Dilip Ratha The World Bank - United NationsDilip Ratha The World Bank New York, November 13, 2014 Session 1: Exploring nexus between financial sector development, inclusion & stability

Dilip RathaThe World Bank

New York, November 13, 2014

Session 1: Exploring nexus between financial sector development, inclusion & stabilitySubstantive Informal Session on Private FinancePreparatory Process for the Third International Conference on Financing for Development

Remittances and Development

Diaspora Financial Resources for Development

Remittances

Diaspora saving

Diaspora giving

Securitization of remittances

Contribution to sovereign credit rating

Remittances

$413 Billion Remittances

$135 Billion Aid

Remittances to developing countries are large ($435 billion in 2014), and more stable

Source: Development Prospects Group, World Bank

-100

0

100

200

300

400

500

600

700

800

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014f 2016f

FDI

Remittances

Private debt & equity

ODA

$ billion

Excluding China, remittances to developing countries are larger than FDI

Source: Development Prospects Group, World Bank

0

50

100

150

200

250

300

350

400

450

500

1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 2012 2014f 2016f

FDI$ billion

Remittances

Remittances

42% of GDPTajikistan

35% of GDPSomalia

$18 bnEgypt

$72 bnIndia

$ billion % of GDP

31%

NepalPoverty rate

42%

1995 2005

Aid that works!

Exorbitant remittances costs

8% 12% 90%Global average Africa Venezuela

20%Within Africa

Reduce remittance cost

1. Relax regulations for small remittances

2. Abolish exclusive partnership with post office

3. Create a non-profit remittance platform

8% (Global average)

$30 Billionannual savings

1%

Reduce remittance cost

Harness the power of diaspora saving and diaspora giving

• Size, corridors, channels• Counter-cyclicality • Effects on poverty, education, health, investment• Policy (costs, competition, exchange controls)

1. Monitoring, analysis, projection

• Payment platforms/instruments• Clearing/settlement, capital adequacy, disclosure, cross-border

arbitration• Anti-money laundering (AML/CFT)

2. Retail payment system

• Deposit and saving products• Mortgage, consumer loans, microfinance• Credit history for MFI clients• Insurance products

3. Financial access for households, SMEs

• Sovereign credit rating• Bonds backed by future remittances as collateral• Diaspora bonds

4. Capital market access for countries,

companies

Global Remittances Agenda

Thank you.

www.worldbank.org/migration

www.knomad.org