The International Migrants Day (December 18) comes close to the end of the year – perhaps a good time to pause and look back at how remittances sent by an estimated 214 million international migrants worldwide have become even more important for development during the last year. It is impossible to do justice to the range of issues, international attention and work across the globe on this topic during the course of 2009. We highlight a few that we have been following in our blog, briefs and other work:
- The current global economic crisis has made migration and remittances a huge issue now for many developing countries. We have been monitoring the crisis since last November when we made a fairly bold call that remittances might decline modestly but would be resilient compared to other capital flows (see story). Indeed, the data for 2009 show that remittance flows to developing countries have been remarkably resilient, while debt flows collapsed into negative territory and FDI declined by a third.* The recent debt crisis in Dubai has created additional risks, but migrants seem willing to wait it out as prospects at home are often even worse. Nonetheless, the prospect of a sharp reduction in foreign exchange flows after several years of rapid growth—and the possibility that some these workers might return—has brought remittances into the radar-screen of policy makers at the highest levels in virtually every developing country, ranging from Ethiopia to India to the Pacific Islands.
- The G8 group of countries has taken the “International Remittances Agenda” seriously (first proposed in June 2007 in Leveraging Remittances for Development—see figure 7 in page 13) and formed a Global Remittances Working Group, with the four thematic areas of the GRWG around the four topics of the remittances agenda. The GRWG is a great example of a collaborative effort across the Bank’s central departments responsible for remittances – DEC/PREM (which focus mainly on development issues) and the FPD (which considers broader financial and payment systems aspects) – and the international development community.
- There are several operational projects/pilots that are starting up, many with a focus on Africa. The African Remittances Institute (initially proposed as an International Remittances Institute) is in the process of being set up. IFAD has started making grants for remittance-linked products this year. France has given a grant of 6 million Euros to the African Development Bank for operational projects on remittances. The World Bank (through CGAP) is involved in remittance technologies such as mobile money transfers to improve access to finance for the poor, the fourth area of the international remittances agenda.
- Many of the World Bank’s analytical and operational products include migration and remittances. Several countries where remittances are large as a share of national incomes—such as Tajikistan, Philippines, Nepal, the Pacific Islands—have undertaken or are considering projects that aim to facilitate remittances and reduce their costs. An interesting case is the small Pacific Islands, where the Bank has played a key role in creating a more competitive landscape, reducing costs by working with the private sector to introduce new technologies and financial literacy, and greater transparency and competition through a price comparison website.
- Migrant remittances are a major part of the World Bank's Africa migration project (undertaken together with the African Development Bank). We did a global survey of central banks to benchmark Africa against other developing regions, highlighting some of the issues with data collection (both inward and outward flows) and how central banks worldwide regulate and supervise remittances and remittance service providers and new technologies (smart cards, mobile money transfers). In parallel, we have conducted surveys of remittance service providers in France, US and UK and several countries in Africa—capturing the entire value chain of sending and receiving remittances. The studies will be released in Spring 2010.
* There were declines in remittances in some corridors—in some cases because of currency movements (e.g. to Central Asia because of the Russian ruble) or abnormal surges in previous years (Mexico in October)—but also increases in others (Bangladesh, Pakistan, Philippines and many others).