Remittance flows to developing countries are expected to total US$351bn this year, while worldwide remittances, including those to high-income countries, will reach US$406b, according to World Bank’s report on global migration and remittances.
The top recipients of officially recorded remittances, estimated for 2011 include India, which is expected to receive US$58b, China US$57b, Mexico US$24b, and Philippines US$23b.
Other large recipients include Pakistan, Bangladesh, Nigeria, Vietnam, Egypt and Lebanon.
According to the report, while the economic slowdown is dampening employment prospects for migrant workers in some high-income countries, global remittances, nevertheless, are expected to stay on a growth path and by 2014 are forecast to reach US$515b.
Of that, US$441b will flow to developing countries, according to the report.
“Despite the global economic crisis that has impacted private capital flows, remittance flows to developing countries have remained resilient, posting an estimated growth of eight per cent in 2011,” said Hans Timmer, Director of the Bank’s Development Prospects Group.
Back home, the National Bank of Rwanda (BNR) forecast that remittance flows will sharply rise to US$103.12m this year, up from US$98.21 last year
Remittances from Rwandans living abroad hit USUS$84.08 m (Rwf49.6 billion) in the second quarter of this year up from USUS$25.78 (Rwf15.2 billion) in quarter one.
“This is an indicator that people living abroad have trust and confidence in the country’s economic environment,” Central Bank Governor, Clever Gatete, told Business Times in an interview in September this year.
Remittance flows to four of the six World Bank-designated developing regions grew faster than expected --- by 11 per cent to Eastern Europe and Central Asia, 10.1 percent to South Asia, 7.6 percent to East Asia and Pacific and 7.4 percent to Sub-Saharan Africa, despite the difficult economic conditions in Europe and other destinations of African migrants.
There are, however, some serious downside risks to the Bank’s outlook for international remittance and migration flows. Persistent unemployment in Europe and the U.S. is affecting employment prospects of existing migrants and hardening political attitudes toward new immigration. Volatile exchange rates and uncertainty about the direction of oil prices also present further risks to the outlook for remittances.
More recently, some of the GCC countries, which are critically dependent on migrant workers, are considering tighter quotas for migrant workers to protect jobs for their own citizens.
“Such policies may impact remittance flows to developing countries in the longer term,” said Dilip Ratha, Manager of the Bank’s Migration and Remittances Unit and a co-author of the Migration and Development Brief.
“But in the medium-term the risk of disruption to these flows is relatively low.”
Remittance flows would receive a further boost if the global development community achieves the agreed objective of reducing global average remittance costs by five percentage points in five years (the ’5 by 5’ objective of the G8 and the G20).
Remittance costs have steadily fallen from 8.8 percent in 2008 to 7.3 percent in the third quarter of 2011 due to increasing competition in large volume remittance corridors such as UK-Nigeria and UAE-India. However, remittance costs continue to remain high, especially in Africa and in small nations where remittances provide a life line to the poor.
“In addition to streamlining regulations governing remittance service providers, there is a pressing need to improve data on remittance market size at the national and bilateral corridor level,” said Ratha.
“That will stimulate market competition and also help in more accurate monitoring of progress towards the ‘5 by 5’ objective.”
The World Bank has made considerable strides in developing financing instruments for leveraging migration and remittances for national development purposes. Diaspora bonds can be a powerful financial instrument for mobilising diaspora savings to finance specific public and private sector projects, as well as to help improve the debt profile of the destination country. The Bank has established a Task Force on the Implementation of Diaspora Bonds to facilitate the provision of technical assistance to developing country governments.
“The Bank now houses considerable expertise in this area and we look forward to working with client governments in developing alternative sources of financing for development projects,” said Ratha.