29 June 2006
Questions Raised Concerning Impact of Private Remittances on Development at United Nations Symposium on Migration
Total Remittances Sent Home to Developing Countries by Workers Abroad Totalled $173 Billion in 2005
TURIN, 29 June -- The total amount of remittances sent home to developing countries by workers abroad reached $173 billion in 2005, $6 billion more than previously estimated, a United Nations symposium on migration taking place this week in Turin, Italy, was told.
If remittances flowing through highly informal channels are taken into account, the total would likely reach around $250 billion to developing countries, and $350 billion worldwide, according to Dilip Ratha, World Bank senior economist.
Not only are total remittances rising, but they are doing so more steadily and predictably than private capital flows, or even official development assistance. But, questions have arisen as to how private remittances can also advance public purposes, such as national development strategies or efforts to attain the United Nations Millennium Development Goals.
Speaking at a workshop on the second day of the International Symposium on Migration and Development, Mr. Ratha indicated that, when these funds are relayed through banks or microfinance institutions in poor countries, they bolster institutions that are well suited to support finance for development, while providing a secure repository for recipients.
On a broader scale, the arrival of remittances strengthens a nation's balance of payments and reduces the ratio of debt to exports, and can, therefore, make developing countries more credit worthy. The dependability of inflows from overseas expatriates was used recently by Brazil, for example, to securitize a large loan from Japan at 10 percentage points less, than would have otherwise been possible.
Diaspora in action
Another example of the usefulness of communities of migrants abroad (diaspora) was described by Thomas McCarthy, who emigrated from Ghana to Europe in 1988. Aided by a programme of the International Organization for Migration, he linked with other Ghanaian émigrés in the region to set up a dynamic interaction with their home country.
The Modena-based Ghanacoop is importing fruit from Ghana, acquiring and managing farmland and setting up links between Italian and Ghanaian banks. An upcoming project is to install solar panels in villages without electricity, so the inhabitants "can see the sunlight during the night", Mr. McCarthy said.
Ghanacoop is also working on the local front, providing services for migrants and working to build bridges with Italian communities. Consciousness-raising is also taking place at the other end of the migrant flow, as the cooperative seeks to dispel illusions, as well as open up economic opportunities in Ghana.
"When I got out of school, my dream was to go to Europe, as it was for all my friends," said Mr. McCarthy, who found jobs in construction and metal working, and as a driver. "We believed that, once we came here, all our problems would be solved. But that's hardly the case."
* *** *