Remittance Families and Development – Page 2

Climate Change as a Crisis-Multiplier

Climate change fuels a growing humanitarian and economic crisis in low-and middle-income countries (LMICs). Worsening drought, shifting raining seasons, more intense floods, heatwaves and storms combine to increase rural poverty, reduce food and water security and spur rural migration. Migrant remittances, estimated at $656 billion in 2023, are now a vital financial lifeline for millions in these countries. These private flows help to support recipients’ household expenses, including education, health and many productive activities. Can these intra-family cash transfers also assist families in becoming more resilient in the face of climate change?

Migrant Remittances and Climate Resilience

Remittances are personal financial flows, not development aid or foreign investment. These transfers deliver value directly and efficiently to loved ones back home. Remittances also support climate resilience in agriculture and rural enterprises, enabling the purchase of products and tools, like drought-resilient seeds and crops, water catchment and efficient irrigation among other climate-smart practices. The impact of these actions will be amplified when families access greater financial options, including tailored financing for solutions that expand climate resilience such as low-cost microloans for resilient farming tools and products, climate insurance and access to know-how for more resilient practices.

Greater Financial Choice for Greater Impact

The focus is not on channelling or directing remittance flows, but on broadening the choices, information and capacities recipients need to build climate resilience. Private and public actors have an important role to play by supporting financial and other products services that encourage resilience building. This should include efforts to lower remittance transaction fees for a range of climate-resilient solutions and activities among other incentives.

The IFAD Approach: A Model for Scaling Good Practices

The International Fund for Agricultural Development (IFAD), through its Financing Facility for Remittances (FFR), leads projects in climate vulnerable regions and supports financial inclusion and development impact. With the critical support of the European Union, Luxembourg, Spain and Sweden IFAD seeks to expand the productive options for families to use their remittances. Pilot projects demonstrate that with the right financial tools and options, families will invest a portion of their remittances in climate resilience, thereby improving agricultural productivity and resilience to climate hazards. IFAD is focused on scaling these models to enable more rural families to harness their remittances for greater resilience, household incomes and sustainability.

A Call to Action: Leveraging Remittances for Resilient Futures

Public and private support for accessible, climate-resilient financial options for rural remittance families is crucial. With this backing, these private migrant resources can also have a beneficial public impact on furthering climate adaptation and resilience in LMICs. It is time to recognize and encourage this form of migrant climate finance.

Pedro de Vasconcelos, Manager Financing Facility for Remittances, International Fund for Agricultural Development

‘The role of SACCOs as international remittance providers in Kenya’ report sheds light on whether Kenyan SACCOs can play a larger role by offering remittance services directly.

Remittances are a crucial part of Kenya’s economy, surpassing traditional foreign exchange. Globally, and particularly in East Africa, SACCOs (Savings and Credit Cooperative Organisations) play a vital role in providing financial services. The research surveyed 140 SACCOs in Kenya, revealing that nearly a quarter currently offer remittance services, and of these, one-third are developing products tailored for the diaspora. SACCOs have expressed interest in offering remittance services, presenting a key opportunity to provide regulatory, strategic, and operational support for broader reach and more favorable business models.

The Remittance Innovation Toolkit developed by IFAD and Cenfri provides guidance on improving access to secure and swift remittance services through enhanced identity verification and customer due diligence (CDD) practices.

It enables regulators and remittance service providers to evaluate national regulatory frameworks, analyze risks and opportunities, and implement innovative solutions for challenges.

The toolkit builds on the Remittance Access Initiative which is active in seven African countries as part of the PRIME programme, co-financed by the European Union.

The report, produced by IFAD with contributions by the World Bank under the request of the GPFI, seeks to provide a compendium of best practices, showcasing the benefits of digital solutions in enhancing financial inclusion and reducing remittance costs. This collection of knowledge is intended to inform G20 member states, policymakers, and stakeholders about successful strategies in digital remittance adoption, serving as a valuable resource for guiding future endeavours in leveraging digitalization for remittance efficiency and accessibility.

This report contains a series of key findings and actionable outcomes for both remittances and diaspora-impact investments and is shared with the President of the UN General Assembly

Aims to maximize the developmental impact of remittances by increasing access to remittances through digital methods, promoting digital and financial inclusion, and enhancing migrant returnees’ access to income-generating activities, particularly in rural areas.

GPFI members reiterate their commitment to “reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent”, as set under the 2030 Agenda for Sustainable Development.

This Project aims to strengthen the resilience of rural populations by improving the money transfer methods for the Senegalese diaspora in France.

This document provides an update to the original Gambia country diagnostic that was produced in 2021. This report focuses on significant changes that have occurred since that time.

Theme: Remittance Families and Development

Remittance Updates

Subscribe to our newsletters

FFR Donors

FFRemittances