Sending Money Home Enabling the rural poor to overcome poverty
100
Worldwide Remittance Flows to Developing Countries
Introduction Remittances, the portion of migrant workers’ earnings
The driving force behind this phenomenon is an
The following worldwide remittance map compiles the
sent back home to their families, have been a critical
estimated 150 million migrants worldwide who sent
best available information drawn from data collected
means of financial support for generations. But, for
more than US$300 billion to their families in
on migrant populations, percentage of migrants
the most part, these flows have historically been
developing countries during 2006, typically US$100,
sending remittances, average amounts remitted
“hidden in plain view”, often uncounted and even
US$200 or US$300 at a time, through more than
annually, as well as the average frequency of annual
ignored. All that is now changing – as the scale of
1.5 billion separate financial transactions. These
transfers. Central banks and other official government
migration increases, the corresponding growth in
funds are used primarily to meet immediate family
sources, money transfer companies, international
remittances is gaining widespread attention.
150 million migrants worldwide
needs (consumption) but a significant portion is also
organizations and academic institutions were used for
available for savings, credit mobilization and other
reference support. The map more than 150 developing
forms of investment. In other words, the world’s
countries* – many for the first time – and, together
largest poverty alleviation plan by millions of
with the accompanying analysis and data tables, it
individuals could also become an effective grass roots
provides comparative indicators to measure the
...sent more than US$300 billion
economic development programme, particularly in the
relative importance of remittances among twenty
rural areas that present some of the greatest
sub-regions of the developing world.
to their families in developing
challenges to financial inclusion.
countries during 2006
Three aspects could further enhance this development: • Improvements in data collection, • Reduction in transaction costs, and
Today, the impact of remittances is recognized in all developing regions of the world, constituting an
• Increased efforts to leverage remittance flows for greater development impact.
important flow of foreign currency to most countries and directly reaching millions of households, totaling approximately 10 per cent of the world’s population. The importance of remittances to poverty alleviation is obvious, but the potential multiplier effect on
*for the purpose of this report countries
economic growth and investment is also significant.
in transition have been included
2
Worldwide Remittance Flows to Developing Countries in 2006 (US$ million)
Europe
$50,805
Central Europe Russian Federation and East Europe (CIS)
$14,106
Southeastern Europe
$11,065
$25,634
Asia and Oceania
$10,155
Eastern Asia
$23,079
Oceania Africa
$38,895
Central Africa
$113,055
Central Asia
$1,393
Southern Asia
$45,922
Southeastern Asia
$32,506
$2,690
Eastern Africa
$5,929
Northern Africa
$17,898
Southern Africa
$1,979
Western Africa
$10,399 Near East Caucasus Middle East Turkey
Latin America and the Caribbean Caribbean
$29,678 $4,584 $17,617 $7,477
$68,201 $8,370
Central America
$11,031
Mexico
$24,354
South America
$24,446
Total Remittances to Developing Countries: US$301 billion
3
This report has been elaborated based on a data research study commissioned by IFAD to the Inter-American Dialogue in collaboration with the Multilateral Investment Fund of the InterAmerican Development Bank and contributions from the European Union, Government of Spain, Government of Luxembourg, CGAP and UNCDF. The methodology used to obtain the data is sole responsibility of the author and can be obtained at www.ifad.org. This document has been revised as of 7 November 2007 For more information, please contact: Pedro de Vasconcelos Programme Coordinator Financing Facility for Remittances remittances@ifad.org
4
Table of Contents
Introduction ...........................................................................................................2 Worldwide Remittance Flows to Developing Countries in 2006 ..............................6 Improve data collection.....................................................................................6 Lower transaction costs ....................................................................................6 Leveraging development impact ......................................................................7 Africa ...................................................................................................................8 Asia and Oceania .................................................................................................10 Europe .................................................................................................................12 Latin America and the Caribbean .........................................................................14 Near East .............................................................................................................16
5
Worldwide Remittance Flows to Developing Countries in 2006 Improve data collection
captured by the official reporting system. Remittances are
Lower transaction costs
Recording the volume of actual remittance flows is
also particularly undercounted in rural areas, where
Reducing the cost of remittance transfers is difficult,
difficult, because so many remittance senders and
informal channels dominate remittance delivery patterns,
because so many factors influence the cost of a
receivers are often outside the economic mainstream.
because of the relative absence of banks and other
transfer such as informality, monopolies,
formal financial institutions.
regulations, and volume, among others.
to quantify total remittance flows transferred through
Improvements in remittance recording systems to date
Across the globe, the cost of remittance transfer services
both formal and informal channels. Remittance corridors
have raised awareness of the staggering estimates of
varies greatly depending on the region to which these
to some countries in Latin America and the Caribbean
remittance flows, which in many cases exceed the
are sent. While the higher-volume remittance corridors
(LAC), have been the subject of research and analysis for
combined volume of overseas development assistance
such as those to Latin America have seen drastic
several years. Central banks in a number of these
and foreign direct investment to these countries. A
reductions in the sending cost, remittance transfers in
countries have undertaken important efforts to adjust
majority of countries in most developing regions show
other corridors remain considerably more expensive.
their data collection systems, improving the accuracy of
annual remittance inflows of more than US$1 billion:
Lowering these costs is crucial for both the maximization
recorded flows and increasing their knowledge of the
Asia and Oceania (17 countries), LAC (13 countries),
of the impact of remittances for recipient families as well
characteristics of remittance markets. However, for many
Europe (12 countries) and the Near East (9 countries),
as competitiveness of formal remittance channels.
The worldwide remittance map constitutes a first effort
countries in Africa, Asia and the Middle East, this study
with a further 18 African countries receiving more
has broken new ground, quantifying remittance flows for
than US$500 million. Greater knowledge of the
The existence of informal networks often results from
the first time. Reaching an accurate measurement of
volume of these flows, and of the millions of
a lack of competition in remote areas, leading to
remittances remains a challenge for most balance of
transnational families that send and receive
higher costs. In many developing countries remittance
payments systems, largely because they rely heavily on
remittances, can inform policy-makers of the need to
payment is restricted to banks; as a result, many rural
reporting from formal financial institutions. In many
provide an enabling environment for migrant
areas are neglected, helping create the preconditions
countries, informal channels are commonplace,
transfers. It can also attract more players to the
for informal channels. Reviewing legislation that
accounting for almost half of remittances worldwide. In
remittance services market, encouraging competition
allows non-banking financial institutions such as
the Middle East, for example, a large portion of
and increasing the downward pressure on the cost of
microfinance institutions, cooperatives and credit
remittances are transferred through a well-developed
these transfers, which represent a lifeline for hundreds
unions to pay remittances will help reduce informality,
network of informal brokers (hawaladars) and are not
of millions of individuals around the world.
increase competition and lower the cost per transfer.
6
In an era of technological progress, innovative business models are reshaping the remittance marketplace. New
Leveraging development impact
transfers which would leverage these flows for remittance senders, receivers and their communities.
technologies, such as prepaid cards and the use of
Leveraging the development impact is made difficult
Expanding financial access would have the effect of
mobile phones, permit cheaper alternatives to transfer
because so many remittance senders and
formalizing remittance flows, reducing costs, and
money, as well as lower account-to-account transaction
receivers lie outside the formal financial system.
increasing the scope for local investment.
cost. Thirty per cent of remittance recipients currently use debit or credit cards; in some countries this figure is
For millions of families around the world remittances
Alternative financial service providers are increasingly
as high as 50 per cent. In India and the Philippines,
are the lifeline that lifts them out of poverty. The vast
stepping into the vacuum and providing a full range of
mobile technology is already a widely accepted means
majority of these flows are spent on basic needs of
financial services. Even though these institutions still
for money transfer operations, and its use is growing
recipient families such as food, clothing and shelter. This
account for a low participation in the overall market,
exponentially. These new opportunities have radically
consumption, combined with investment in healthcare
they have demonstrated a willingness to play a crucial
changed the remittance market by increasing the
and education, constitutes 80 per cent to 90 per cent of
role in banking the traditionally unbanked and in
spectrum of participating players. However, there is still
remittance spending; the remaining 10 percent to 20
cross-selling financial services to remittance recipients.
room for improvement as new ideas and alliances arise.
per cent of remittances includes a mix of formal and
In rural areas where bank presence is at its lowest,
informal savings and investments. Financial access and
these institutions can provide key services to segments
One obstacle to lowering transaction costs is the
financial literacy are two key factors to unlocking the
of the population that would otherwise be left
increased focus on the regulatory environment since
development potential of remittance flows.
September 11th, 2001. Money transfer companies
without access to finance. This aspect is particularly important when addressing the gender dimension of
and financial institutions have been encouraged to
Throughout Latin American and the Caribbean, banks
strictly monitor their transactions. The associated
distribute nearly half of all remittances; whereas in
compliance costs have greatly impacted the remittance
Central Asia, Africa, the Southern Caucasus, Eastern
business, forcing some companies to close shop and
Europe, and parts of Southeastern Asia, this figure rises
leaving migrants no alternative other than using either
to almost 100 per cent. Surprisingly, despite the fact
more expensive outlets or informal networks.
that banks generate at least 20 per cent of their net
Despite the challenges, the cost of remitting has
greatly from cross-selling, they have been slow to reach
declined over the last decade and the savings
out to migrant workers and their families. As a result,
generated have greatly increased the potential for
remittances recipients cannot save, borrow or build up
remittances.
in 2006, 57 developing countries received more than
income from remittance services and could benefit
remittances as a step toward financial self-sufficiency.
US$1 billion in remittances
credit histories through these banking institutions. Most remittance transfers are cash-to-cash transactions as opposed to account-to-account
7
Africa Total number of migrants
32,808,000
Total remittances (US$ million) Central Africa
$38,895 $2,690
Eastern Africa
$5,929
Northern Africa
$17,898
Southern Africa
$1,979
Western Africa
Northern Africa (US$ million) (%GDP) Algeria $5,399 4.7% Egypt $3,637 3.4% Libyan Arab Jamahiriya $134 0.3% Morocco $6,400 11.2% Sudan $769 2.0% Tunisia $1,559 5.1% Total $17,898
$10,399 Indicators
Annual average remittances per migrant
US$1,358
Remittances as percentage of GDP (weighted average)
4%
Remittances as percentage of exports (weighted average)
11%
Ratio of remittances per capita to GDP per capita
13%
Average share of migrants in total population
7%
Average share of migrants in countries with a population under 1 million
20%
Average share of migrants in countries with a population over 1 million
5%
Top 5 recipients by volume received (US$ million) Morocco
$6,400
Nigeria
$5,397
Algeria
$5,399
Egypt
$3,637
Tunisia
$1,559
6 out of 53 countries receive more than US$1 billion Main destination and migrant percentage to that destination France (Northern Africa)
33%
C么te d'Ivoire (Western and Central Africa )
14%
United Republic of Tanzania (Southeastern Africa)
11%
Cost of sending US$200
Only countries receiving more than US$50 million are listed
8
Eastern Africa (US$ million) (%GDP) Burundi $184 22.8% Comoros $85 21.1% Eritrea $411 37.9% Ethiopia $591 4.4% Kenya $796 3.8% Madagascar $316 5.7% Malawi $102 4.6% Mauritius $356 5.5% Mozambique $565 7.4% Rwanda $149 6.0% Somalia $790 Uganda $642 6.9% United Republic of Tanzania $313 2.4% Zambia $201 1.8% Zimbabwe $361 7.2% Total $5,929
8% - 12%
Western Africa Benin Burkina Faso Cape Verde C么te d'Ivoire Gambia Ghana Guinea Guinea-Bissau Liberia Mali Mauritania Niger Nigeria Senegal Sierra Leone Togo Total
(US$ million) $263 $507 $391 $282 $87 $851 $286 $148 $163 $739 $103 $205 $5,397 $667 $168 $142 $10,399
(%GDP) 5.5% 8.2% 34.2% 1.6% 17.0% 6.6% 8.6% 25.8% 12.5% 3.9% 5.8% 4.7% 7.5% 11.6% 6.4%
Central Africa (US$ million) (%GDP) Angola $969 2.2% Cameroon $267 1.5% Central African Republic $73 4.9% Chad $137 2.1% Congo $423 5.7% D.R. of Congo $636 7.4% Equatorial Guinea $77 0.9% Gabon $60 0.6% Total $2,690
Southern Africa (US$ million) Lesotho $355 South Africa $1,489 Swaziland $89 Total $1,979
(%GDP) 24.1% 0.6% 3.4%
Migration
Market and Financial Access
transfers are handled by one money transfer agency
The African continent has over 30 million people in
When compared to other regions, money transfers to
and banks are the sole remittance payers in the
the diaspora. Of all the world’s regions, however,
Africa are among the most problematic mainly due to
country. Migrants in South Africa are also faced with
Africa’s predominant migration is intra-regional. The
the fact that the continent faces two major
significant regulatory restrictions in sending money, and thus rely on informal networks.
fluid migration within Western Africa, for instance, is
challenges: high rates of informality, particularly within
partly due to the region’s status as a geopolitical and
the continent, and a regulatory environment that
economic unit, but also by a common history, culture
foments monopolies. In turn, transfer costs are higher
Because regulatory environments often prevent other
and ethnicity among many groupings. There is also
and remittance senders obtain less value for their
non-banking financial institutions from making
significant international migration to former European
money. Most African countries restrict money transfers
transfers or restrict outbound transfers, financial
colonial powers, such as France, England, the
to banking depository institutions, and restrict
access is also a casualty. As few institutions participate
Netherlands and Italy, among other countries.
outbound flows of money unless used for trading.
in the transfers, and banks do not cater to lowerincome individuals, financial access among African
Remittances Remittance flows to and within Africa approach
senders and recipients is relatively low. In some
In all of Western Africa...70 per
countries like, South Africa, barriers to entry relate to
cent of payments are handled
Other countries such as Kenya are seeking to deepen
by one money transfer operator
through the use of mobile telephony.
US$40 billion. North African countries such as Morocco and Egypt are the continent’s major
their legal status, thus disenfranchising migrants.
recipients. East African countries heavily depend on these flows, with Somalia standing out as particularly
financial access by leveraging remittance transfers
remittance dependent. For the entire region, these transfers are 13 per cent of per capita income and on a country-by-country average represent 4 per cent of
As a result, informality emerges as a solution to the
GDP and 11 per cent of exports.
need to remit. Another effect, however, is the persistence of monopolies by banks and the few
Rural Remittances
money transfer operators handling transfers. In all of
Remittances to rural areas are significant and
Western Africa, for example, 70 per cent of payments
predominantly related to intraregional migration,
are handled by one money transfer operator.
particularly in Western and Southern Africa. The
Moreover, 50 per cent of payments are handled
mobility of Africans within these regions has been
directly by banks and the rest by MFIs either as sub-
followed by the sending of regular amounts of money.
agents of banks, with some exceptions (in Senegal, for
Two thirds of West African migrants in Ghana remit to
example, MFIs operate as independent agents).
rural areas in their countries of origin.
Nigeria is a case in point: nearly 80 per cent of
9
Asia and Oceania Total number of migrants
50,615,000
Total remittances (US$ million) Central Asia
$10,155
Eastern Asia
$23,079
Oceania
Eastern Asia (US$ million) China $21,075 Korea, Dem. Peop. Rep. of $1,802 Mongolia $202 Total $23,079
$113,055
$1,393
Southern Asia
$45,922
Southeastern Asia
$32,506 Indicators
Annual average remittances per migrant
US$3,126
Remittances as percentage of GDP (weighted average)
2%
Remittances as percentage of exports (weighted average)
7%
Ratio of remittances per capita to GDP per capita
23%
Average share of migrants in total population
25%
Average share of migrants in countries with a population under 1 million
50%
Average share of migrants in countries with a population over 1 million
5%
Top 5 recipients by volume received (US$ million) India
$24,504
China
$21,075
Philippines
$14,651
Bangladesh
$8,108
Viet Nam
$6,822
Central Asia Kazakhstan Kyrgyzstan Tajikistan Turkmenistan Uzbekistan Total
(US$ million) (%GDP) $4,995 6.5% $846 31.4% $1,032 36.7% $358 3.4% $2,924 17.0% $10,155
Southern Asia Afghanistan Bangladesh India Nepal Pakistan Sri Lanka Total
(US$ million) (%GDP) $2,485 29.6% $8,108 13.1% $24,504 2.7% $1,135 14.1% $6,242 4.8% $3,428 12.7% $45,922
17 out of 41 countries receive more than US$1 billion Main destination and migrant percentage to that destination USA (Asia )
13%
New Zealand (Pacific)
23%
Cost of sending US$200 Only countries receiving more than US$50 million are listed
10
6% - 12%
Southeastern Asia Cambodia Indonesia Laos Malaysia Myanmar Philippines Thailand Timor-Leste Viet Nam Total
(US$ million) (%GDP) $559 7.8% $3,937 1.1% $1,175 34.5% $2,366 1.6% $511 $14,651 12.5% $2,424 1.2% $61 17.1% $6,822 11.2% $32,506
(%GDP) 0.8% 7.5%
Migration
Remittances
Market and Financial Access
There are over 50 million migrants from Asia and
Asia and Oceania receive more than US$113 billion in
The marketplace for money transfers is mixed, with a
Oceania worldwide. Their main destinations are the
remittances annually – the highest regional total in the
competitive industry sending money predominantly
United States, the Russian Federation and, in the case
world. India and China are the top recipient countries,
from China (Hong Kong), the Russian Federation and
of the Pacific, New Zealand. Emerging destination
receiving US$24.5 billion and US$21 billion respectively.
Singapore, and a less competitive and overly regulated
countries from India – the region’s main exporter of
Transfers make up 23 per cent of regional per capita
corridor from Japan and Malaysia. Parallel to these
migrants, with 22 per cent of total migrant – include
income. Remittances to the smaller economies (the
industries are informal money transfer businesses
Malaysia and the Arab oil exporting countries. There is
Philippines, Indonesia, Nepal and Tajikistan) constitute
coupled with the widespread practice of hand-carrying
also significant intraregional migration to Australia,
between 20 per cent and 70 per cent of per capita
money when travelling. In turn, transaction costs vary
China (Hong Kong), Japan and Singapore, while
income. On average, remittances in Asia and Oceania
significantly. Remittances to Central Asia, for
Central Asian migrants go predominantly to the
are 2 per cent of GDP and 7 per cent of exports.
Russian Federation and Kazakhstan.
Oceania (US$ million) (%GDP) Fiji $513 18.2% Papua New Guinea $143 2.5% Tonga $146 Samoa $382 2.8% Total $1,393
example, are among the lowest (if not the lowest) in the world, at an average of 3 per cent per transaction.
Rural Remittances
In some parts of Asia transfers are influenced by
The flow of remittances into rural areas in Asia is
technological innovation, as in the case of mobile
among the highest. This is partly because half of Asian
phone transfers in the Philippines.
countries are 65 per cent rural. The impact of remittances among Asian developing countries is
Access to banking and other financial services varies
greater than in other parts of the world: in Asian
greatly within the region. In many Asian countries
countries that are 65 per cent or more rural, the ratio
migrants and their dependents do not have access to
of remittances per capita to per capita GDP is 23 per
basic financial services. Southeast Asians (Filipinos and
cent and the highest in the world.
Indonesians for example) have more financial opportunities than those living in countries like Tajikistan and Kyrgyzstan, where less than 10 per cent of inhabitants have bank accounts. Similarly,
Asia and Oceania receive more
only 11 per cent of Indians in the state of Kerala have bank accounts.
than US$113 billion in remittances annually – the highest regional total in the world.
11
Europe Total number of migrants
29,204,000
Total remittances (US$ million)
$50,805
Central Europe
$14,106
Russian Federation and East Europe (CIS)
$25,634
Southeastern Europe
$11,065 Indicators
Annual average remittances per migrant
US$1,880
Remittances as percentage of GDP (weighted average)
2%
Remittances as percentage of exports (weighted average)
5%
Ratio of remittances per capita to GDP per capita
11%
Average share of migrants in total population
10%
Average share of migrants in countries with a population under 1 million
Central Europe Czech Republic Estonia Hungary Latvia Lithuania Poland Romania Slovakia Total
(US$ million) $1,635 $378 $905 $453 $477 $4,760 $4,795 $703 $14,106
(%GDP) 1.2% 2.3% 0.8% 2.3% 1.6% 3.9% 1.3%
-
Average share of migrants in countries with a population over 1 million
10%
Top 5 recipients by volume received (US$ million) Russian Federation
$13,794
Ukraine
$8,471
Romania
$4,795
Poland
$4,760
Serbia and Montenegro*
$3,642
12 out of 18 countries receive more than US$1 billion Main destination and migrant percentage to that destination Ukraine (Eastern Europe)
25%
USA (Central Europe)
17%
Cost of sending US$200
6% - 12%
*estimates for Serbia and Montenegro were based on information prior to independence of Montenegro declared on 3 June, 2006 Only countries receiving more than US$50 million are listed
Southeastern Europe (US$ million) Albania $1,986 Bulgaria $1,200 Bosnia and Herzegovina $2,295 Croatia $1,422 Macedonia $520 Serbia and Montenegro* $3,642 Total $11,065
(%GDP) 21.7% 3.8% 20.3% 3.3% 8.4% 11.4%
*estimates for Serbia and Montenegro were based on information prior to independence of Montenegro declared on 3 June, 2006
12
Russian Federation and East Europe (CIS) (US$ million) (%GDP) Belarus $2,342 6.3% Moldova, Rep of $1,027 31.4% Russian Federation $13,794 1.4% Ukraine $8,471 8.0% Total $25,634
Migration
Remittances
Market and Financial Access
There are over 29 million migrants from developing
Remittances to Europe total over US$50 billion and go
The market for money transfers is relatively
European nations worldwide. On average, 10 per cent
to countries like The Republic of Moldova, Poland,
competitive if money flows to the Republic of
of the population have migrated abroad to live and
Romania, the Russian Federation, and Ukraine – where
Moldova, Poland, Romania or the Russian Federation.
work. Some migrate to Ukraine – one of the most
remittances are particularly significant (nearly 20 per
However, in most remitting countries in Western
populated countries in Europe. Other places of
cent of per capita income). Transfers to Europe are 11
Europe, competition among money transfer operators
destination include Italy, the United Kingdom and the
per cent of per capita income and represent 2 per cent
is only now emerging, and therefore there are not
United States. The Russian Federation is a major
of GDP and 3 per cent of exports. Remittances to the
many vendors. Moreover, some European migrants
migrant-exporting country in Europe, comprising 48
Republic of Moldova are also of singular importance
sending remittances from Western European countries
per cent of total migrants from the region. Notably, it
as they represent more than 30 per cent of the
face constraints in that only banks make money
is also the main destination country of migration from
country’s national income.
the Commonwealth of Independent States.
…Albania, the Republic of
Rural Remittances
Romania are more competitive and cost-effective than
Remittances to rural areas are received in a lower
flows from Switzerland to Serbia.
proportion than other places in the world. However, among Eastern European countries the ratio of
Moldova and Romania see over 50 per cent of flows going to rural areas.
transfers. Remittances from Italy and the United Kingdom to Poland, the Republic of Moldova and
Financial access is also limited. There is little
remittances per capita to per capita income is 60 per
commensurability between the percentage of banks
cent in communities where the population is over
paying remittances and the percentage of recipients
35 per cent rural. Some countries like Albania, the
opening bank accounts at those same institutions
Republic of Moldova and Romania see over 50 per
where they withdraw money. Moldovan remittance
cent of flows going to rural areas.
recipients, for example, exclusively cash their remittance at banks, yet fewer than 20 per cent have bank accounts. However, a larger percentage has over US$1,500 in savings.
13
Latin America and the Caribbean Total number of migrants
Mexico Mexico Total
(US$ million) $24,354 $24,354
(%GDP) 2.9%
Caribbean (US$ million) (%GDP) Barbados $292 9.4% Cuba $983 Dominica $181 Dominican Republic $2,739 9.0% Grenada $162 31.2% Haiti $1,049 21.1% Jamaica $1,924 18.3% Montserrat $71 Saint Kitts and Nevis $90 18.5% Saint Lucia $94 10.4% Saint Vincent and the Grenadines $123 26.4% Trinidad and Tobago $655 3.3% Total $8,370
30,403,000
Total remittances (US$ million) Caribbean
$68,201 $8,370
Central America
$11,031
Mexico
$24,354
South America
$24,446 Indicators
Annual average remittances per migrant
US$2,128
Remittances as percentage of GDP (weighted average)
2%
Remittances as percentage of exports (weighted average)
10%
Ratio of remittances per capita to GDP per capita
20%
Average share of migrants in total population
26%
Average share of migrants in countries with a population under 1 million
49%
Average share of migrants in countries with a population over 1 million
11%
Top 5 recipients by volume received (US$ million) Mexico
$24,354
Brazil
$7,373
Colombia
$4,516
Guatemala
$3,557
El Salvador
$3,328
13 out of 34 countries receive more than US$1 billion Main destination and migrant percentage to that destination USA (South America)
32%
USA (Central America)
74%
USA (Caribbean)
73%
USA (Mexico)
92%
Cost of sending US$200
Only countries receiving more than US$50 million are listed
14
6% - 8%
Central America Belize Costa Rica El Salvador Guatemala Honduras Nicaragua Panama Total
(US$ million) $139 $444 $3,328 $3,557 $2,286 $798 $479 $11,031
South America Argentina Bolivia Brazil Chile Colombia Ecuador Guyana Paraguay Peru Suriname Uruguay Venezuela Total
(%GDP) 11.4% 2.0% 18.2% 10.1% 24.8% 14.9% 2.8%
(US$ million) $1,650 $972 $7,373 $1,024 $4,516 $3,162 $466 $650 $2,869 $335 $479 $950 $24,446
(%GDP) 0.8% 8.7% 0.3% 0.7% 3.3% 7.8% 4.3% 3.1% 2.5% 0.5%
Migration
Remittances
Market and Financial Access
Over 29 million people emigrate abroad from Latin
LAC received US$68 billion in remittances in 2006,
Money transfers to LAC today are predominantly
America and the Caribbean (LAC); and for small and
mostly going to Mexico, which received US$24.3
processed by licensed money transfer operators.
economically dependent countries migration constitutes
billion. South America follows, receiving nearly
However, over the past three years other competitors
one quarter of their population. Until recently, the
US$24.4 billion. Though the region’s economy is
(within the United States and Spain to Latin America
United States was the main destination; however,
volatile and experiences boom-and-bust cycles,
corridors) such as banks and card-based operators
increasing migration to Europe and intraregional
remittance flows have remained steady for many
have emerged as players offering account-to-account
mobility has changed this pattern. Italy and Spain are
years. Transfers are on average 20 per cent of income
transfers. However, within intraregional corridors,
two of the main destinations in Europe, whereas
per capita, although in some Central American
significant informality in fund transfers still exists. The
Argentina, Costa Rica and the Dominican Republic are
countries such as El Salvador this number is higher.
cost of sending remittances to this region is among
the main intraregional places of destination.
On a macro level and as a country’s average in LAC,
the lowest in the world, averaging 7 per cent to send
remittances equate to 2 per cent of GDP and 10 per
US$200, largely because of the extent of competition.
cent of exports.
The cost of sending remittances to this this region is among the lowest in the world‌
As in other parts of the world, financial access in LAC Rural Remittances
is relatively poor, even among recipients of remittances
Remittances sent to rural regions represent about one
who tend to save more; and, with some exceptions,
third of all flows. These amounts have been increasing
there is little access to formal banking institutions.
as migrants move to different parts of their home
Credit unions and microfinance institutions are
countries. An interesting example is Mexico:
stepping in to offer services to recipients and thus
remittances from the State of Chiapas are the fastest
increase the cross-sale of financial products. The end
growing in the nation and most of them are sent to
result is greater financial intermediation and
rural areas. However, the percentage of remittances
transformation among clients. Examples include
to the rural areas of Latin America is greater among
Mexican rural banks (Cajas Populares), or Jamaican
migrants working within the region in neighboring
building societies, which benefit thousands of clients.
countries. Bolivians in Argentina are predominantly rural migrants who send money to areas near main urban centres. Nicaraguans in Costa Rica transfer money to the southern parts of their home country.
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Near East Total number of migrants
12,573,000
Total remittances (US$ million) Caucasus
$29,678 $4,584
Middle East
Caucasus Armenia Azerbaijan Georgia Total
$17,617
Turkey
$7,477 Indicators
Annual average remittances per migrant
US$2,679
Remittances as percentage of GDP (weighted average)
Turkey Turkey Total
(US$ million) $7,477 $7,477
(%GDP) 1.9%
4%
Remittances as percentage of exports (weighted average)
14%
Ratio of remittances per capita to GDP per capita
21%
Average share of migrants in total population
15%
Average share of migrants in countries with a population under 1 million
-
Average share of migrants in countries with a population over 1 million
15%
Top 5 recipients by volume received (US$ million) Turkey
$7,477
Lebanon
$5,723
Iraq
$3,723
Jordan
$2,681
Iran
$2,301 9 out of 11 countries receive more than US$1 billion
Main destination and migrant percentage to that destination Germany (Middle East) Cost of sending US$200 Only countries receiving more than US$50 million are listed
17% 7% - 12%
Middle East Iran Iraq Jordan Lebanon Syrian Arab Republic West Bank and Gaza Strip Yemen Total
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(US$ million) $2,301 $3,723 $2,681 $5,723
(%GDP) 1.0% 18.9% 25.2%
$804
2.3%
$1,409 $945 $17,617
34.7% 5.0%
(US$ million) $1,188 $1,871 $1,525 $4,584
(%GDP) 18.5% 9.3% 20.2%
Migration
Remittances
Market and Financial Access
From the Near East, around 12 million people have
Nearly US$30 billion are remitted to this region each
Money transfers to this region also offer a mix of
migrated abroad – an average of 12 per cent of the
year. The top two recipient countries are Turkey and
players like those found in the Asian region. Many
population. Depending on the region of origin,
Lebanon, receiving US$7.5 billion and US$5.7 billion
corridors for example experience relatively low costs,
destinations for working or living abroad may include
respectively. Notably, the impact on per capita income
as is the case in the Caucasus. Similarly, migrants
France, Germany or the Russian Federation. Equally
differs: 3 per cent in Turkey to 30 per cent in Lebanon.
from the Middle East sending remittances from the
significant is the intra-regional mobility of people into
On average, on a country-by-country basis,
Arab oil-exporting countries often go through
places like countries such as Kuwait and Saudi Arabia,
remittances equate to 4 per cent of GDP, 14 per cent
inexpensive bank transfers that cost less than 2 per
for instance. People from the South Caucasus migrate
of exports and 21 per cent of income per capita.
predominantly to the Russian Federation and Ukraine.
cent. However, there is a percentage of migrants who hand-carry the money upon return to their home
In countries such as Armenia, Albania, and the
Rural Remittances
country or on visits, especially if they are returning
Republic of Moldova, a third of the population has
Many people from the Near East, whether from the
from Kuwait or the United Arab Emirates.
migrated abroad.
Middle East or the Caucasus, migrate from rural areas and equally remit to their places of origin. For
‌48 per cent of remittances to
In general, financial access in the Near East region is
example, 48 per cent of remittances to Georgia go to
limited due to the presence of well established
rural areas, as do over 60 per cent of remittances to
financial institutions and financial intermediation
Azerbaijan.
strategies. In most countries access is relatively small.
Georgia go to rural areas, as do
For example, the share of Georgians and Azerbaijanis
over 60 per cent of remittances
lower in rural areas, where the majority of people
with bank accounts is under 15 per cent, and even come from.
to Azerbaijan.
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International Fund for Agricultural Development (IFAD) IFAD is an international financial institution and a United Nations specialized agency dedicated to eradicating poverty and hunger in the rural areas of developing countries. Through low-interest loans and grants to governments, IFAD develops and finances poverty reduction programmes and projects in the world’s poorest communities. Seventy-five per cent of the world’s poorest people, almost one billion women, men and children, live in rural areas of developing countries and depend on agriculture and related activities to survive. IFAD focuses on poor, marginalized and vulnerable rural people, enabling them to access the assets, services and opportunities they need to overcome poverty. IFAD works closely with governments, other United Nations agencies, donors, non-governmental organizations, community groups and poor rural people themselves. For more information, please visit www.ifad.org
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UNCDF
Enabling the Enabling the rural rural poor poor to overcome overcome poverty to poverty
International Fund for Agricultural Development Via del Serafico, 107 – 00142 Rome, Italy Tel.: +39 06 54591 Fax: +39 06 5043463 E-mail: ifad@ifad.org www.ifad.org
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