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The impact of remittances for development

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 The impact of remittances for development

Date: 16-19 June 2015

Place: Milan, Italy

Pillars: Migration and Development

Look back at the first African Conference on Remittances and Postal Networks (Cape Town, South Africa) and introduction to the next Global Forum on Remittances and Development 2015 (Milan, Italy)

Each year more than US$60 billion in remittances is sent to and within Africa, but often at great expense. Finding ways to leverage this powerful financial and development force by making remittance services more affordable and accessible to rural people was the focus of the first African Conference on Remittances and Postal Networks, which took place on 4-5 March in Cape Town, South Africa, hosted by the International Fund for Agricultural Development (IFAD).

The conference was organised under the African Postal Financial Services Initiative, a joint regional programme launched by IFAD’s Financing Facility for Remittances (FFR) in collaboration with the World Bank, the Universal Postal Union (UPU), the World Savings Banks Institute/European Savings Banks Group (WSBI/ESBG) and the United Nations Capital Development Fund (UNCDF), and cofinanced by the European Union. This unique partnership aims to enhance competition in the African remittance market by promoting, supporting and enabling post offices in Africa to offer remittance and financial services and to foster dialogue between stakeholders, regulators and policymakers.

Over two days, some 100 delegates from postal operators, postal banks, regulatory authorities, governments, the private sector, international organizations, civil society and others involved in the remittance market from across Africa met to focus on addressing the challenges for improving the provision of remittance and financial services through postal networks in rural Africa, and share experiences and solutions.

Among the topics that were covered by the conference were market positioning of postal operators, linking remittances with financial inclusion, innovative technologies for financial inclusion, and the legal and institutional environment affecting post offices and remittances.

Remittances make a major contribution to the incomes of rural households. But at the same time, a dearth of services, lack of competition and other causes also make rural remittances enormously expensive. Similarly, high transaction costs, limited rural payment networks, low financial literacy and consumer protection, as well as problematic regulatory environments, prevent these financial flows from having greater development impact.

In this market, postal networks have a key role to play. More than 80 per cent of post offices in sub-Saharan Africa are located outside the top three cities in each country, in areas where banks are often absent. Post offices are therefore often well placed to deliver remittances in rural areas, but they lack the business model, technology and expertise to process real-time payments and provide additional financial services in an efficient and safe manner. The opportunities are clear, the challenges too, and the event organized by IFAD gave some first concrete responses.

The conference was also a key milestone on the road towards the next Global Forum on Remittances and Development 2015, that will take place in Milan, Italy, from 16 to 19 June 2015 in conjunction with the Universal Exposition EXPO2015 - Feeding the Planet, Energy for Life.

Organised by IFAD in collaboration with the Word Bank and the European Commission, the GFRD 2015 will focus on the global remittance markets, with a special attention on European-linked corridors and the development impact these have in the developing world. Over 400 participants from the public and private sectors and civil society are expected to attend, with the purpose of discussing issues related to global remittances and finding solutions to maximize the development impact of these flows. No continent has more experience or ongoing involvement in remittances than Europe, having been a source of large-scale migration in the past that has resulted in remittances flowing back home. Europe has now become home to millions of migrants and a net sender of remittances, although in many European countries a high number of families continue to rely on these flows from abroad.

The opening of the GFRD will also coincide with the first celebration of the International Day of Family Remittances, which was officially declared by IFAD and will be celebrated every year on June 16. The objective of this observance is to recognize and raise global awareness of the fundamental contribution made by migrant workers to the well-being of their families and communities back home, and to the sustainable development of their countries of origin. In recent years, migrant remittances have become a major subject of interest for governments and development organizations alike.

With over US$500 billion expected to be sent by migrant workers to their home countries by the end of 2015, remittances represent a key flow of foreign currency with tremendous impact on local communities because they bring in large amounts of money that help sustain millions of families. The importance of these flows is now internationally recognised. Maximising the impact of remittances is on the list of priorities of governments and the development community.

The GFRD 2015 is the right place to be if you want to know the most recent data on remittances flows, share best practices and lessons learned, raise awareness, promote dialogue, stimulate partnerships and create long-lasting synergies among all stakeholders involved in the remittances market worldwide, from the public and private sector and the civil society. Registrations are open! Do not miss the opportunity to be part of it.

Useful links:

African Conference on Remittances and Postal Networks: www.ifad.org/remittances/events/2015/index.htm

African Postal Financial Services Initiative: http://www.ifad.org/remittances/pub/african.pdf

Global Forum on Remittances and Development 2015: http://www.remittancesgateway.org/index.php?option=com_content&view=article&id=185&Itemid=353

http://www.ifad.org/remittances/events/2015/globalforum/index.htm

IFAD’s Financing Facility for Remittances (FFR): www.ifad.org/remittances

Remittances Gateway: www.remittancesgateway.org