Migrants across the world sent over €580 billion back home to their families in low and middle-income countries last year, according to a report published by the International Fund for Agricultural Development (IFAD) on 16 June, the official International Day of Family Remittances.
Global remittances, money earned by migrant workers sent to their family members in their countries of origin, grew by 8.6% in 2021. This figure is increasing year on year, thanks to new developments in money transfers made through smartphones, the report suggests. Last year, there was a 48% increase in money sent via mobile technologies.
Unfortunately for migrants from African countries, the price of these transfers is higher than the global average. If the cost of transfers was reduced to just 3%, as agreed in the UN’s Sustainable Development Goals (SDGs), this would have generated an additional €3.8 billion for families in Africa.
“The digitalisation of remittances, particularly through mobile channels, is a great opportunity to boost rural development as over half of these funds go to rural areas. Digitalisation reduces fees and other transaction costs like travel time, making the process more convenient and safer while promoting digital and financial inclusion,” said Gilbert F. Houngbo, President of the IFAD.
So successful is the digitalisation of remittances, especially in East Africa, that the United Nations is working to develop the technology across the rest of Africa, sponsoring projects in seven African countries.
The development of these technologies may prove to be more effective than aid projects or any other government support, allowing Africans to lift their own families out of poverty through their work in third countries.
The data shows that migrants in developed countries send more to low and middle-income countries than international aid programmes. Remittance flows were almost triple the value of international official development assistance, IFAD states.
There are around 200 million migrant workers across the world. By the end of this year, it is expected that they will send home over €604 billion to their families. The hard work of migrants in high-income countries, the IDAP says, has an extremely positive impact on low and middle-income countries.
“Remittances lift people out of poverty, put food on the table, pay for education, cover health expenses, allow housing investments, and many other family goals beyond consumption,” added Houngbo.
By 2030, an additional €5.18 trillion in remittances will have been received by families in low and middle-income families, twice as much as the GDP of the entire continent of Africa last year.