Sending Money Home

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.

15

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.

17

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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