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Global Forum on Remittances 2013 Contacts
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Issue 2 – 20 May 2013 | ||||||||||||||||||||||||||||||
Welcome to the GFR2013 - Message from IFAD’s President It is with great pleasure that I welcome you all to the Global Forum on Remittances in Bangkok. More than 215 million people around the globe live outside their countries of origin. Some are lucky enough to have left for better opportunities, while many are forced to leave their homelands in order to escape economic hardship, conflict, hunger or destitution. Regardless of the reasons for leaving, they all have a profound connection to their families, friends and communities back home. The most tangible expression of this connection is the more than US$420 billion dollars in remittances migrant workers will send to their families in developing nations this year. These remittances enable these families to purchase the food, clothing and shelter they urgently require. What many are beginning to realize is that migrant remittances go far beyond just meeting short-term needs; they also play a vital role in long-term development. The consortium of partners under IFAD’s Financing Facility for Remittances has been at the center of innovation since its inception in 2006. Since then, through the Facility, IFAD has been working closely with governments, the private sector and civil society to expand access to finance and to maximize the development impact of this vital flow of funds. Everyone attending the Global Forum on Remittances has an important role to play in this, whether you represent a national government, a money transfer agency, a microfinance institution, a postal network, a development organization, or a group of migrants. The alliances you will forge here and the ideas you will exchange over the next few days will help make every dollar count for the families of migrant workers. I would like to extend the following challenge to those here today: let us deepen our commitment to maximize the long-term development impact of remittances, particularly for those that can benefit the most in rural areas. Let us mobilize our expertise, our resources, and our dedication to invest in our home communities. Let us turn our backs on economic hardship, conflict and fragility and together lay the foundations of prosperity. Let us work on a future where migration is a matter of choice, and not a necessity. G8, G20 leaders place remittances on world agenda When the leaders of the world’s eight richest countries met in L’Aquila, Italy in the summer of 2009, they put the issue of remittances firmly on the global agenda. The G8 Final Declaration on Responsible Leadership for a Sustainable Future recognized the development impact of remittances and made a commitment to facilitate the flow of migrant cash. It also set an ambitious deadline: “We will work to achieve in particular the objective of a reduction of the global average costs of transferring remittances from the present 10 percent to 5 percent in 5 years …” Since the L’Aquila declaration, more countries have added their weight to the so-called ‘5x5’ commitment. At the 2011 G20 summit in Cannes, leaders from the world’s 20 biggest economies also endorsed hitting the 5 percent reduction target by 2014. While 5 percent may not seem like a huge amount, such a reduction in average global remittance costs would have an enormous impact, putting as much as an extra $20 billion in the pockets of remittance receivers around the world. Figures from the World Bank show that prices have declined. "The latest data offer good news about progress toward achieving the 5x5 objective,” said Massimo Cirasino, the World Bank’s manager for financial infrastructure and remittances. “In the last calculation, the weighted average reached the lowest level it has ever recorded: 6.92 percent.” Even so, Australia, which will take over the G20 presidency from Russia next year, has called for global action from G20 members to bring prices down more quickly. In a recent statement, Australia proposed that “each G20 member commit to take at least one action internationally or domestically to help reduce the global average cost of transferring remittances.” Australia gave a list of the ways governments could help reduce remittance costs: for example, by adapting their rules to make it easier for institutions other than banks to handle remittance transfers – a measure that would increase competition. Australia used India as an example of a success story, noting how it now offers remittance services allowing Indian migrants in the United States and United Kingdom to send remittances online directly from their bank account or credit card, reducing costs in some cases by more than 30 percent. Russia currently holds the G20 presidency, and this year’s annual summit will be held in St. Petersburg in September. That may be a good omen: the prices of sending remittances from Russia to the former Soviet republics in Central Asia are among the lowest in the world. There may be something other world leaders can learn. Putting family remittances to work in Nepal Message from Massimo Cirasino, Manager, Financial Infrastructure and Remittances, The World Bank
Livestock farmer Parbati Khatri has something in common with so many of the women in her Nepalese village – she’s doing a job once only done by men. That’s because a large number of the men of Makrahar village in Nepal have left to join the vast ranks of Nepalese seeking a better life for their families outside the Himalayan mountain nation. “My husband went abroad in 1999, leaving his job here,” she said. “He went to Korea. About 1,400 to 1,500 men and women left this village to work abroad.” However, Khatri has not been abandoned. She regularly receives remittances from her husband. Not so long ago, she would have had little option but to receive the money as a cash transfer, stashing away any savings at home – the all-too-common ‘mattress’ option. Now though, thanks to the Progressive Cooperative, a local savings and credit organization, which is supported by IFAD, she is putting the money to work as an investment. Nepalese migrants send home an estimated $5 billion a year, equivalent to about a quarter of Gross Domestic Product, one of the highest levels in all Asia. With support from IFAD in partnership with the Nepal Centre for Microfinance, the Progressive Cooperative offers a safe local money transfer service, while encouraging its members to save their remittances. In Makrahar, these funds are helping to transform the community, as locals like Khatri use their savings to get credit for the first time in the form of microloans. “At first I got a loan of 9,000 Nepalese Rupees ($105),” Khatri said. “Then I bought a buffalo for 8,000 NPR. Later I got more loans from the cooperative and bought two cows.” She is not alone. Money sent home has allowed many women in the village to develop their entrepreneurial skills, and together, they are transforming their community. “Due to the lack of money women used to be very inactive in starting businesses or developing skills,” said Progressive’s director, Durgia Kumaru Acharya. Now, she said, “they are really engaging.” Watch an IFAD TV mini-documentary on this project
New report by IFAD and World Bank highlights the world’s most dynamic remittances region From the shores of the Caspian Sea to tiny island nations in the Pacific Ocean, the mathematics of the world’s biggest remittance market are mindboggling. Last year alone, 60 million migrants sent back a quarter of a trillion dollars to their families in Asia. “We are here in Asia because the scale of global migration from rural to urban areas, and across borders, is unprecedented in human history, and 21st century Asia is its focal point,” said Pedro de Vasconcelos, manager of IFAD’s Financing Facility for Remittances. IFAD releases its Sending Money Home to Asia report today in collaboration with the World Bank. The report aims to give everyone working in remittances - from government policymakers to money transfer operators and microfinance organizations - a better understanding of achievements in the market, as well as the obstacles and challenges they face. The report reveals a region of remittance contrasts, with some of the lowest sending costs in the world as well as some of the highest; a region where new technology and innovative newcomers are ready to challenge the traditional role of banks, but are often held back by regulatory straightjackets. Economic mainstay Much of Asia runs on remittances, the report reveals. One in ten households benefit from them and seven of the world’s top ten remittance-receiving countries are in the region – India, China, the Philippines, Bangladesh, Pakistan, Viet Nam and Indonesia. In nine countries, remittances are equivalent to more than a tenth of gross domestic product, and in one case – Tajikistan – they are equal to more than half. South Asia is the largest source of migrants on the continent, with about 28 million living abroad, more than 11 million of them from India alone. It follows that South Asia accounts for nearly half of incoming remittances to the continent. But in some parts, the balance is changing, the report finds. Economic growth is also now pulling migrants into some ountries, especially Bangladesh, Nepal and Pakistan. Central Asia boasts among the lowest remittance costs in the world, averaging about 2.5 percent on money mostly flowing from Russia. China, on the other hand, has one of the highest global average costs – 9.83 percent – largely due to a lack of competition in the remittance market. Southeast Asia is probably the world’s most dynamic and diverse remittance market, with flows to all countries increasing over the past decade. The Philippines overshadows all of them, however, receiving more than $24 billion annually, equivalent to a tenth of its economy. Here too, Cambodia, Malaysia, Singapore and Thailand are now attracting significantly higher numbers of migrants as their economies grow. Migrant workers in Thailand now send more remittances back to their own countries than the nation receives in cash transfers from its own citizens abroad. Rural poor losing out For the region as a whole, banks are still the main way of sending money, mostly through their money transfer operator agents. They handle 75 percent of all transactions. The main reason they maintain their lion’s share is government regulations, which largely limit cross-border operations to banks. Other sectors are making inroads, however. Despite the legal limitations, microfinance institutions, post offices and mobile phone companies are all gradually increasing their Asian remittance operations, proving themselves to be a source of great potential for the future. That is good news, especially for rural areas, where the majority of Asians live. Picking up money from a bank may be a good option for people living in cities, but banks have little presence in the countryside. An estimated $100 billion of remittances go to rural Asia, but 65 percent of remittance payment locations are in urban areas. That means poor, rural families have to travel miles and waste valuable work hours going to pick up their cash. “It is both expensive and inconvenient to be poor,” says the report. A wasted opportunity Aside from the need to bring transaction costs down where they remain high, one of the report’s strongest recommendations is of the need for greater financial inclusion. For the moment, most remittance transactions take place in cash, because both the sender and the receiver are often outside the financial system. All too often, remittance receivers have little choice but to put their money in a jar. While there have been some successful financial inclusion programs - in Bangladesh and the Philippines for example - financial institutions make little attempt to reach out to people receiving remittances. “Remittance recipients may enter an Asian bank several times each year to collect their cash, but they are never offered the possibility of a savings account, a small loan or an insurance product.” That, the report says, is a wasted opportunity that governments, the private sector and civil society alike must work to change. “Given the opportunity, and with access to the appropriate tools and mechanisms, remittance-receiving families have shown enthusiasm for saving and investing.” BASUG is a Bangladeshi diaspora organization based in the Netherlands. It began in the early 1990’s to help out back home after some devastating flooding. Since then it has reached out to Bangladeshis in other European countries, and more recently, to the Sri Lankan migrant community and their families back home. BASUG chairman Bikash Chowdhury Barua spoke to GFR Update on his way to Bangkok. How important are remittances for Bangladesh? What does it mean to a Bangladeshi family to have a relative sending money from abroad? What do most families spend their remittance money on? Why is diaspora investment so important? What lessons have you learned at your time at BASUG that might be useful advice for other organizations? What is your dream for Bangladesh 20 years from now? Bikash Chowdhury Barua will participate in the Wednesday afternoon panel on diaspora capital. |
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