Excellencies,
Distinguished guests,
Colleagues,

Welcome

A good morning to you all. And to our guests and project partners who have come from afar, a warm welcome to IFAD.

This morning we have come together to discuss an issue that touches the lives of virtually everyone in this building. Many of the people of IFAD – and indeed of the entire UN – are part of the global community of international migrants.

Most of us have left our countries, our cultures, our families and friends behind us - some for a short time, others for many years. In the end, our common goal is to contribute to the lives of our families and communities back home and to the lives of other families and communities through the work that we do.

But for the vast majority of migrants, the sacrifices they must make to provide for their families back home are far greater than most of us gathered here can imagine. 

Mothers who leave their children to the care of relatives, thousands of miles away, so that they can work 12-hours a day, six-days a week, to send money home for food, clothing and education. Men and women who scrimp and save, living in tiny rooms, working every waking hour, spending little on themselves so that they can send money back for their parents, their siblings, their nieces and nephews.

Remittances

It is only in the last ten years that the world has come to understand how vital migrant workers are to the economic development of their home communities and their nations.

In 2007, when IFAD released the first ever estimate of remittances going to developing countries, we were at first met with disbelief. The figure was  US$300 billion. How could these poor people be the source of so much money? The latest estimates project that remittances are, in fact, far higher – we expect the number to top US$325 billion for 2010.

Remarkably, despite the global financial crisis and continuing turmoil in many economies, remittances are continuing to increase.

As you know, the largest share of remittances is used for daily necessities such as food, clothing and shelter. That money is essential to the lives of millions of poor families, keeping millions of people out of poverty.

About 20 to 40 per cent, however, is saved or invested in such things as small businesses, education, and healthcare. So remittances do not only save millions from lives of grinding poverty, they also allow families at home to invest in a better, more secure future.

But remittances are not yet having the greatest possible impact because too many people in rural areas do not have access to basic financial services. Much of the money sent home is saved informally instead of deposited in a bank or a microfinance institution. Families without access to financial services are not able to build credit histories and invest fully in their future. Nor do they receive the financial education they need to achieve long-term financial independence.  

IFAD and remittances

Between 30 and 40 per cent of remittances go to rural areas. It is in rural areas that financial services are most lacking, and it is in those areas without financial services that the cost of receiving remittances is highest.

This is why IFAD, through its multi-donor Financing Facility for Remittances, funds innovative projects that aim to achieve three goals:

The first goal is to reduce the cost of sending remittances

Last year we released a report – called “Sending Money Home to Africa” – that showed how expensive it can be to send money home. In some countries in Africa up to 25 per cent of the amount of money sent can disappear in fees. This is money that should be used for a son or daughter’s education or to put food on the table of a parent or grandparent.

We are now working with the private sector to encourage the development of new services and the means of delivering them, while also working with regulators to ensure effective and efficient regulation. In this way, we can stimulate innovation while keeping money in the hands of those who need it most.

The second goal is to increase access to financial services

IFAD is working to bridge the rural-urban divide in financial services using a variety of means, including  technology such as mobile phones, the internet and credit/debit cards. At the same time, we are working with governments, banks and non-bank financial institutions to ensure that poor rural people have access to adequate financial services.

The third goal is for local economies to benefit from remittances and migrant capital 

If we want families and communities to have long-term financial independence, it is vital that remittances are integrated into the formal financial system. A formal financial system can take the funds – that are all too often kept under the mattress or saved informally – and reinvest these funds in the local economy.

This year the Financing Facility for Remittances’ Call for Proposals focused on working with postal networks, with mobile financial services and with microfinance institutions to achieve these goals.

With over 600,000 post offices around the globe with access to the most rural areas, combining post offices with basic financial services makes commercial sense for postal networks while expanding access to finance for poor rural people.

Not all financial services need to be conducted face-to-face. Mobile phones can bring financial services to customers almost anywhere in the world.  

In contrast to banks, which often focus on the top of the financial pyramid, microfinance institutions focus on the needs of customers at the base. And microfinance institutions stand to benefit from the revenues and deposits that result from remittances.

Today’s meeting marks a milestone for the Financing Facility for Remittances, as it matures, and shifts its focus towards gleaning lessons learned from its portfolio of projects.

By the end of this year, the FFR will have financed 40 grants in almost as many countries around the world. A number of project partners will present their experiences later on in this morning.

Looking forward, the Facility’s work will be integrated ever more closely into IFAD’s country strategies. Lessons learned will be shared and the most successful interventions will be scaled up in the months and years ahead.

It is my hope that we can count on the support of our donors and partners alike as we embark on this next phase for the FFR.

Closing

In closing, let me look to the future for a moment.  Over the next five years, migrant workers worldwide will send well over US$1.5 trillion in remittances to their families.

In light of this, companies and technologies are competing and governments are shaping the rules that will help reduce the cost of sending money home.

IFAD will continue to work with these pioneering partners who are seeking to empower migrant workers and their families. In this way, I believe remittances will be able to address some of the developmental imbalances that cause so many women and men to leave their families and friends behind in search of a better future.

We want to make it possible for more people to be able to build that better future at home.  We want to make it possible for everyone to enjoy the benefits of rural development – dignified lives and better livelihoods. 

24 November, Rome, Italy