By Gilbert F. Houngbo, President, International Fund for Agricultural Development (IFAD)
Today, 20 million children, women, and men are at risk of famine in four countries in Africa and the Near East, and more than 5.5 million people will be without a reliable food source by July. Already more than 2 million people have been forced to flee their homes and farms because of conflict and drought. In Uganda, some of those who have left South Sudan are growing food, and taking it back across the border to feed their families.
June 16 is the International Day of Family Remittances. More than 250 million people live outside their countries of origin. Not all migrants are refugees, of course, but we should remember the many ways in which they care for those they leave behind, and their contribution to making the world a better place.
One way they contribute is through remittances—the money they send home. Individual remittances are often relatively small transfers, typically $200 or $300, but their cumulative impact is huge. Total global remittances are expected to exceed $450 billion for 2017. These sums literally save lives. Remittances reach around the world, keeping millions of people out of poverty and helping them to feed their families, send their children to school, and pay for housing and other necessities.
The economic contribution of migrants can be a powerful force for good—and they are on the rise. According to the recently released report, Sending Money Home: Contributing to the SDGs, One Family at a Time, migrants will send an estimated $6.5 trillion between 2015 and 2030.
Roughly 40 percent of that is destined for the rural areas of developing countries, where 80 percent of world’s poorest people live. This is another reason why remittances have a powerful development impact. Three quarters of remittances go to cover immediate basic needs like food and shelter.
Remittance receivers are not getting rich—but they are getting enough to create a better future for their children and societies. The vast majority of migrants take on dirty, difficult, or dangerous jobs at the low end of the international economy. And migrant workers generally send home only about 15 percent of their earnings, while the remaining 85 percent—a whopping $2.5 trillion annually, more than the GDP of France—is spent on housing, food, transportation, and necessities, thus benefiting the host country’s economy. Looked at objectively, it is hard to see a loser here, on either the sending or receiving side.
But the benefits for poor people could be even greater. Remittances go to some of the poorest and some of the most heavily populated countries in the world, where rural areas suffer from lack of infrastructure, banking and finance, markets, and services that are so much easier to access in towns and cities. One of the positive findings of the report is the expansion of remittance service providers; among the top 23 remittance-receiving countries, the number of payment locations has increased from 350,000 to more than 1.5 million over the last decade.
The International Fund for Agricultural Development (IFAD), specializes in financing projects that help rural people earn more and improve their nutrition. Innovative development projects can help channel remittances to address the lack of economic opportunity that so often forces people to migrate in the first place.
In Mali, for example, a project is using a French crowdfunding platform to allow the Malian diaspora in France to provide finance for rural young people. This project is aimed at helping young people build productive livelihoods so that they don’t have to migrate. In Tonga, members of one community raised $100,000 from their own funds and from relatives living abroad to build a road from their village to the harbor, making it easier to transport goods to market and creating further economic potential.
The key here is financial inclusion. In remote rural areas, financial institutions are often nonexistent, which makes it difficult to plan and save for longer-term or shared goals. This is especially a problem for rural youth. In a global survey conducted in 2014, more than 70 percent of young farmers said that access to finance was the main obstacle they faced. Farmers and operators of rural small and medium enterprises are often seen as too risky to lend to, closing off the possibility of investing, improving, and expanding. In many African countries, more than half of rural households report having at least one migrant. It is clear why migration has implications for future global food security as well.
International Family Remittances Day is not just about billions of dollars but about billions of lives. Because realizing the full development impact of remittances by providing more options and better opportunities for families to use remittances productively would benefit us all. While migrants make a major contribution to both their countries of residence and of origin, migration should be a choice, not a necessity.
Check out our interview with Gilbert Houngbo here.
The views expressed in this article are the sole responsibility of the author and do not necessarily reflect the position of the Chicago Council on Global Affairs. References to specific non-profit, private, or government entities are not an endorsement.