The International Day of Family Remittances is observed every year on 16 June in recognition of the fundamental contribution of migrant workers to their families and communities back home and to the sustainable development of their countries of origin.
In 2018, over 200 million migrant workers sent US$689 billion back home to remittance reliant countries, of which US$529 billion went to developing countries. That’s over three times the amount of official development assistance and beyond foreign direct investment combined.
A staggering one billion, or one in seven people in the world, are involved with remittances, either by sending or receiving them. One in nine people in the world – around 800 million – benefit from these flows.
Between 2015 and 2030 (the SDG timeframe), an estimated US$8.5 trillion will be sent by migrants back to their communities of origin in developing countries. Of that amount, more than US$2 billion will either be saved or invested.
Migrant workers send on average US$200 or US$300 home every one or two months. This represents only 15 per cent of what they earn, as the rest stays in their host countries. What they send can make up to 60 per cent of a household’s total income and represents a lifeline for millions of families.
About 75 per cent of remittances is used to put food on the table and cover medical expenses, school fees or housing expenses. At times of crises, migrant workers may send more money home to cover loss of crops or family emergencies. The rest, about 25 per cent of remittances, representing over US$100 billion per year, can be either saved or invested in asset building or activities that generate income, jobs and transform economies, in particular in rural areas. Remittances can be an engine of development.
Remittances matter enormously in rural areas. Around half of the global remittances go to rural areas where 75 per cent of the world’s poor and food insecure live. Globally, the accumulated flows to rural areas over the next five years will reach 1US$ trillion.
Remittances can be costly to send. Conversions and fees cost, on global average, seven per cent of the amount sent. Sustainable Development Goal 10.c aims to reduce transaction costs to less than three per cent by 2030. Technical innovations, in particular, mobile technologies, digitalization and blockchain can fundamentally transform the markets, coupled with a more conducive regulatory environment. Migrants make an invaluable contribution to the Sustainable Development Goals, through remittances and investments. In particular, they contribute to ending poverty (SDG 1), zero hunger (SDG 2), good health (SDG3), quality education (SDG 4), clean water and sanitation (SDG 6), decent work and economic growth (SDG 8) and reduced inequalities (SDG 10).
Migrant contribution to development, through remittances and investments, has been recognized in Objective 20 of the Global Compact on Safe, Orderly and Regular Migration, adopted by the United Nations General Assembly in December 2018.
AD’s Financing Facility for Remittances (FFR) works to leverage the impact of remittances in rural areas by promoting innovative business models to lower transfer costs and provide financial services for migrants and their families. Through cross-sector partnerships, the FFR implements initiatives to empower migrants and their families through financial education and inclusion, while promoting migrant investment and entrepreneurship.