Migrants' transfers: substantial financial flows for developing countries
Funds remitted by migrants generate very substantial financial flows for developing countries, accounting in some cases for a major part of their gross domestic product. They may in cer-tain cases exceed the amount of Official Development Assistance (ODA) going to the country concerned and, according to the estimates of the World Bank, total remittances stood at ap-proximately $283 billion in 2008. The Leading Group’s reflections focused particularly on the facilitation of such remittances, reducing their cost and maximising their impact on the receiv-ing country.
Although migrant remittances have long withstood the vagaries of the economic climate, the present crisis seems to be having a major impact on such flows, and the decline in their level is affecting emerging economies, which are often highly dependent on them, thus heightening the impact of the crisis on the poorest countries.
Numerous initiatives have already been undertaken both in the developed countries (in par-ticular in Spain and France) and in the developing world in order to put in place mechanisms to facilitate such fund transfers and to make them more effective, but much remains to be done. In the developed countries, there is a need to improve banking services to provide a better fit to migrants’ needs and to develop cooperation between the financial sector and the public authorities. In the receiving countries, particular attention needs especially to be de-voted to access to banks through development of micro-credit institutions and e-banking, as well as reflecting on how the impact on the local economy might be maximised.
The positions of the Leading Group
The Leading Group, whose member countries have differing levels of development, has played a major role in raising awareness of the contribution of migrant remittances to devel-opment. The work done by the Group is aimed particularly at channelling migrant remittances towards productive or social investment in the migrants’ countries of origin, and the Leading Group is seeking to play an important role as a unified platform.
The Conakry Declaration states that the Leading Group provides “an important opportunity for exchange of good practices on transparency and reduction of the transfer cost of remit-tances, the setting up of mechanisms, including especially tax mechanisms, helping to channel such remittances towards productive or social investment in the migrants’ countries of origin. These mechanisms must mainly facilitate access for the beneficiary families to the financial and banking institutions.”
Migrant remittances are not in themselves an innovative mechanism for development financ-ing. They have played an important part in financing the economies of developing countries for decades. Various mechanisms based on voluntary contributions facilitated by the public authorities testify to the innovative character of these resources for development. Neverthe-less, several partners have raised the issue of the need for the international community to put in place a legal framework to allow such flows to be channelled in the most appropriate way.
Among the countries in the Leading Group, the United Kingdom has focused on making of-fers of services more fluid by stimulating competition through flexible regulations and the diversification of rapid fund transfer methods, while Spain has concentrated on encouraging migrants to use the banks on the basis of very low transfer costs. Where France is concerned, the aim has been to channel these resources toward collective investment within the frame-work of co-development programmes (co-development savings accounts and bank books).