UN agency calls for harnessing of untapped potential of remittances
ROME, 20 October 2009: A new United Nations report calls for the lifting of restrictions and costly fees imposed on the 40 billion US dollar (200 milliarder DKR) that migrant workers send home to Africa each year, the world bodys agency tasked with eradicating rural poverty said Tuesday.
– Supporting this people-to-people money flow to rural areas of Africa is especially vital now because of the recession, said International Fund for Agricultural Development (IFAD) Assistant President, Kevin Cleaver.
– The power of remittances (tilbagesendelse af penge fra vandrearbejdere) can be catalyzed by easing restrictions and making it less costly for African families to collect this money, added Mr. Cleaver ahead of the two-day Global Forum on Remittances 2009 in Tunis, Tunisia, organized by IFAD and the African Development Bank (AfDB).
Global remittances top 300 billion dollar per year, outstripping foreign direct investment (FDI) and development assistance combined, but high fees and logistical difficulties are hampering the power of remittances to lift people out of poverty, according to IFADs report, entitled “Sending Money Home to Africa”.
The report, which will be presented at the 22-23 October Tunis gathering, noted that although transfer costs have declined significantly in Latin America and in Asia, sending money home to Africa is still expensive, with fees within the continent reaching 25 per cent of the sum.
In addition, some 30 to 40 per cent of all remittances to Africa head to rural areas where many recipients have to travel great distances to collect their cash as the number of collection points across the entire continent is the same as for Mexico, which has a tenth of the population.
The report finds that simply by expanding the kinds of institutions able to conduct remittance services to include microfinance institutions and post offices, the number of payment points would more than double.
The IFAD report highlights how new technologies – such as cellphones – and existing infrastructure – particularly post offices or small retail outlets – could vastly increase the reach of remittance services. Algeria, where 95 per cent of remittances are paid through post offices, could be a model for other African countries.
World leaders attending the G8 group of industrialized countries summit in July also recognized the development impact of remittance flows and set a goal of reducing the cost of remittances by 50 per cent over the next five years, by promoting a competitive environment and removing barriers.
Most money sent home by migrants is spent on daily consumption but research shows linking remittances to financial services for the unbanked – savings accounts, loans and insurance – allows even the very poor to save and potentially invest in the development of their community.
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IFADs multi-donor Financing Facility for Remittances (FFR) was set up to support innovative cost effective and accessible remittance services. IFAD promotes partnerships between African microfinance institutions and financial institutions in the US to link remittances to other financial services. Ethiopian migrant families can access low cost transfer services and also be introduced to other financial products.
IFAD works with the Universal Postal Union to provide remittance services to rural areas using post offices, linking remittances to other financial services such as bank accounts savings and loans. Læs også
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The AfDB, together with a number of partners including IFAD, is committed to search for ways and means to better use such resources. In that respect, the Bank launched a study on migrants’ remittances in four corridors, France/Comoros, France/Mali, France/Morocco and France/Senegal.
The study, presented in Paris in 2008, shows that remittances range in volume from 9 to 24 per cent of GNP in those countries covered, which is equivalent to 80 to 750 per cent of ODA (statslig bistand) received. The AfDB intends to play a still greater role in channeling migrants remittances, notably through a multilateral fund to be set up in the near future.
IFAD on IFAD
The International Fund for Agricultural Development (IFAD) works with poor rural people to enable them to grow and sell more food, increase their incomes, and determine the direction of their own lives. Since 1978, IFAD has invested over 11 billion dollar in grants and low-interest loans to developing countries, empowering some 340 million people to break out of poverty.
IFAD is an international financial institution and a specialized UN agency based in Rome – the UNs food and agricultural hub. It is a unique partnership of 165 members from the Organization of the Petroleum Exporting Countries (OPEC), other developing countries and the Organisation for Economic Co-operation and Development (OECD).
Kilde: www.ifad.org
