UN agency wants cheaper transfer costs for Caribbean remittances

The United Nations Conference on Trade and Development (UNCTAD) has called for cheaper ways for Caribbean and other migrant workers to send money back home so as to maximise the economic impact.

Noting that money sent home by economic migrants working in foreign countries exceeded US$300 billion in 2010, UNCTAD said that "this vast and growing tide of income needs to be safeguarded and channelled so that it does the most good for families and economies in the world's poor nations."

It said experts at a two-day meeting here, titled 'Maximising the development impact of remittances', agreed that "remittances are now a major economic force, and they must be better understood and harnessed for development".

"More can be done to ensure that families and developing-nation economies derive lasting benefit from these wages earned overseas," UNCTAD quoted speakers as saying.

They stressed that less of this money should be lost in transmission, and more should be invested in the "stable, broad-based social and economic growth of economies that originally were weak enough for citizens to feel compelled to leave and work elsewhere".

In opening the meeting, UNCTAD Deputy Secretary General Petko Draganov said remittances account for about two per cent of the gross domestic product (GDP) of all developing countries "and for higher percentages in many".

He said in Lesotho, Nepal, Samoa, Haiti and Bangladesh, these money transfers make up more than eight per cent of GDP.

Draganov said though the effects across countries are varied, remittances have reduced poverty at the household level in many developing countries.

A recent UNCTAD study found that, in countries where remittances make up five per cent or more of GDP, on average a 10 per cent rise in remittances leads to a reduction of 3.9 per cent in the poverty head-count ratio.

"Evidence shows that a significant amount of remittance transfers to developing countries is spent on household consumption and human capital," Draganov said.

He said such emphasis on food, education, housing, health and related purchases can ripple outwards through the domestic economies of poor nations "and - if managed well - can create jobs and business opportunities that raise living standards and keep future potential migrants at home."

But Draganov and other experts said that the costs of sending money from overseas could be high, noting that the current average fee is about 8.7 per cent.

They said there is "still a lack of safe, reliable, accessible transfer systems for remittances," adding that, for some countries, "excessive margins are charged".

"Governments should try to fashion incentives so that families receiving remittances invest any surpluses in ways that spur development in their home nations," recommended William Lacy Swing, director-general of the International Organisation for Migration.

"If you're poor where you are, you move," he added, stating that the challenge is to use the wealth returning in the form of remittances "so that it spreads economic growth broadly in the poorer, recipient nations".

- CMC