Leveraging Remittances with Microfinance: Timor Leste Country Report

This paper estimates the value of inward migrant remittances to independent Timor Leste and assesses their impact on poor peoples livelihoods. Inward remittances received in Timor Leste from migrant workers amount to around US$5 million per annum, making labor the countrys second largest export after coffee. Key findings of the study include:

• Households who receive remittances are better off financially than households that pursue employment locally;
• Transaction costs of sending and receiving remittances in Timor Leste are far higher than the international average;
• Timor Leste workers would benefit from programs that increase their skills base and help them access labor markets in developed counties;
• Pre-departure and travel costs are a significant burden on migrant families and a policy issue for governments seeking to promote remittances;
• Investigation of financial services outreach can help improve access to remittance services in peri-urban and rural areas.

MFIs in Timor Leste have limited direct involvement in the flow of migrant worker remittances. However, this study provides evidence that there is potential for increased MFI involvement in the growing remittance transfer market in Timor Leste.