The amount of money migrants send to their families in developing countries has risen by 51 per cent over the past decade – far greater than the 28 per cent increase in migration from these countries.
This is indicated in a new report, Sending Money Home: Contributing to the SDGs, One Family at a Time, released by the International Fund for Agricultural Development (IFAD) today.
The report the first-ever study of a 10-year trend in migration and remittance flows over the period 2007-2016. While the report shows that there have been increases in sending patterns to almost all regions of the world, the sharp rise over the past decade is in large part due to Asia which has witnessed an 87 per cent increase in remittances.
Despite the decade-long trend, Gilbert F. Houngbo, President of IFAD, said the impact of remittances must first be viewed one family at a time. “It is not about the money being sent home, it is about the impact on people’s lives. 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.”
More than 200 million migrant workers are now supporting an estimated 800 million family members globally. It is projected that in 2017, one-in-seven people in the world will be involved in either sending or receiving more than US$450 billion in remittances. Migration flows and the remittances that migrants send home are having large-scale impacts on the global economy and political landscape.
Total migrant worker earnings are estimated to be $3 trillion annually, 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.
Taken together, these individual remittances 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.
“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.”
Transaction costs to send remittances currently exceed $30 billion annually, with fees particularly high to the poorest countries and remote rural areas. The report makes several recommendations for improving public policies and outlines proposals for partnerships with the private sector to reduce costs and create opportunities for migrants and their families to use their money more productively.
“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.”
Other key findings from the Report:
- Remittance flows have grown over the last decade at a rate averaging 4.2 per cent annually, from $296 billion in 2007 to $445 billion in 2016.
- One hundred countries receive more than $100 million in remittances each year.
- It is projected that an estimated $6.5 trillion (at no growth) in remittances will be sent to low- and middle-income countries between 2015 and 2030.
- The top ten sending countries account for almost half of annual flows, led by the United States, Saudi Arabia and the Russian Federation.
- Eighty per cent of remittances are received by 23 countries, led by China, India and the Philippines.
- Asia receives 55 per cent of all remittance flows.
The report is released ahead of the International Day of Family Remittances commemorated annually on 16 June. Its analysis and recommendations set the stage for discussions at the Global Forum on Remittances, Investment and Development 2017 on 15-16 June at UN Headquarters in New York.