Despite that several countries have made a call of action for enhancing data collection and capacity building of the national statistical systems to improve migration data, there has not been much progress. The High Level on International Migration in 2013 “emphasized the need for reliable statistical data on international migration, including when possible on the contributions of migrants to development in both origin and destination countries.”
This is the third post in a series of six in which Michael Woolcock, Lead Social Development Specialist at the World Bank and lecturer in public policy at the Harvard Kennedy School, discusses critical ideas within the field of Social Development.
International migration trends have been the subject of fierce debate globally, and when you look at the data it’s no surprise why this is the case. In 2015, the number of international migrants was the highest ever recorded, reaching 244 million (from 232 million in 2013), according to the International Organization for Migration. Moreover, the number of people fleeing conflict has also risen. UNHCR, the UN’s Refugee Agency, estimates that 65.3 million people have been forcibly displaced from their homes, 21.3 million of which are now refugees, and around 10 million people are stateless.
These massive flows of people, however, demonstrate the incredible capacity of social networks to help individuals navigate and deal with new experiences. For most migrants the choice to move is an existential one in which they weigh the risk it takes to make the journey with the potential opportunities it may bring. In doing so they consider where and how people they know have traveled before them, and which relationships they can tap into for support. Individuals living in diasporas also respond by sharing critical knowledge and tools, sending remittances, and in bridging the cultures between the newly arrived and their new communities.
As Michael Woolcock explains, the risk involved with migrating is directly affected by the social networks that individuals can construct to cope with the hazards and vulnerability that they encounter- both in the process of moving but also in settling and figuring out how things are done in the new locale.
Remittances – money sent back home by emigres – amount to a larger financial flow than development aid. Since 2000, remittance inflows per capita to fragile states have been higher than those to other developing countries.
Read more in the OECD's States of Fragility 2015 and access data on migration and remittances and data on population and remittances from World Development Indicators. Note the aggregations and data used in the chart above are made available by the OECD at: http://dx.doi.org/10.1787/888933185242
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How do countries ensure that remittance service providers – who are often serving the world’s poorest people – mitigate their risk for abuse by money launderers and terrorist organizations?
This important question is addressed by new Guidance from the Financial Action Task Force (FATF), the international standard-setting body for anti-money laundering and combating the financing of terrorism (AML/CFT).
The United Nations estimates that developing countries received over US$400 billion in remittances from migrants living abroad in 2014. These funds are often the first financial service that migrants and their families use, so it is important that people can send and receive funds with relative ease and at reasonable cost. However, remittance service providers and the governments that supervise them, must ensure that they are not abused by parties undertaking illegitimate activities such as money laundering or terrorist financing.
MENA has always had low private investment both domestic and foreign. However, the political and economic unrests post the ‘Arab Spring’ raised the necessity of a dynamic and growing private sector than ever before. The dominant economic role of the public sector in MENA cannot endure, especially with the escalating unemployment rates, budget deficits, heavy dependence on food and manufactured imports, vulnerability to oil and foreign currency swings besides the challenging social and political environments.
Imagine having to skip work every month to travel to the city center just to pay your electricity bill or your child’s school fee? Would you not worry if your income relied on remittances and you were unable to pay rent because they were tied up in a network of agents? And wouldn't it frustrate you if you didn’t have a say in how your salary was spent or invested?
Having a bank account could help in all of these situations. Most of us probably have auto-pay set up so we don't need to worry about our monthly bill payments or money transfers. But the conveniences we take for granted are out of reach for the world's 1.1 billion women who lack an account. According to World Bank’s Global Findex database, men in developing countries are 9 percentage points more likely than women to own an account. The gap is largest in South Asia, where only 37 percent of women have an account compared with 55 percent of men.
An increasing number of anecdotal reports about banks’ de-risking remittances service providers and the negative impact these actions have had on the industry have been circulating within the international financial community over the last few years.
Different sources have for instance reported that banks are supposedly cutting off access to banking services to money transfer operators (MTOs) because generated revenue isn’t sufficient to offset the cost of complying with AML/CFT and other requirements.
MTOs are crucial to the international remittances industry and provide relevant services for many migrants and their families. They also help extend reach and access to remittances and other financial services since they operate in many remote locations where banks aren’t present.