The global and social impact of remittances

The concept of moving money around the world has been one which has existed across generations. It’s only the method that has changed.

According to a report by the International Fund for Agricultural Development (IFAD), 200 million migrants from low and middle-income nations, send remittances to 800 million loved ones on a regular basis. Meaning that one out of every seven people in the world is affected somehow by remittances.

The IFAD publication refers to these remittance families as forming the “human face of globalization.”

 

remittances

One in seven people around the world sends or receives remittances.

 

For the millions of people who rely on remittances worldwide, this monthly gift opens the door to better healthcare, education and nutrition – essentials that many people take for granted.

In fact, for many developing countries, the importance of remittances is such that they significantly overtake the economic contribution of many national sources of income to become a valuable stabilising factor, representing, on average, 60 percent of every household’s revenue.

Connecting people 

Today, there are around 250 million people living outside their country of birth, with roughly 90 percent taking on the less desirable jobs at the lower end of the international economy. Between 2007-16, the number of migrants from developing countries increased by 28 percent and at the same time, remittances to developing countries increased by 56 percent.

Regions such as Latin America, the Caribbean, the Near East and Caucasus also experienced a rise in remittances, at an average of 27.5 percent. In light of this upwards trend, IFAD predicts that between 2015 and 2030, a total of $6.5 trillion in remittances will be sent to low and middle-income nations – a figure that is almost too difficult to comprehend.

The top five countries sending the highest volume of remittances today are the United States, Saudi Arabia, United Arab Emirates, the United Kingdom and Canada.

 

Remittances

Migrant worker income distribution and remittances as disposable income for receiving families, taken from IFAD’s Sending Money Home: Contributing to the SDG’s, One Family at a Time 2017 report.

 

IFAD have highlighted the power of remittances and are encouraging governments of sending and receiving countries to acknowledge the importance of leveraging them as an integral part of their development agenda and financial inclusion policies.

Since 2009, the cost of money transfer has dropped from an average of 9.67 percent to 7.09 percent, representing a lifetime low.[1]

Although the goal is to keep this cost decreasing, these numbers reflect progress throughout recent years. This also means that international migrants are seeing more of their hard-earned money directly transferred to their loved ones.

Ria aims to keep prices as affordable as possible, with our global average remittance costs now representing just 3.7 percent of the total. Through providing fairer pricing, we give more money to our customers, empowering them and the remittances they send to continue to do global and social good.

[1] Remittance Price Worldwide, Issue 24, December 2017.