International Day of Family Remittances
International Day of Family Remittances (IDFR)
The International Day of Family Remittances (IDFR) was adopted by the United Nations General Assembly and is observed on 16 June. The IDFR recognizes the 230 million migrant workers, women and men, who send money home to over 800 million family members. This day further highlights the great resilience of migrant workers in the face of economic insecurities, natural and climate related disasters and a global pandemic. The IDFR is now globally recognized and is a key initiative in the Global Compact for Safe, Orderly and Regular Migration (Objective 20), which urges the reduction of transfer costs and greater financial inclusion through remittances.
Remittances, or “cross-border person-to-person payments of relatively small value,” serve as a vital lifeline to the developing world. Individual remittances may be of ‘relatively small value,’ but collectively these flows are three times greater than global official development assistance. Remittances underwrite many basic household needs and support skills formation and opportunities through education and entrepreneurship. These resources prove transformational for both households and local communities, enabling many families to achieve their ‘own SDGs.’
Remittance flows have increased five-fold over the past twenty years, serving in a counter-cyclical capacity during economic downturns in recipient countries. COVID-19 has been a formidable test for global remittances. However, early forecasts of sharp declines greatly underestimated the resilience in remittances flows. A May 2021 report by the World Bank reveals a drop in remittances of only 1.6 per cent in 2020, to US$540 billion from US$548 in 2019. In 2021, migrant workers sent an estimated US$605 billion to their families, a growth of 8.6 percent compared to the previous year.
The resilience of these flows is not surprising. Remittances are the financial side of the social contract that binds migrants to their families back home. While these inflows total in the billions, the number that matters the most to families is the average remittance of US$200-US$300 a month.
Behavioural shifts among migrants and the diaspora over the past year have further bolstered the resilience of remittances. Changes include an increased use of savings to sustain remittances flows, greater utilization of formal sending channels and more migrants sending money home for the first time. Local currency depreciation in recipient countries and increased government support for formal migrants in host countries during the pandemic have also had an impact.
One of the greatest catalysts for formal remittances during 2020 was the accelerated adoption of digital technology by the migrant workers and their families. Both online and mobile digitalization have buoyed remittance flows during this challenging period. Mobile remittances alone increased 48 per cent during 2021 to US$16 billion (GSMA, 2021). This change was hastened by lockdowns and social distancing rules that spurred the move away from informal channels and the use of cash for senders and recipients. Digitalization is less costly than cash transfers and has reinforced the adoption of mobile money, thereby advancing the financial inclusion of migrants and their families.
The IDFR and the United Nations commends the determination and resilience of the human spirit as evidenced by migrant workers. Further, the UN calls for governments, the private sector, development organizations and the civil society to promote digital and financial solutions for remittances that foster greater social and economic resilience and inclusion.
IDFR Facts and figures
Facts and figures
- Each year 230 million migrant workers in over 40 high-income countries send remittances to over 800 million relatives in more than 125 low- and middle- income countries (LMICs).
- Family remittances directly impact the lives of more than one billion people, or one out of every seven people on Earth.
- Global remittances are three times greater than Official Development Assistance and surpass Foreign Direct Investment.
- The full impact of COVID-19 on remittances flows remains to be seen. However, in 2020 officially recorded remittance flows to LMICs reached US$540 billion, or only 1.6 per cent below the US$548 billion seen in 2019. In 2021, these flows spiked by 8 per cent, reaching US$ 605 billion to LMICs.
- More than half of remittances sent in 2020 went to rural areas where remittances ‘count the most’.
- Mobile remittances increased by 48 per cent during 2021.
- Beyond the aggregate data is the most important number of all— the US$200 or US$300 in average monthly remittances. Remittances reflect the financial ledger in the social contract that binds migrant workers with families back home. These flows contribute an average of 60 per cent of household income, enabling tens of millions of families to reach for their own individual SDGs.
- 70 countries rely on remittances for more than four per cent of their GDP.