Rethinking Remittances

April 12th, 2010

“Migrants sent 32 billion euro to their former country of residence”- Eurostat’s newest figures say a lot about the generosity and industry of Europe’s migrants and invite us to think about the untapped economic and social capital that immigration represents.

Money sent by migrants to their former country of residence is referred to as workers’ remittances.   In 2007, the level of recorded remittances sent to developing countries were estimated at USD$ 240 billion dollars – double the value of official development assistance. Some estimates suggest that upwards of one billion people, or one in six of the planet’s population, benefit from remittance flows.

Remittances are now one of the largest cash flows in the world. What’s new is that they are supporting local economies, as well as families, by financing the infrastructure needs and economic development of the cities and towns of receiver communities.

The sheer size and impact of remittances invites us to re-think how we frame this important contribution from migrants to local, and global prosperity, especially when migrants are paying taxes like everyone else –whatever their status. Indeed, a recent study from the Public Policy Institute of California, reports that up to 85% of the undocumented population is also contributing to the economy’s tax base.

New thinking

In Amsterdam, the Mama Cash Foundation produced a ground-breaking 2006 study of the contribution of migrant women to this massive global cash flow. In, She Gives Back: Migrant Women’s Philanthropic Practices From The Diaspora , remittances are re-described as ‘diaspora philanthropy” and the impact of this financial contribution by some of society’s least wealthy women is analyzed in diaspora communities in Italy, the UK, the Netherlands, Germany and France.

The Western Union Foundation(the charitable arm of the global wire service) partnered with The Economist to see where all the money goes so that it can help local communities leverage its full value with financial literacy and micro-lending programs. The report found that a growing number of remittances are being channeled into community-directed ‘collective’ funds (vs. intra-family) that finance specific projects in the receiving countries, and not just extended family members. The study, “Building A Future Back Home: Leveraging Migrant Worker Remittances For Development In Asia,” reports that collective remittances support community infrastructure development, from schools to roads, and that local leadership and capacity development could further leverage the value of this global funding trend.

Both of these examples suggest that it is time to start rethinking remittances and the change power of diaspora communities.  

For related ideas on remittances, please see some recent articles in the Integration News Update:

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