A farmer from Corrientes, Argentina sells produce in the city market. Photo: IFAD / Giuseppe Bizzarri
The vast contribution that remittances can make to the achievement of the SDGs is clear: before the crisis, the projected sum of money in international remittances to be sent to developing countries between 2015 and 2030, was US$6.5 trillion.
But behind the numbers are the individual remittances of US$200 or US$300 that migrants send home regularly so that their families can buy food, pay for housing, and meet necessary expenses.
Less than 20 years ago, remittances were literally unaccounted for, and the contributions of migrant workers remained unrecognized – though not to their families. But for the development community, it has been a gradual realization that remittances are a potentially powerful tool. Documentation of the scale and scope of remittances has been key in building this consensus.
The role of remittances in achieving the SDGs
The 2030 Agenda for Sustainable Development, adopted in September 2015, is a global commitment to eradicate poverty and achieve sustainable development by 2030, ensuring that no one is left behind. Its 17 specific Sustainable Development Goals (SDGs) address the major challenges facing the world today.
SDG 10.c commits, by 2030, to reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent. Migrant remittances, however, contribute directly and indirectly to several SDGs in addition to 10.c, as outlined in IFAD’s Remittances, investments and the Sustainable Development Goals report.
Most migrants work at difficult and often dangerous jobs at the low end of the international economy, in order to support those who remain at home. They have their own specific goals: reduced poverty, better health and nutrition, education, improved housing and sanitation, and greater resilience in the face of uncertainty with the help of savings. They are working towards a more stable and sustainable future – a goal that the international community shares.
The crucial contribution of migrant workers, through remittances and investments, has also been recognized in the Global Compact for Safe, Orderly and Regular Migration, adopted in December 2018. Its Objective 20 indeed calls for specific actions to maximize the impact of remittances and includes the International Day for the global community to get engaged.
Current estimates are that 75 per cent of remittance flows go to meet immediate needs, but the other 25 per cent – over US$100 billion a year – is available for other purposes. Given better opportunities to save and investment options, migrants’ families will be better able to channel remittances toward long-term needs and live better lives. And because many migrant workers will eventually return home, helping them build assets is a central development policy objective.
The projected US$6.5 trillion in aggregate remittances to be received by families living in developing countries over the period of the 2030 Agenda represent a tremendous opportunity. Remittances count especially in the small rural towns and villages of developing countries. In 2018, almost one hundred low- and middle-income countries, the majority with large rural populations, each received at least US$100 million in remittances. It is here that remittances can help make migration more of a choice than a necessity for future generations.
Remittances are private funds, transferred through private channels. It is obvious but also important to acknowledge the growing levels of support and endorsements from the private sector, which has increased its support for the remittances agenda. There are regulatory and policy aspects to leveraging the power of remittances, and hence governments can substantially increase their positive impact, particularly in the poorest and most remote rural areas. And through further coordinated initiatives, international financial institutions can better support the primary goal of enhancing well-being of migrant workers and their families.
Did you know?
Estimates indicate remittances will decrease by USD$109 billion as a result of the pandemic.
Family remittances have a direct impact on the lives of 1 billion people – one out of seven individuals on earth. Added together, remittances are three times greater than Official Development Assistance and surpass Foreign Direct Investment.
In 2019, there were approximately 200 million migrant workers providing essential services to important economic sectors in more than 40 high income countries and sending needed financial resources to support an estimated 800 million relatives living back home in more than 125 countries. Almost half of those families live in rural areas, where remittances “count the most.””
The full impact of this pandemic remains unknown. However, lessons learned from the global reaction to the events of 2008 and 2001 point towards a dramatic reduction in the more than US$500 billion in family remittances sent home annually.
For the first time, both sides of remittance corridors have been impacted simultaneously, likely pushing millions of families below poverty lines resulting in food insecurity and other challenges in the small towns and villages of developing countries.
Beyond these enormous aggregate numbers, and their societal consequences, lies the most important number of all— the US $200 or US $300 monthly remittance, the financial measure of affection and commitment that generates on average over 60% of household income, and allows tens of millions of families to reach for their own individual SDGs.