23/02/2021
For many developing countries, reduced remittances and less foreign-direct investment are a double whammy | D+C - Developme…
correspondent bank accounts. This would help millions of workers by o ering more secure channels for
sending money home.
There is an additional incentive to do so: governments can mobilise diaspora savings and investments by
securitising future remittance ows and issuing diaspora bonds. This process could help to maximise the
use of remittance ows for development purposes.
A call to action
Global action would make sense. A coalition of national governments and international organisations
spelled out what needs to be done in May 2020 in a document titled “Remittances in Crisis: How to Keep
them Flowing”. This call to action has been endorsed by 30 countries and 17 organisations, including the
World Bank, UN agencies, industry associations, civil society and diaspora groups. Britain and Switzerland
played leading roles.
The document suggests that policy makers immediately declare that moving remittance funds is an
essential nancial service. That would allow nancial services providers on both the sending and receiving
ends to stay open and accessible to migrants – particularly to poor migrants and their families who may
not have bank accounts or online access.
In the medium-term, the document calls for scaling up digital remittance channels, to give migrants and
families more access to these cheaper channels. In the wake of Covid-19, digital operators have already
seen a signi cant increase in remittance transfers. MoneyGram’s digital transactions surged 106 % in the
second quarter of 2020 compared with the previous year, while Western Union’s rose 50 % in the same
period.
To build upon this trend, the Call-to-Action document advises nancial-services providers to o er
nancial-literacy programmes to migrants and to remittance recipients, explaining to them how to use
digital remittance channels.
Supporting development
Labour migration and remittances are not substitutes for economic development in LMICs. Yet labour
migration can be managed better so that it supports economic development.
For example, the World Bank is helping remittance-receiving countries to issue diaspora bonds, to
maximise nancial ows for economic development. The Bank also supports development of safe and
e cient national payment systems and infrastructure, which facilitate remittance transfers.
The Bank also continues to monitor the prices for sending remittances and is working towards eliminating
barriers to entry into the remittances market. In doing so, the Bank has discovered signi cant data gaps
that prevent real-time monitoring of remittance ows and migratory movements. Information is missing
on stranded and returning migrants, among other data points.
The data collection systems should be improved. Through the Global Knowledge Partnership on Migration
and Development (KNOMAD), the World Bank is forming an international working group on improving
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