11
OctHistory Of Money Remittance
A remittance is a transfer of money by a foreign worker to his or her home country or simply sending amount from one country to another. Money sent home by migrants constitutes the second largest financial inflow to many developing countries, exceeding international aid. In 2012, according to the World Bank Report, $401 billion new remittance record went to developing countries with overall global remittances (including developed countries) topped $514 billion.[1] Remittances contribute to economic growth and to the livelihoods of people worldwide. Moreover, remittance transfers can also promote access to financial services for the sender and recipient, thereby increasing financial and social inclusion.
Remittances are playing an increasingly large role in the economies of many countries, contributing to economic growth and to the livelihoods of less prosperous people (though generally not the poorest of the poor). According to World Bank estimates, remittances totalled US$414 billion in 2009, of which US$316 billion went to developing countries that involved 192 million migrant workers. For some individual recipient countries, remittances can be as high as a third of their GDP. As remittance receivers often have a higher propensity to own a bank account, remittances promote access to financial services for the sender and recipient, an essential aspect of leveraging remittances to promote economic development. The top recipients in terms of the share of remittances in GDP included many smaller economies such as Tajikistan (45%), Moldova (38%), and Honduras (25%).
The World Bank and the Bank for International Settlements have developed international standards for remittance services.
In 2004 the G8 met at the Sea Island Summit and decided to take action to lower the costs for migrant workers who send money back to their friends and families in their country of origin. In light of this, various G8 government developmental organizations, such as the UK government's Department for International Development (DFID) and USAID began to look into ways in which the cost of remitting money could be lowered.
In September 2008, the World Bank established the first international database of remittance prices. The Remittance Prices Worldwide Database provides data on sending and receiving remittances for over 200 “country corridors” worldwide. The “corridors” examined include remittance flows from 32 major sending countries to 89 receiving countries, which account for more than 60% of total remittances to developing countries. The resulting publication of the Remittance Prices Worldwide Database serves four major purposes: benchmarking improvements, allowing comparisons across countries, supporting consumers’ choices, and putting pressure on service providers to improve their services.
At a July 2009 summit in L’Aquila, Italy, G8 heads of government and states endorsed the objective of reducing the cost of remittance services by five percentage points in five years. To drive down costs, the World Bank has begun certifying regional and national databases that use a consistent methodology to compare the cost of sending remittances.
In 2010, US and Saudi Arabia, respectively, were the top two senders of remittance globally.
Asia
A majority of the remittances from the US have been directed to Asian countries like India (approx. 66 billion USD in 2011), China (approx. $57 billion USD), and the Philippines (approx. 23 billion USD) (see here 1 2). Most of the remittances happen by the conventional channel of agents, like Western Union, UAE Exchange and MoneyGram. However, with the increasing relevance and reach of the Internet, online and mobile phone money transfers from companies such as Remit2India and Xoom.com have grown significantly.
Philippines
A common shop for remittance in Angeles City, Philippines
According to a World Bank Study, the Philippines is the second largest recipient for remittances in Asia. It was estimated in 1994 that migrants sent over US2.6 billion back to the Philippines through formal banking systems. With the addition of money sent through private finance companies and return migrants, the 1994 total was closer to US6 billion annually. Looking at current remittance flows, the total is estimated to have grown by 7.8 per cent annually to reach US21.3 billion in 2010. Remittances are a reliable source of revenue for the Philippines, accounting for 8.9 per cent of the country’s GDP.
The Estrada administration in 2000 declared it “The Year of Overseas Filipino Worker in the Recognition of the Determination and Supreme Self-Sacrifice of Overseas Filipino Workers.” This declaration connects monetary remittances of overseas workers as the top foreign-exchange earnings in the Philippines.
