Migrant Worker Remittances Surpass Development Assistance and Foreign Direct Investment

Gilbert F Houngbo, President of International Fund for Agricultural Development (IFAD),

Migrant Worker Remittances Surpass Development Assistance and Foreign Direct Investment

By Abdi Ali
Published July 15, 2019

Paul Winters, IFAD Associate Vice President, says providing better access to remittances and better use to families through rural financial institutions has had a positive impact in rural areas by bringing many unbanked recipients into the formal financial sector. Remittances from international migrant workers are expected to rise to an estimated US$550 billion in 2019, up from US$529 billion in 2018.

Gilbert F Houngbo, President of International Fund for Agricultural Development (IFAD), says the money sent home by the world’s 200 million migrant workers adds up to more than three times the level of official development assistance (ODA).
Saying the remittances also surpass foreign direct investment (FDI), Houngbo notes this amount is impressive as it ‘corresponds to only 15 per cent of migrant workers’ earnings, with 85 per cent remaining in host countries’.

“Behind the numbers are the individual remittances of $200 or $300 that migrants send home regularly so that their 800 million family members can meet immediate needs and build a better future back home. Half of these flows are sent to rural areas, where they count the most,” Houngbo says.

If current trends continue, it is projected that US$8.5 trillion will be transferred to families in developing countries by 2030 when United Nations’ Agenda for Sustainable Development is expected to have been met.

Gilbert F Houngbo, President of International Fund for Agricultural Development (IFAD), says the money sent home by the world's 200 million migrant workers adds up to more than three times the level of official development assistance (ODA). “Governments, regulators and the private sector have an important role to play in leveraging the effects of these flows and, in so doing, helping nearly one billion people to reach their own sustainable development goals by 2030,” Houngbo says.

IFAD, that explains that remittances are private funds transferred through private channels that are viewed both as a business opportunity and as a tool for development, the Rome-based UN agency says linking these flows with financial services remains one of the greatest development opportunities that remittances offer.

“Providing better access to remittances and better use to families through rural financial institutions has had a positive impact in rural areas by bringing many unbanked recipients into the formal financial sector. Thanks to this inclusive effect, families can now collaterise remittances and access financial products, such as savings, credit, and insurance,” says Paul Winters, Associate Vice-President of IFAD.