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.
These are some of the views and reports relevant to our readers that caught our attention this week
Remittances to developing nations to hit $500 billion in 2015 - U.N. official
An estimated 230 million migrants will send $500 billion in remittances to developing countries in 2015, a flow of capital expected to do more to reduce poverty than all development aid combined, a senior official of the U.N. agricultural bank said. Ten percent of the world's people are directly affected by this money, Pedro De Vasconcelos, programme coordinator for remittances with the International Fund for Agricultural Development, told a conference on Tuesday. "Migrants are investing back into poor regions," Vasconcelos said, adding that about $200 billion is expected to go directly to rural areas.
The Aid Industry- What Journalists Really Think
International Broadcasting Trust
There has been growing media criticism of the aid industry in recent years. Some of this has been ideologically driven and some opportunistic but it also appears that journalists are more insistent on holding aid agencies to account than they have been in the past. This is a good thing but often the aid sector has appeared unduly defensive in the face of criticism. This report seeks to understand what a broad range of journalists – both specialists and generalists – think about aid and the agencies that deliver it. The criticisms are wide ranging but several themes emerge. There’s a consensus that the aid sector as a whole needs to be more open and transparent. Since media reporting of the aid industry undoubtedly has a big influence on public opinion, it’s important that we take the views of journalists seriously. A better understanding of what journalists really think will also enable those working in the aid sector to deal more effectively with media criticism.
Over the past decade, there has been an almost exponential rise in international remittances. We from recent research that remittances are critical for the well-being of individual households in developing countries – helping them to emerge from poverty, send their children to school, and invest in small enterprises, health, education and housing. Yet not much is known about determinants of remittance flows within transnational households (those with one or more members working abroad), an increasingly important topic for policy makers with the sums involved.
Watch the film to find out what Agha says about his life and what he thinks about terrorism. Then reconsider what you think are Pakistan’s greatest problems.