Financial Thought and the Diaspora
I recently came across another excellent article on the importance of reducing remittance fees worldwide. In “Remittances and savings of the diaspora can finance development,” at EurActiv.com, authors Mahmoud Mohieldin (Corporate Secretary and the World Bank President’s special envoy on Millennium Development Goals and Financial Development) and Dilip Ratha (head of the World Bank Migration and Remittances Unit and Global Knowledge Partnership on Migration and Development) lay out the numbers while explaining the many benefits of remittances.
I find these statistics especially interesting (source: The World Bank):
- There are over 230 million international migrants worldwide (more than the entire population of Brazil – the world’s fifth largest country).
- They earn an estimated $2.6 trillion annually (more than the entire GDP of the United Kingdom – the world’s sixth largest economy).
- Last year (2013), migrants sent home over $404 billion (which does not include the extensive amounts sent via informal channels) to developing countries.
- International money transfer fees are excessively high – currently averaging more than 8% globally.
“Remittances have reduced poverty in Bangladesh, Ghana, and Nepal. Children from recipient households in El Salvador have a lower school-dropout rate; in Sri Lanka, they have more access to private tutors. The money finances health care, housing, and businesses.”
– Mahmoud Mohieldin and Dilip Ratha
The G-20 understand the positive economic impact of remittances, and have set the goal of reducing remittance costs to 1% by 2030. But what’s the solution? Mohieldin and Ratha suggest that mobile banking technology, increased market competition, decreased governmental regulations, and the creation of new “diaspora financial instruments” could help pave the way forward. I believe the global financial community has a responsibility to reduce remittance fees worldwide. Now is the time for new ideas to make international money transfers secure, affordable, and accessible.