Remittances to developing countries to grow to $7.5trn in 15yrs

In 2015, some 250 million migrants living outside their countries of origin sent nearly $450 billion back home in remittances. Development aid in the same year totalled $131.6 billion, less than half of what migrants sent home; showing the vital financial contribution they make to the economic stability of their families and countries.

“The remittances sent back to relatives provide a lifeline, particularly to tens of millions of families living in fragile or post-conflict societies,” said Kanayo F. Nwanze, President of the International Fund for Agricultural Development (IFAD) on the occasion of the International Day of Family Remittances, which holds every June 16.  “Remittances can help rebuild the fabric of societies, spark economic development, and bring the stability necessary for a hopeful future.”

Like the rest of the world African migrants send more money home to their families than is sent by traditional Western aid donors in what is called Official Development Assistance (ODA). According to Hong Kong-based Ghanaian academic Adams Bodomo who researches remittances, about 75 percent of all transfers are informal and, therefore, impossible to track. “If we add all that [informal transfers] in, the diaspora remittances would be bigger by a factor of three or four times.” With the World Bank estimating that $35.2 billion was sent to Africa by the diaspora last year, the actual figure could be up to $140 billion.

Recently, IFAD-supported activities among the Somali diaspora in Europe and the United States have resulted in targeted investments that have had a positive impact on Somalia’s agriculture sector. Remittances to Somalia is the largest and most important financial flow going into the country. Even in Nigeria, Africa’s largest economy, remittances are second only to oil as a source of foreign exchange.

IFAD has long realised how important remittances are to developing economies, hence, the international financial institution has over the last decade piloted remittance programs in more than 40 developing countries, helping to aid the flow of funds and giving families more options to invest their money and create opportunities for business development and employment.

As an indication of the transformative potential of remittances, Nwanze said that the new Sustainable Development Goals have set a target of 15 years to end extreme poverty. Within this time, migrants abroad will have sent an accumulated $7.5 trillion to their hometowns in developing countries.

On 19 September, the UN Plenary Session on Large Movements of Refugees and Migrants will address the treatment and well-being of the millions of migrants and refugees and their families back home. Taken together, it is estimated that one out of every seven people on earth – more than one billion individuals – are directly impacted by remittances.