Remittances Current Affairs
The International Day of Family Remittances (IDFR) is observed every year on 16 June across the world. It is aimed at recognizing significant financial contribution migrant workers make to wellbeing of their families back home and to sustainable development of their countries of origin. It is also aimed at encouraging public and private sectors, as well as civil society, to do more together and collaborate to maximize impact of remittances in developing world.
Remittance is a transfer of money by foreign worker to individual or family in their home country. It competes with international aid as one of the largest financial inflows to developing countries.
The IDFR was unanimously proclaimed by all 176 member states of International Fund for Agricultural Development (IFAD)’s Governing Council at its 38th session in February 2015. Later it was adopted by United Nations General Assembly (UNGA) in June 2018 through resolution A/72/L.56. The first IDFR was celebrated on 16 June 2015. Observance of this day recognizes efforts of migrant workers globally, but also to strengthen current partnerships and create new synergies among sectors to promote development impact of remittances worldwide.
International Fund for Agricultural Development (IFAD)
IFAD is international financial institution and specialised agency of UN dedicated to eradicating poverty and hunger in rural areas of developing countries. It was established in 1977 as one of the major outcomes of 1974 World Food Conference. Its headquarters is in Rome, Italy. It is member of UN Development Group.
According to recently released report ‘RemitSCOPE – Remittance markets and opportunities – Asia and the Pacific’, India was largest remittance receiving country in the world with US $69 billion in 2017. Top five remittance receiving countries in 2017 in the world were India ($69 billion), China ($64 billion) and Philippines ($33 billion), Pakistan ($20 billion), and Vietnam ($14 billion).
Key Highlights of Report
Asia-Pacific region: Remittances to Asia-Pacific region amounted to US $256 billion in 2017. It represented 53% of flows worldwide, growing 4.87% since 2008, with rates flattening in recent years. About 70% of remittances sent to Asia and Pacific came from outside region and in particular from Gulf States (32%), North America (26%) and Europe (12%).
Remittances contribute to region more than 10 times official development assistance. 400 million people in region i.e. one out of every 10 people, are directly affected by remittances either as sender or as receiver. It benefits about 320 million family members in the region, most of them in rural areas.
Remittances and Rural Development: Remittances are particularly crucial in rural areas where poverty is highest. Worldwide, an estimated 40% of total value of remittances goes to rural areas. In Asia-Pacific region, remittances go disproportionally to countries with majority of rural populations such as Nepal (81%), India (67%), Vietnam (66%), Bangladesh (65%), Pakistan (61%) and the Philippines (56%). Remittances to rural areas are generally costlier due to expenses associated with offering access points in distant locations.
Usage of Remittances: 70% of remittances in the Asia pacific region are used to meet basic needs, such as food, clothing, healthcare and education. The remaining 30% can be saved and invested in asset-building or income-generating activities, helping families to build livelihoods and their future.
Improvement of remittance markets: It still needs to be transformed to ensure that families can benefit fully from the flows. Technological innovation in remittance marketplace can bring about fundamental transformation for hundreds of millions benefiting from these flows. Moreover, outdated regulatory barriers on both sending and receiving ends is resulting in higher and less transparent costs which make it less likely and more difficult to convert remittances into savings and investments. Besides, financial inclusion which has increased in recent times has not fully represented reality of substantial majority of remittance receiving families in Asia-Pacific region where financial exclusion remains predominant.