Remittance flows to developing countries reaches $445 billion in 2016

16 Jun 2017, 12:00 am
Financial Nigeria

Summary

Total migrant worker earnings are estimated to be $3 trillion annually, out of which approximately 85 per cent remains in the host countries.

Remittance flows from migrants rose by 51 per cent over the past decade from $296 billion in 2007 to $445 billion in 2016, according to a new report by the International Fund for Agricultural Development (IFAD).

The report – titled Sending Money Home: Contributing to SDGs, One Family at a Time – attributed the sharp rise in remittance flows over the past decade to Asia, which has witnessed an 87 per cent increase in remittances.

The decade-long remittance flows also is far greater than the 28 percent increase in migration from developing countries over the same period, the report said.

“It is not about the money being sent home, it is about the impact on people’s lives,” said Gilbert F. Houngbo, President of IFAD. “The small amounts of $200 or $300 that each migrant sends home make up about 60 per cent of the family’s household income, and this makes an enormous difference in their lives and the communities in which they live.”

The report said more than 200 million migrant workers are now supporting an estimated 800 million family members globally. It projected that in 2017, one-in-seven people in the world will be involved in either sending or receiving more than $450 billion in remittances.

Total migrant worker earnings are estimated to be $3 trillion annually, out of which approximately 85 per cent remains in the host countries. The money migrants send home averages less than one per cent of their host country’s GDP.

When individual remittances are taken together, they account for more than three times the combined Official Development Assistance (ODA) from all sources, and more than the total foreign direct investment to almost every low- and middle-income country. Transaction costs to send remittances currently exceed $30 billion annually, with fees particularly high to the poorest countries and remote rural areas.

“About 40 per cent of remittances - $200 billion – are sent to rural areas where the majority of poor people live,” said Pedro de Vasconcelos, the Manager of IFAD’s Financing Facility for Remittances and lead author of the report.

“This money is spent on food, health care, better educational opportunities and improved housing and sanitation. Remittances are therefore critical to help developing countries achieve the Sustainable Development Goals.”

In Africa, Nigeria remained the top destination for remittances over the last decade as flows rose 5.2 percent from $18 billion in 2007 to $19 billion in 2016.

Other top African remittance destinations are: Egypt, with a 117 percent growth in flows from $7.7 billion to $16.6 billion; Morocco, with a 4.1 percent growth from $6.7 billion to $7 billion; Algeria, which recorded a 3.5 percent decline in flows from $2.1 billion to $2 billion; and Ghana, where flows reached $2 billion in 2016.

“As populations in developed countries continue to age, the demand for migrant labour is expected to keep growing in the coming years,” said de Vasconcelos. “However, remittances can help the families of migrants build a more secure future, making migration for young people more of a choice than a necessity.”


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