Remittances and Sustainable Development:

A $100 billion Idea

Dilip Ratha

Swisscontact Event on Remittances, New York

September 17, 2015

 International migrants: 250 million

South-South migration larger than S-N migration
Domestic migrants: 750 million

Remittances
$440 Billion
Remittances

$135 Billion
Aid

Aid that works!

42%

Nepal
Poverty rate

31%

1995

2005

Dollars wrapped with care

Exorbitant remittances costs

8%
Global average

12%

20%

95%

Africa

Within Africa

Venezuela

Reduce remittance cost

8% (Global average)

$20 Billion
annual savings
3%

Global Remittances Agenda

1. Monitoring,
analysis,
projection
2. Retail payment
system
3. Financial
access for
households,
SMEs

4. Capital market
access for
countries,
companies

Size, corridors, channels

Counter-cyclicality
Effects on poverty, education, health, investment
Policy (costs, competition, exchange controls)

Payment platforms/instruments
Clearing/settlement, capital adequacy,
disclosure, cross-border arbitration
Anti-money laundering (AML/CFT)

Deposit and saving products

Mortgage, consumer loans, microfinance
Credit history for MFI clients
Insurance products

Sovereign credit rating

Bonds backed by future remittances as collateral
Diaspora bonds

Over $50 billion per year could be

mobilized via diaspora bonds
Diaspora size Estimated savings
(millions)
($ billions)
Developing countries

181

511

East Asia & Pacific

29

116

Europe & Central Asia

42

93

Lat. America & Carib.

34

146

Middle East & N. Africa

19

47

Sub-Saharan Africa

22

37

South Asia

35

72

Source: Ratha and Mohapatra 2011.

Recruitment fees
$4,000

Income per year

$2,000

Reduce recruitment costs

$4,000

$4 Billion

for every 1 million migrants

$0

$100 billion idea

Diaspora savings via diaspora bonds ($50 bn)
Reducing remittance costs ($20 bn)
Reducing recruitment fees paid by lowskilled migrant workers ($20 bn)

Diaspora philanthropy ($10 bn)

Using future-flows as collateral
($4-$25 bn for Africa alone)

Remittances in Development Goals and

Financing for Development
Remittances cannot be equated to ODA
Ensure adequate financial services for migrants
Reduce cost of remittances by 2030 to less than

3%; no remittance corridor charges higher than 5%

Address obstacles such as banks withdrawing

services

Remove obstacles to non-bank RSPs accessing

payment system infrastructure

Cheaper, faster and safer remittances through

competitive, transparent market conditions

Exploit new technologies, promote financial literacy

and inclusion, and improve data collection

The Future
Organic annual growth rate 7-8%
South-South remittances and South-North
remittances to grow

Remittance fees to fall, but FX margins to

remain

Exploit remittance platforms for:

consumer saving, loans, insurance
diaspora bonds
philanthropy

Thank you!
www.worldbank.org/migration
www.knomad.org