Money
transfers from workers abroad to family back home have tripled in a
decade and are three times larger than global aid budgets
From The Guardian
Migrant workers wait
for a bus to take them home after a day's work in Dubai. Remittances by
people working abroad topped $530bn last year. Photograph: Ghaith Abdul
Ahad
For decades it was a largely unnoticed feature of the global
economy, a blip of a statistic that hinted at the tendency of
expatriates to send a little pocket money back to families in their home
countries.
But now, the flow of migrant money around the world has shot up to
record levels as more people than ever cross borders to live and work
abroad. It's known as remittance money, and in 2012 it topped $530bn
(£335bn), according to the latest
World Bank figures.
The amount has tripled in a decade and is now more than three times larger than total global
aid budgets, sparking serious debate as to whether
migration
and the money it generates is a realistic alternative to just doling
out aid. If remittances at the level recorded by the World Bank were a
single economy, it would be the 22nd largest in the world, bigger than
Iran or Argentina.
And according to World Bank officials, the real
figure could be much larger. Dilip Ratha, of the migration and
remittances unit at the World Bank, said that billions more in
remittances were not being recorded as many people were continuing to
bypass the banks and big money transfer companies that are relied on for
data.
A number of countries, including the Philippines,
Bangladesh and Senegal, have set up initiatives or even government
ministries to manage cash sent from overseas.
The Rwandan
government, which has seen much of its aid cut last year over
allegations it was supporting rebels in neighbouring Democratic Republic
of the Congo, has called on Rwandans living abroad to contribute to a
new "
solidarity fund", in an attempt to lessen its reliance on aid.
"It's
something that's been going on since time immemorial," said Michael
Clemens, a US economist who studies migration and remittances at the
Centre for
Global Development,
a thinktank based in Washington. "But now, for example, with Skype you
can see the school uniform bought with the money you sent in the
morning."
But there is a dark side. Attention is turning to the
companies scrambling to capture as much as they can from these
multibillion-dollar flows. In some cases, more than 20% of money
migrants send is lost to transfer fees.
India and China were the
biggest beneficiaries of remittances last year, each receiving more than
$60bn, followed by the Philippines ($24bn), Mexico ($24bn), and Nigeria
($21bn). Egypt, the sixth largest, has seen the value of remittances
surge from less than $9bn in 2008 to nearly $18bn last year.
For
some smaller economies, remittances can account for huge proportions of
national income.
Tajikistan and Liberia receive the equivalent of 47%
and 31% of their respective GDPs from workers abroad.
For dozens
of developing countries the money migrants sent home is worth more than
the aid they receive. For some – including Bangladesh, Guatemala, Mexico
and Senegal – remittances from workers abroad are larger than aid and
foreign investment combined.
Globally, there are more than
214 million migrants; if they lived in one country, it would be the
fifth most populous, trailing only China, India, America and Indonesia.
Migrants
in the UK sent nearly $4bn in remittances to India in 2011, according
to World Bank estimates, compared with the $450m in UK aid it received
that year. Bangladesh received $740m in remittances from the UK in 2011;
its aid amounted to $370m.
"People feel an obligation. I've never
heard someone with an origin in another country not feel a sense of
obligation, or a sense of connection, or wanting to make a
contribution," said Britain's shadow minister for international
development, Rushanara Ali.
Ali, who was born in Bangladesh,
believes the UK government should look at how remittances could
complement aid spending. "There will always be pressures on budgets,"
she said. "The time is ripe for coming up with new ideas on how diaspora
communities can make a contribution."
The remittance phenomenon
has been largely recession proof, although there was a dip in 2008/09.
But the biggest complaint from migrants is the cut taken by banks and
wire transfer firms. The G8 wants the global cost of sending money
lowered to an average of 5% by 2014, giving billions more to migrants'
families. At present, the average fee is about 9%, meaning an average of
$18 for every $200 sent, but in some parts it tops 20%.
Civil
society groups warn the rising interest in remittances and the impact
they could have on global poverty should not gloss over the challenges
migrants face nor the many reported cases of abuse and exploitation.
The
flipside of parents working thousands of miles from home is children
growing up as virtual orphans. Some villages in the Philippines, for
example, are almost devoid of parents, with grandparents shouldering the
childcare.
Meanwhile, the execution this month of Sri Lankan
domestic worker Rizana Nafeek in Saudi Arabia highlighted the often
brutal conditions faced by migrant workers there.
Saudi Arabia has
one of the highest migrant populations in the world, with remittances
sent from the kingdom topping $28bn in 2011 – the third largest amount
across the globe.
"Attention to the rights of migrants is especially important at this time of global economic and financial distress,"
said the UN secretary general, Ban Ki-moon, last month.
"As
budgets tighten, we are seeing austerity measures that discriminate
against migrant workers, xenophobic rhetoric that encourages violence
against irregular migrants, and proposed immigration laws that allow the
police to profile migrants with impunity."
In September the UN
will hold a high-level meeting alongside the general assembly to discuss
migration and development, from increasing labour mobility and
remittances to protecting human rights.
An
international convention on migrant workers' rights
does exist, but only a few dozen governments have ratified it –
primarily developing countries where migrant workers come from. The US
has not signed it, nor have EU or Gulf countries.
• This article
was amended on 31 January 2013. The original referred to an attempt to
lesson, rather than lessen, reliance on aid. This has been corrected.
URL: http://www.guardian.co.uk/global-development/2013/jan/30/migrants-billions-overshadow-aid
