Migrants send record amounts to home countries, but overall poverty pertains
At the end of this year, migrants will have sent $466 billion to family and friends in their countries of origin. Despite this record amount these remittances have little to no effect on the dire economic state of affairs in those home countries. Earlier this week in Brussels, a group of experts convened to think of ways to make the sent money work in a way that benefits more than just a few lucky families.
Though relatively stable as a percentage of the world population, there have never been more migrants than today. Out of the one billion people that moved away from their places of birth, some 258 million have found a place abroad while 760 million remained within their own states. Despite it being a heated political debate in the global North, only one third of all international migration is directed from South to North. The overall majority, some 100 million people, move between states in the global South, IPS reported.
These numbers were presented by Laura Palatini, Belgium and Luxemburg’s mission chief for the International Organization for Migration (IOM). Palatini was the first of five speakers on an international conference, organized by IOM, the International Fund for Agricultural Development (IFAD), several Brussels municipalities and local and international NGOS at the Brussels Parliament this Tuesday.
These one billion migrants each year send home approximately $466 billion. “It is said that if remittances would be country, it would have the right to claim its seat in the G20,” said Valéry Paternotte of Réseau Financité, a Belgian network of organizations for ethical finance, “It is three times the annual budget of development aid worldwide.”
But according to Paternotte, the numbers need a closer look. “In Belgium for instance, 38 percent of all remittances are destined to neighbour France and four percent for Luxembourg while Senegal, Congo, Rwanda and Bangladesh together account for less than one percent.” Then again, the estimate of 466 billion is most probably an underestimation, as not all countries are being taken into account, second and third generations are not included, nor are informal remittances – migrants travelling with envelopes, small transfer agencies and possible other unknown practices sending money home.
Nevertheless the 6.4 billion flowing annually into Morocco is just as important for the economy as the entire phosphate sector or tourism. The nine billion dollars sent to Congo by members of the diaspora accounts for twice the country’s annual budget. Remittances are an indispensable source of income for 750 million people worldwide. Research in 71 developing countries of indicates that a 10 percent rise in remittances leads to a 3.5 percent drop in the number of people living with less than one dollar a day.
Researchers on the topic agree that remittances are a stable source of income for developing countries that are not affected by economic shocks or cycles of regression and growth. Moreover, they are the first form of help that reaches regions affected by natural disasters or epidemics. This became most evident with the last ebola crisis in Sierra Leone and the recent earthquake in Nepal.
But as of yet, the money flow doesn’t lead to structural changes in the countries of origins whose economies remain in a dire state. “The first obstacle is that the money received is spent, not invested in the local economy,” said Paternotte, “and this is understandable. In the world’s least developed countries less than a quarter of adults have access to a bank account. The received money is kept under the mattress. That is a very practical but very important barrier to saving and investing in the local economy.”