Remittances are a gateway to financial citizenship; they create a starting point on which to build other inclusive and sustainable financial services. A transaction or deposit account can lead to a broader range of responsible financial services provided through stronger and more diverse financial institutions. When remittances are received through regulated financial intermediaries, savings can occur and can be reinvested in the local community; they can act as an engine for local development; and they can function as a buffer against instability at the macroeconomic level.
Remittances make an important contribution to the achievement of the SDGs, principally by increasing the income of recipient families. A projected in international remittances will be sent to developing countries between 2015 and 2030, involving over one billion senders and receivers. Thanks to the cumulative value of these small but regular remittances, many recipient families are able to reach their own SDGs – reduced poverty, better health and nutrition, educational opportunities, improved housing and sanitation, entrepreneurship, financial inclusion and reduced inequality. Moreover, they are better able to deal with the uncertainty in their lives by increasing their savings and building assets to ensure a more stable future.
In 2017, the number of international migrants worldwide – people residing in a country other than their country of birth – was the highest ever recorded, having reached 258 million (up from 232 million in 2013). About 200 million migrant workers send money back home.
It is estimated that migrant workers globally send individual amounts of $200 or $300 sent home regularly and consistently. These amounts represent 60 percent of total household income and, if leveraged, can effectively improve the living standards of migrants’ communities of origin.
Families spend approximately 75 percent of their remittances to meet immediate needs, such as food, health, housing. Regular remittances lift most families above the poverty line and help them avoid falling back into “poverty traps.” The remaining 25 percent – over $100 billion each year – is available to build a better future, in particular through savings and investments in assets, income-generating activities or small enterprises. These productive activities can also create jobs and transform economies, in particular in rural areas.
While the cost of transferring money has been reduced by half over the last five years, it still represents, on average, 7.45 percent of the amount sent. This remains far above the SDG target of 3 percent to be reached by 2030. In many places, costs are much higher, for example in Sub-Saharan Africa senders can spend as much as 9.3 percent. It is estimated an additional $20 billion would be available to families in developing countries if the 3 percent fee target was reached.