We have just celebrated The International Day of Family Remittances (IDFR), a day that recognises the significance of the financial contribution migrant workers make in supporting the wellbeing of their relatives back home as well as the sustaining developmental projects in their home countries.
Over the last 45 years, global remittances flow has soared by over 30,000% with 2016 recording about 580 billion USD in flows. Remittances have supported individual families in improving their quality of life, from accessing better health care, to education, accommodation to starting up and expanding businesses. It was only in the last 10 years that remittances from migrant workers became increasing recognised, and today account for over 3 times of developmental aid sent to developing countries.
Migration and remittances
Remittances have been on the increase because of the increasing scale of migration across borders – those forced to flee their homelands to those seeking better economic opportunities. Today we have 250 million migrants crossing national borders, a 60% increase since 1990. A phenomenon labelled as “The human face of globalisation”. Despite the slow in remittances flow since 2014, the role it plays in supporting developing countries cannot be underestimated, as top origins of remittances coincide with top migrant destinations like United States and Saudi Arabia ranking top two and have remained on the increase since 2010.
Top destination countries by continent are Asia (India and China); Europe (France; Germany); Africa (Nigeria, Egypt); Latin America and Caribbean (Mexico, United States). Remittances flow is clearly a North to South thing, and US, Saudi and UAE have the busiest corridors.
It is estimated that migrant workers send home approximately $200 to $300 several times a year and of the 750 million worldwide receiving this, 50% are rural residents. A survey by African Development Bank and the World Bank of African diaspora in Belgium from the Dem. Republic of Congo, Nigeria and Senegal and their household members in their corresponding countries were interviewed, showed they sent between $800 to $1600 equivalent as often as about 8 times per year to over 50% of their households living in rural areas. Apart from supporting everyday expenditures like feeding, education, rent, these households make significant investments in land, businesses, housing, agriculture. In particular, over 57% of remittances coming into Nigeria are dedicated to investments. United States and UK to Nigeria are one of the busiest remittances corridor with over $9.4 billion remitted through formal means in 2015 only.
Remittances from OECD countries are sent mainly through formal means like Western Union and banks compared to remittances originating from African countries where friends and relative or self-delivery are the main medium of delivery. Despite the significance of these funds to rural residents, there is an obvious financial exclusion to formal financial services in rural areas. Social and geographical barriers remain a problem, as banks who take up this particular service in developing countries prefer to establish branches in developed areas leaving rural dwellers to incur additional expenses in transportation and time to commute long distances and send or access funds. In rural Kenya geographic distance to bank could be up to 4 km or further for banks rendering money transfer services. Banks also require documentation, which can be a barrier for less literate rural dwellers. Sending costs within African countries are also high and in some instances, receivers incur further costs.
How Republic of Benin is Responding to Financial Exclusion and Access to Remittances
Republic of Benin is improving access to remittances in rural communities by equipping post offices to offer basic financial services of sending and receiving remittances without the opening of account. This provision of this service has not only ensured further access to funds to support families and development project but has created jobs to rural indigenes.
Republic of Benin Response to Accessing Remittances in Rural Locations (Source: capacity4devuservids)
Diasporic networks, remittances and rural areas – A Case of Nigeria
Diasporic networks are becoming a medium through which rural communities and migrants are responding to the “human face of globalization” – the need to leave home for better economic opportunities but also bring back development and aid that would not have resulted. Beyond of remittances to individual families, there is also community remittances sent by individuals; formal and informal diasporic networks in migrant destination countries back to their communities of origin. It supports developmental projects in home communities from building infrastructure, hospitals, road, power generation, water, education, providing scholarships, specialist health care provision, promoting culture to tourism. Nigeria is one of the top sending migrant country in Africa and top remittance receiving country globally, with United States and United Kingdom as key destination of its migrants and key origins of remittances.
Across UK and US, Nigerians in diaspora have set up three formal diasporic networks with the mandate of fostering development and growth in Nigeria as well as support Nigerians in these destinations. They are MANSANG – Medical Association of Nigerians Across Great Britain, Mbano National Assembly and Arondizuogu Patriotic Union. They have over time supported education, infrastructural development, cultural exchange and tourism and specialist health care via medical missions through remittances and skills targeted at rural communities. They bring to rural areas in Nigeria locally unavailable specialist skills. The role of such networks in fostering development through their remittance is less looked upon than family remittances yet it is a way rural areas are responding to the out migration of their workforce and migrants maintaining connections with their rural communities in their home country. While they support these rural communities, remitting funds to these locations to support developmental work is also an issue.
How much we can respond to financial exclusion of rural areas, recognize and harness migrants, diasporic networks and connections is important in curbing the negative impacts of globalisation on rural communities.