150 million migrants worldwide sent more than US$300 billion to their families in developing countries during 2006

Remittances, the portion of migrant workers’ earnings sent home to their families, have been a critical means of financial support for generations. For the most part, these flows have historically been “hidden in plain view”, often uncounted and even ignored. All that is changing. As the scale of migration increases, the corresponding growth in remittances is gaining widespread attention.

Today, the impact of remittances is recognized in all developing regions of the world, constituting an important flow of foreign currency to most countries and directly reaching millions of households – approximately 10 per cent of the world’s population. The importance of remittances to poverty alleviation is obvious, but the potential multiplier effect on economic growth and investment is also significant.

The driving force behind this phenomenon is an estimated 150 million migrants worldwide. They sent some US$300 billion to their families in developing countries during 2006, typically US$100, US$200 or US$300 at a time, through more than 1.5 billion separate financial transactions. These funds are used primarily to meet immediate family needs (consumption), but a significant portion are also available for savings, credit mobilization and other forms of investment. In other words, one of the world’s largest poverty reduction effort – by millions of individuals at a time – could also become a much more efficient contribution to grass-roots economic development. This is particularly true in rural areas of the developing world, that present some of the greatest challenges to inclusion in the economic mainstream and where remittances could further become a catalyst for poverty alleviation.

Three aspects of remittances could enhance this development:

• improved data collection
• lower transaction costs
• increased efforts to leverage remittance flows
  for greater development impact

This report represents a baseline in a series of regional documents aimed at highlighting the importance of the rural remittances in developing countries and their potential to stimulate local economic activity. The following worldwide remittance map seeks to quantify the overall flow of remittances and highlight the importance they may play in the development of rural areas of the developing world. It compiles the best available information on migrant populations, the percentage of migrants sending remittances, average amounts remitted annually and the average frequency of annual transfers. Central banks and other official government sources, money transfer companies, international organizations and academic institutions were used for reference support. The map covers more than 150 developing countries* – many for the first time. Together with the accompanying analysis and data tables, it provides comparative indicators to measure the relative importance of remittances among 20 subregions of the developing world.

* For the purpose of this report, countries in transition for the year 2006 have been included (World Bank, United Nations Economic Commission for Europe)

Source: IFAD