The Financing Facility for Remittances (FFR) of the International Fund for Agricultural Development (IFAD) meets today, marking its fifth year of operations and bringing together key players and partner institutions in the field of remittances and migration from around the world. It will use the opportunity to showcase FFR-financed projects (there are 47 in 39 developing countries around the world worth some US$20 million), focus on new opportunities, initiatives, partnerships and look to the road ahead.
With growing numbers of the world’s peoples living outside of their countries of birth—estimated at some 215 million—and a significant number of these sending money back home FFR projects will more than likely expand significantly as well.
The FFR noted that for last year alone, the diaspora in developed countries remitted US$325 billion to families in developing countries, through, among other things, money transfers to family and relatives, investments, trade, philanthropy and knowledge transfers. It is estimated that the money transfers, which were typically US$100, US$200 or US$300 at a time, involved more than one-and-a-half billion separate financial transactions, each costing a not insignificant sum of money.
This money is used primarily to help meet the immediate needs of family members back home, some of whom live on the brink of or below the poverty line. Mothers and fathers, who have left children behind or persons who have left elderly relatives of pensionable age or who might be infirm, remit money 12+ times a year. It ensures that loved ones in developing countries can afford rent, utility costs and food and that educational costs (tuition and transportation) are met.
In addition, it was noted, significant sums of money are also remitted for investments and for savings—often for the immigrant’s retirement and eventual return home or for the relatives.
Apart from that, and the Guyana experience is a good example, parents and relatives also spend significant sums sending home boxes and barrels, which they would have packed with foodstuff, clothing and household items. One school of thought attributes this to ‘the guilt factor’ —stating that some immigrants are unable to enjoy the higher quality of life they would have worked to achieve knowing that relatives back home have no access to same. They therefore seek to assuage the guilt they feel by sending barrels of ‘things’ to compensate.
For last year alone, Guyana was set to rake in some US$280 million in remittances; US$27 million more than the US$253 million it received last year, according to the World Bank.
With trends this year revealing that total global remittances are likely to be in the vicinity of US$350 billion, the FFR is likely to ramp up its efforts to reduce the transfer costs of remittances, promote innovative remittance and financial services and promote productive rural investment of migrants’ capital in their countries of origin.
The FFR was set up five years ago by the International Fund for Agricultural Development (IFAD) after it was recognized that remittances—a huge untapped resource—could be channelled towards credit mobilization and other forms of investment and had the capacity, if properly administered, to become a much more efficient contribution to grass-roots economic development and truly one of the world’s largest poverty reduction efforts.
FFR works to reduce money transfer fees by finding low cost ways of doing this, and at present is encouraging the use of post offices and mobile transfers in countries where the technology is available. It also seeks to influence the diaspora to invest back home, particularly in rural areas and in agriculture.
The FFR currently has projects in Latin America and the Caribbean in Bolivia, Colombia, Costa Rica, Ecuador, Haiti, Jamaica, Paraguay and Peru, and in Africa in Benin, Burkina Faso, Cameroon, Ethiopia, Ghana, Madagascar, Malawi, Mali, Mauritania, Niger, Senegal, Sierra Leone, Somalia and Uganda.
The IFAD works with poor rural people to enable them to grow and sell more food, increase their incomes and determine the direction of their own lives.
