IOM Calls for Cheaper, Transparent and More Accessible Remittances
United Kingdom - Yesterday (June 16) marked the second annual International Day of Family Remittances (IDFR), which recognises the financial contributions made by 250 million migrant workers to sustainable international development. IOM is calling on governments, the financial sector, and money transfer operators to commit to a cross-sector approach to facilitate cheaper, transparent and more accessible remittances worldwide which leverage their full potential for development.
The World Bank estimates that in 2015, remittances to developing nations surpassed 440 billion US dollars – three times the amount received in official development assistance (ODA). Forty percent of these remittance flows were received in rural areas.
Where governments fail or are unable to provide adequate access to healthcare, education, and housing, remittances are put directly into the hands of individuals and communities – with a tangible impact on quality of life. Remittances represent an economic lifeline and help make vulnerable communities more resilient to shocks, like economic downturns and natural and man-made disasters.
The UN Sustainable Development Goals (10.c) commit to reducing the cost of remittances to three percent, and closing remittance corridors with fees above five percent. However, although significant progress has been made, the costs of remittances remain high – averaging at eight percent globally, with costs significantly higher to some nations and continents. For example, for every USD 100 sent to Africa, USD 12 will be deducted in fees.
Additionally, lack of information or understanding of financial systems can mean that unofficial channels are often used to transfer money. This results in greater costs and reduced safeguards.
IOM believes that migrants who send money home need more accurate information on the services available to them and their respective costs, including innovative mobile technology options. Similarly, those who send and receive money require effective access to affordable and sustainable financial services from reliable and formal providers that are responsive to their specific needs.
Dipti Pardeshi, Chief of Mission at IOM UK, said: “Migrants are making a phenomenal contribution to international development and the UN Sustainable Development Goals. The IDFR reminds us that with a multi-sector approach encompassing the financial sector, money transfer industries, policy makers and development and migration organisations, we can improve the way remittances are earned, sent and used.”
Veronica Studsgaard, Co-Founder and CEO at The International Association of Money Transfer Networks said: “The IAMTN, as a representative stakeholder in the remittances industry, on behalf of its supporters, hereby endorses 16 June to be proclaimed the IDFR. This day aims to recognise and raise global awareness of the fundamental contribution made by migrant workers through remittances to the wellbeing of their families and communities back home, and to the continued development of their countries of origin.”
Pedro de Vasconcelos of the International Fund for Agricultural Development, the organization that founded the day added: “The IDFR, celebrated on 16 June, is aimed at recognizing the fundamental contribution of migrant workers to their families and communities back home, and to the sustainable development of their countries of origin. On the International Day of Family Remittances, let us commit to the goal of making the migration of future generations a choice rather than a necessity.”
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