cash habits particularly in the underserved and rural areas. Support the observance of the International Day of Family Remittances (IDFR) in recognition of the contribution of migrant workers to families and communities back home, and to the sustainable development of their countries of origin.
