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Development Account Projects

Strengthening capacities to utilize workers’ remittances in financing for development

Background:

International remittances to developing countries have grown rapidly over the past decade. While the recent economic crisis has seen a moderation in remittance flows, they have remained far more stable than other categories of private capital flows. In some countries with a long history of emigration, such as El Salvador and Mexico, Governments have adopted comprehensive strategies to harness remittances for development which are aimed at increasing the inflows of remittances channelled through the banking system and directing them towards financing development projects. These initiatives, together with fiscal and institutional incentives, have resulted in an increase of inflows remitted and channelled to finance development, and have helped to create jobs, reduce illiteracy rates, alleviate poverty and improve population well-being, thus contributing to achieving the Millennium Development Goals. They can also compensate for the current reduction in foreign direct investment experienced by many least developed countries.


Nine labour-exporting Arab States, namely Algeria, Egypt, Jordan, Lebanon, Morocco, the Sudan, the Syrian Arab Republic, Tunisia and Yemen, receive significant remittance inflows on a regular basis which account for a significant proportion of the recipient country’s gross domestic product. Remittances constitute a stable source of external capital inflows that account for a large part of foreign exchange in Egypt, Jordan, Lebanon, Morocco and Yemen. Despite the large amounts of remittances received by labour-exporting Arab States, three major challenges persist: (a) the non-existence of national strategies and policies to channel remittances to development; (b) the relatively weak financial and institutional infrastructure supporting the remittances; and (c) the lack of sufficient data/information on workers’ remittances.


The proposed project will complement the recently initiated work on harnessing migration for development by the International Organization for Migration (IOM) in Egypt, Morocco and Tunisia. It will thus benefit from these ongoing projects in terms of country-specific data, experience and information as well as IOM intellectual, technical and logistical support. The project will also constitute a follow-up to the analytical work of the ECA North Africa Office on international migration and development in North Africa and on workers’ mobility in the Maghreb, and a follow-up to the recent expert group meetings organized by ESCWA on the role of workers’ remittances in development finance. In addition, the Department of Economic and Social Affairs has in recent years devoted greater attention to monitoring remittances and analysing their impact.

Objective:

To strengthen the capacities of Government officials to formulate and adopt strategies, policies and programmes to enhance the impact of workers’ remittances in financing for development in nine labour-exporting Arab States

Expected accomplishments:

  • To increase the understanding of policymakers in the nine member countries of the positive impact of workers’ remittances as an additional source to finance development and to support the achievement of the Millennium Development Goals
  • To improve the technical capacity of the nine Member States to develop policy measures and initiatives to channel part of workers’ remittances towards investment

Implementation status:

In progress.