The FFR Brief – Five years of the Financing Facility for Remittances

This document reports on the remarkable achievements of the FFR in its five years of operation. It provides an overview of the importance of remittances to development, the strategy that the Facility has adopted to date, and the lessons learned from the innovative projects it has financed. Looking forward, the report highlights the tremendous opportunities offered by large-scale distribution networks, adoption of new technologies, mobilization of migrant capital and partnering with the private sector.

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Financing Facility for Remittances

The Financing Facility for Remittances (FFR) has been working since 2006 with the goal of increasing the development impact of remittances and enabling poor rural households to advance on the road to financial independence.

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Remittances and Postal Networks

The Financing Facility for Remittances (FFR) aims to expand the reach of financial services to the world's underserved rural areas. The maintenance of a network of dedicated brick-and-mortar branches throughout vast sparsely populated areas is prohibitively expensive for most forms of financial institutions, with one important exception: post offices.

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Remittances and Financial Literacy

In line with its mandate to expand the reach of financial services into rural areas, the Financing Facility for Remittances (FFR) is leading the way in testing models that bring migrants’ funds to recipient families quickly, safely, conveniently and at the lowest possible cost. However, the key to ensuring that remittances help families achieve financial independence lies in financial literacy.

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Remittances and Microfinance Networks

Of the US$350 billion that migrant workers send home to developing countries every year, between 30 and 40 per cent goes to rural areas. At the starting point of the migration chain, people leave rural areas to seek opportunities elsewhere, due to a lack of opportunities closer to home. Microfinance institutions (MFIs) are uniquely capable of serving the needs of remittance recipients, while reinvesting surplus funds to improve opportunities for the local community.

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Remittances and Mobile Banking

With mobile phone coverage generally surpassing 90 per cent of the population even in developing countries, the potential to leapfrog to mobile banking holds the promise of addressing many of the challenges currently faced by rural remittance recipients. Long, costly and potentially dangerous treks from isolated villages to urban financial institutions could soon be replaced by instantaneous transfers of funds from one country to another using mobile phones.

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Remittances

Remittances, the money migrant workers send home to their families, provide crucial financial support for millions of people in developing countries. For years, migrants worked in the shadows of globalization while their remittances went uncounted by governments and aid agencies. Over the past 10 years, however, the true size of their contribution – well over US$300 billion a year – has come to light.

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Sending Money Home to Africa: Remittance markets, enabling environment and prospects
During the 2009 Global Forum on Remittances, this regional study was officially released. This study summarizes regulatory issues relating to foreign currency transfers, competition in the marketplace and areas in which remittances intersect with financial intermediation.
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Sending Money Home: Worldwide remittance flows to developing and transition countries
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. 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.

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Remittances: strategic and operational considerations
Exceeding USD 230 billion in 2005, remittances are a critical flow of funds for low-income people in both the North and South. Accessing and affording these services, however, can be a challenge, especially in remote, rural areas. This annex to the IFAD Decision Tools for Rural Finance introduces migrant remittances in the wider context of development finance, discussing the key principles of effective service delivery and highlighting potential areas for IFAD support. Designed to give IFAD staff a solid grounding in this topic, this paper includes a review of donor activity on remittances and provides numerous references to research on remittances in specific regions.