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Migrants' Billions Put Aid in the Shade

World  (tags: 'CIVILLIBERTIES!', 'HUMANRIGHTS!', africa, asia, children, freedoms, ethics, government, media, politics, Refugees&Relief, Refugees&Relief, world, usa, society )

- 1939 days ago -
Money transfers from workers abroad to family back home have tripled in a decade and are three times larger than global aid budgets

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JL A (281)
Thursday January 31, 2013, 12:09 pm

Migrants' billions put aid in the shade

Money transfers from workers abroad to family back home have tripled in a decade and are three times larger than global aid budgets

Claire Provost
The Guardian, Wednesday 30 January 2013 13.35 EST

Migrant workers wait for a bus to take them home after a day's work in Dubai. Remittances by people working abroad topped $530bn last year. Photograph: Ghaith Abdul Ahad

For decades it was a largely unnoticed feature of the global economy, a blip of a statistic that hinted at the tendency of expatriates to send a little pocket money back to families in their home countries.

But now, the flow of migrant money around the world has shot up to record levels as more people than ever cross borders to live and work abroad. It's known as remittance money, and in 2012 it topped $530bn (335bn), according to the latest World Bank figures.

The amount has tripled in a decade and is now more than three times larger than total global aid budgets, sparking serious debate as to whether migration and the money it generates is a realistic alternative to just doling out aid. If remittances at the level recorded by the World Bank were a single economy, it would be the 22nd largest in the world, bigger than Iran or Argentina.

And according to World Bank officials, the real figure could be much larger. Dilip Ratha, of the migration and remittances unit at the World Bank, said that billions more in remittances were not being recorded as many people were continuing to bypass the banks and big money transfer companies that are relied on for data.

A number of countries, including the Philippines, Bangladesh and Senegal, have set up initiatives or even government ministries to manage cash sent from overseas.

The Rwandan government, which has seen much of its aid cut last year over allegations it was supporting rebels in neighbouring Democratic Republic of the Congo, has called on Rwandans living abroad to contribute to a new "solidarity fund", in an attempt to lessen its reliance on aid.

"It's something that's been going on since time immemorial," said Michael Clemens, a US economist who studies migration and remittances at the Centre for Global Development, a thinktank based in Washington. "But now, for example, with Skype you can see the school uniform bought with the money you sent in the morning."

But there is a dark side. Attention is turning to the companies scrambling to capture as much as they can from these multibillion-dollar flows. In some cases, more than 20% of money migrants send is lost to transfer fees.

India and China were the biggest beneficiaries of remittances last year, each receiving more than $60bn, followed by the Philippines ($24bn), Mexico ($24bn), and Nigeria ($21bn). Egypt, the sixth largest, has seen the value of remittances surge from less than $9bn in 2008 to nearly $18bn last year.

For some smaller economies, remittances can account for huge proportions of national income. Tajikistan and Liberia receive the equivalent of 47% and 31% of their respective GDPs from workers abroad.

For dozens of developing countries the money migrants sent home is worth more than the aid they receive. For some including Bangladesh, Guatemala, Mexico and Senegal remittances from workers abroad are larger than aid and foreign investment combined.

Globally, there are more than 214 million migrants; if they lived in one country, it would be the fifth most populous, trailing only China, India, America and Indonesia.

Migrants in the UK sent nearly $4bn in remittances to India in 2011, according to World Bank estimates, compared with the $450m in UK aid it received that year. Bangladesh received $740m in remittances from the UK in 2011; its aid amounted to $370m.

"People feel an obligation. I've never heard someone with an origin in another country not feel a sense of obligation, or a sense of connection, or wanting to make a contribution," said Britain's shadow minister for international development, Rushanara Ali.

Ali, who was born in Bangladesh, believes the UK government should look at how remittances could complement aid spending. "There will always be pressures on budgets," she said. "The time is ripe for coming up with new ideas on how diaspora communities can make a contribution."

The remittance phenomenon has been largely recession proof, although there was a dip in 2008/09. But the biggest complaint from migrants is the cut taken by banks and wire transfer firms. The G8 wants the global cost of sending money lowered to an average of 5% by 2014, giving billions more to migrants' families. At present, the average fee is about 9%, meaning an average of $18 for every $200 sent, but in some parts it tops 20%.

Civil society groups warn the rising interest in remittances and the impact they could have on global poverty should not gloss over the challenges migrants face nor the many reported cases of abuse and exploitation.

The flipside of parents working thousands of miles from home is children growing up as virtual orphans. Some villages in the Philippines, for example, are almost devoid of parents, with grandparents shouldering the childcare.

Meanwhile, the execution this month of Sri Lankan domestic worker Rizana Nafeek in Saudi Arabia highlighted the often brutal conditions faced by migrant workers there.

Saudi Arabia has one of the highest migrant populations in the world, with remittances sent from the kingdom topping $28bn in 2011 the third largest amount across the globe.

"Attention to the rights of migrants is especially important at this time of global economic and financial distress," said the UN secretary general, Ban Ki-moon, last month.

"As budgets tighten, we are seeing austerity measures that discriminate against migrant workers, xenophobic rhetoric that encourages violence against irregular migrants, and proposed immigration laws that allow the police to profile migrants with impunity."

In September the UN will hold a high-level meeting alongside the general assembly to discuss migration and development, from increasing labour mobility and remittances to protecting human rights.

An international convention on migrant workers' rights does exist, but only a few dozen governments have ratified it primarily developing countries where migrant workers come from. The US has not signed it, nor have EU or Gulf countries.

This article was amended on 31 January 2013. The original referred to an attempt to lesson, rather than lessen, reliance on aid. This has been corrected.

Past Member (0)
Thursday January 31, 2013, 12:28 pm

Angelika R (143)
Thursday January 31, 2013, 1:08 pm
Very interesting numbers ! I never had a doubt about this, yet did not know the amounts-sheer fascinating!
Too bad Turkey is not included there-who do you think made it a rich and modern country today?

JL A (281)
Thursday January 31, 2013, 3:47 pm
You cannot currently send a star to Angelika because you have done so within the last week.

. (0)
Friday February 1, 2013, 9:38 am
20% lost to transfer fees? It is definitely time to come up with something new.

JL A (281)
Friday February 1, 2013, 11:05 am
You cannot currently send a star to Michael because you have done so within the last week.

De D (96)
Friday February 1, 2013, 8:45 pm
Those handling fees cost way too much money. That needs to be re-evaluated. Thanks for sharing.

JL A (281)
Friday February 1, 2013, 10:00 pm
You're welcome Dee. That level fee was once considered usury by law many places.You cannot currently send a star to Dee because you have done so within the last week.

paul m (93)
Saturday February 2, 2013, 6:21 am


Joanne D (38)
Saturday February 2, 2013, 2:10 pm
So much for the myth of migrants being shiftless and irresponsible! If only the Greedy Old Pigs could bring themselves to recognize the truth. And yes, transfer fees are a sin and a shame. So are the rates charged by people who rent out furniture. And many other situations where the poor, who can least afford it, are cheated blind.

Mary Donnelly (47)
Saturday February 2, 2013, 5:28 pm
Thanks J.L. A. Another informative post.

. (0)
Saturday February 2, 2013, 6:16 pm
If only they could make that in their own countries so they wouldn't have to send it home and be away from their families. Definitely presents another facet of the immigration debate.

Moneygram is about $9 - $11 to send between $100 - @$600, possibly a little more. Western Union is at least double that sometimes even triple.

Immigrants work very hard for their money. Those long and grueling hours to take care of their children and extended families.

Kit B (276)
Saturday February 2, 2013, 6:22 pm

Very true, they are hard workers and never paid fair wages. These are the last people that should be labeled as lazy or "sucking off the system". Benefits? They have none. It can take years to save the money to bring their families here, and legal or illegal families do belong together. Those who have tried to use our very broken system have waited years with no reply, then they take the risk of coming here illegally.

Edith B (146)
Saturday February 2, 2013, 8:33 pm
Those fees are usury, and should be sharply reduced. I knew we had a large number of migrants who sent money to their home country, didn't realize it was such a huge number in other parts of the world. Thanks for posting.

Vera Taylor (46)
Sunday February 3, 2013, 5:12 am
so if they send so much money home why the hell is our countrymsending so much money to them instead of helping the poor & needy in our own country???????? As you can imagin I donate extreamly little or no money to all these organizations who alway have their hands out looking to "help" everyone.

Lloyd H (46)
Sunday February 3, 2013, 7:17 am
In general the Guardian is both reliable and mostly unbiased, unfortunately the same can not even remotely be said about the World Bank. The fact is that the money sent home directly is of far more help to the people, and there by the home country economy, than any of the International Aid schemes be they Governmental or NGO. Far too much 'international aid' either comes with strings attached, actually ropes would be a more accurate term, in the case of Governments and/or far far too much in 'pipeline fees' in the case of NGOs. With NGO aid there is massive leakage, hemorrhage, for all things from for profit donation gathering corporations to massive salaries to their Presidents/CEOs, with Governments it is everything from sterile grain so that they can not plant crops, to money having to be spent on only products manufactured by corporations of the donor nation.
I see two problems. One, the money 'sent home' is essentially stripped from the economies where the immigrants work, and there few economies in the world right now that can afford what amount to a drain on cash flow. Then at least in the US the Repug/Tea Bagged are going to use this to their advantage politically, to justify cuts in the DOS budget, all foreign aid even for disasters, hell they are already doing it with aid for American disaster victims, and as a reason to attack social safety net programs claiming that the money should be spent by the immigrants in the US for the health care and education of themselves and their children here in the US.

JL A (281)
Sunday February 3, 2013, 8:35 am
You are so right Kit, Joanne, Hugh, Edith and Lloyd--thank you all for your caring and compassionate responses. Green stars sent where I could.
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