A dramatic up tic in the amount of money migrants send home to their families in developing countries is helping to lift millions out of poverty, according to a new report out today from the United Nations International Fund for Agricultural Development (IFAD).
The first-ever study, Sending Money Home: Contributing to the SDGs, One Family at a Time, highlights the role these funds - more than $445 million in 2016 ¬- play in helping development countries attain the UN Sustainable Development Goals (SDGs).
"About 40 per cent of remittances - $200 billion - are sent to rural areas where the majority of poor people live," said Pedro de Vasconcelos, manager of IFAD's Financing Facility for Remittances and lead author of the report, which notes that over the past decade, remittances have risen by 51 per cent - far greater than the 28 per cent increase in migration from these countries.
"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," underscored Mr. de Vasconcelos.
Sending Money Home covers a 10-year trend in migration and remittance flows from 2007-2016. While the report shows that there have been increases in sending patterns most 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, IFAD President Gilbert F. Houngbo noted 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," said Mr. Houngbo.
Currently, about 200 million migrant workers support some 800 million family members globally. This year, and expected one-in-seven people globally will be involved in either sending or receiving more than $450 billion in remittances, according to the report.
Migration flows and remittances are having large-scale impacts on the global economy and political landscape. Total migrant earnings are estimated at $3 trillion annually, approximately 85 per cent of which remains in the host countries. The money sent home averages less than one per cent of their host'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.
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," pointed out Mr. 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," he added.