Remittance inflow has helped Bangladesh cut its poverty by six percent, according to the World Bank's annual 'Global Economic Prospects' (GEP) report for 2006.
"Remittances have association with significant declines in poverty in several low-income countries including six percent in Bangladesh, 11 percent in Uganda and five percent in Ghana," the report said.
In addition, remittances appear to help households maintain their consumption levels in the face of economic shocks and adversity. Remittances are also associated with increased household, investments in education and health, as well as bolstered entrepreneurship. These conclusions are borne out by findings of a recent World Bank research study on 'International Migration, Remittances and the Brain Drain'.
But the fees charged by remittance service providers are often as high as 10 to 15 percent of the remitted amount for small transfers typically made by poor migrants. The GEP report recommends actions to reduce these fees, which are often much higher than the actual cost of carrying out the transactions.
The report says increased competition in the remittance transfer market would result in lower fees, thereby increasing the disposable income of poor migrants, as well as their incentives to send more money home.
Reducing remittance costs would do more to encourage the use of formal remittance channels than the so-called informal services. While regulation is necessary to curb money laundering and terrorist financing, it must be implemented in a way that does not interfere with the objective of reducing remittance costs.
The South Asia region will receive an estimated $32 billion in remittances in 2005, a 67 percent increase from 2001. With recorded inflows of $21.7 billion in 2004, India received the most in remittances in the world, followed by China and Mexico at $21.
3 billion and $18.1 billion respectively.
Of other South Asian countries, Pakistan received $3.9 billion and Bangladesh $3.4 billion. Meanwhile, in Sri Lanka, remittance receipts are larger than tea exports, and in Nepal, remittances account for nearly 12 percent of GDP.
Officially recorded remittances worldwide are estimated to exceed $232 billion in 2005. Of this, developing countries are expected to receive $167 billion, more than twice the volume of development aid from all sources.
The GEP authors suggest that remittances sent through informal channels could add at least 50 percent to the official estimate, making remittances the largest source of external capital in many developing countries.
The report cites experiences of reducing remittance transfer fees in India, the Philippines, and the US-Mexico corridor, as examples for others to follow.
The steady stream of foreign exchange flowed from the remittances can improve a country's creditworthiness for external borrowing, it added.
International migration can generate substantial welfare gains for migrants and their families, as well as their origin and destination countries, if policies to better manage the flow of migrants and facilitate the transfer of remittances are pursued, the GEP report said.
While encouraging reforms to facilitate an increased flow of remittances, the report opposes efforts by governments to tax remittances and cautions against providing incentives for direct remittances in specific areas or sectors through matching-fund programmes.
|
Source : |
|
| |
|
