Global Form on Remittances
Delivered by video
Good morning, Ladies and Gentlemen. People migrate for many reasons. Almost always, they are seeking to set themselves and their families on a new path. Sending money home is a big part of how they achieve this. This year migrants will send home an estimated $450 billion from overseas. And this may be a conservative number, considering the very large informal and domestic remittances. This money provides for immediate needs. And it is often the foundation for long-term welfare and income when migrants return home. The question is how to harness remittances more effectively in order to help migrants and their families reach their goals. I would like to call your attention to several areas for action.
Remitting money is expensive. Every year, international migrants spend about the GDP of Kenya to send money home. Fees can climb as high as 20%. Reducing the high costs at both ends will mean that more money ends up in hands of receivers. There are many opportunities for policy makers and the private sector to explore ways to reduce costs— through new products or mitigation of currency exchange risk. But also by spurring competition, which in certain corridors has driven down costs and increased innovation. This is particularly important in rural areas where receivers often have to pay an additional premium.
We can also help by designing better products tailored to the changing patterns of migration. Women now make up nearly half of all migrants. They send a greater proportion of their earnings home and more regularly than men. And they tend to invest in family and necessities over consumer goods. How can we help them better? Another new trend is a growing number of remittances between two developing countries, not only north-south. These new corridors also need attention.
Another area for priority action is helping receivers use the money in the best possible way once they get it. By considering the full pictures of their lives, how can remittances help them leverage savings, insurance, loans, and other products that add value? One bank in Sri Lanka offered a savings-linked remittance product to help migrants and their families buy a home or start a business. 63% of these accounts are held by women. And, the bank couples the product with financial education. This multi-dimensional approach helps individuals understand financial choices and budgeting. It also supports, of course, entrepreneurship.
Realizing all this takes partnerships and dialogue. Regulators, senders, receivers, providers and development agencies. This forum is an excellent venue to take all these valid views into account. Look to your left and to your right. Is anyone missing? Should others be part of this in the future? With which partners can you take this kind of dialogue to the national or regional level? Or into specific sectors?
You know, several years ago I met a woman in South Africa. Her son sent a set amount of money every three months. With this money, she slowly bought building materials with the intention to build an extra room to rent it out. This would be her pension and security. Every time there was a storm, however, half the materials were destroyed. If she just had a bank account, she could have saved the money safely. If there had been loans that could have actually seen the steadiness of the cash flows, she could have borrowed against the regular remittance and built this room in one go. And insurance could have helped her protect the investment against risks.
It’s really time to shine a spotlight on remittances and tackle some of the challenges still facing very hard working families. Better remittances as a suite of financial products will empower people to shape their future. The impact of helping migrants and their families will be lasting and global if we link remittances to other financial services and make them more affordable and more relevant to their needs.
I hope you will address these issues during your forum and in your coming work.