Remittances: Lessons Learned and Private Sector Opportunities

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

REMITTANCES: LESSONS LEARNED & PRIVATE SECTOR OPPORTUNITIES

MONEY TRANSFERS DUBAI 2010

Robert W. Meins

Remittances SpecialistFinancing Facility for RemittancesInternational Fund for Agricultural Development


The challenge:Remittances to rural areas


A transfer of $200 is sent from the UK to Kuyunga, Uganda, 50 kilometers from the capital Kampala.

The sender has two options:

1) Send directly to Kuyunga using Western Union.

2) Send to a competing firm in Kampala.

Kayunga

Kampala


Kayunga

Remitter sends $ 200,-

- Transfer fees $40.00

- Exchange rate margin 1.28 %

- Fees on the receiving side

$0

Actual amount received in Kayunga

$ 157.44 (21.28%)

Picking up remittances in rural areas:

Remitter sends $ 200,-

- Transfer fees $19.03

- Exchange rate margin 1.15 %

- Fees on the receiving side

$0

Actual amount received in Kampala

$ 176.68 (11.66%)

Kampala


The financial crisis &Remittances in 2010


Venezu

ela

Mold

ova

Arm

enia

Turk

ey

Pola

nd

Bra

zil

Uru

guay

Egypt

Ukra

ine

Georg

ia

Nig

eri

a

Alb

ania

Moro

cco

Colo

mbia

Cost

a R

ica

India

Ecu

ador

Jam

aic

a

Hondura

s

Guate

mala

El Salv

ador

Bolivia

Cape V

erd

e

Eth

iopia

Indonesi

a

Nic

ara

gua

Dom

inic

an R

epublic

Jord

an

Peru

Para

guay

Kenya

Philip

pin

es

Sw

azi

land

Bangla

desh

Pakis

tan

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Impact of the financial crisis:Remittance growth in 2009 YTD:

Source: Most recent reporting from Central Banks


Colo

mbia

Egypt

Mexic

o

Bra

zil

Hondura

s

Guate

mala

Arm

enia

Nic

ara

gua

El Salv

ador

Pakis

tan

Jam

aic

a

Turk

ey

Philip

pin

es

Bangla

desh

Georg

ia

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Impact of the financial crisis:Remittance growth in Jan/Feb 2010 :

Source: Most recent reporting from Central Banks


Oct Nov Dec 2009 Feb Mar Apr May Jun Jul Aug Sep Oct Nov Dec

-40%

-30%

-20%

-10%

0%

10%

20%Remittances to Latin America and the Caribbean in 2009

Latin America & Caribbean

Mexico

Andean region

Mexico, Brazil and Colombia

Caribbean

Central America


Bangla

desh

Philip

pin

es

Indonesi

a

Pakis

tan

Jord

an

Turk

ey

Dom

inic

an R

epublic

Nic

ara

gua

Cost

a R

ica

Guate

mala

El Salv

ador

Hondura

s

Jam

aic

a

India

Mauri

tius

Guin

ea-B

issa

u

Kenya

Cape V

erd

e

Moro

cco

Egypt

Leso

tho

Mexic

o

Para

guay

Peru

Bolivia

Ecu

ador

Colo

mbia

Uru

guay

Bra

zil

Venezu

ela

Alb

ania

Georg

ia

Ukra

ine

Pola

nd

Mold

ova

Arm

enia

Kaza

chst

an

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

2009 Remittance growth by region

National growth

Regional growth


2006 M

arMay Ju

lSe

pNov

2007 M

arMay Ju

lSe

pNov

2008 M

arMay Ju

lSe

pNov

2009 M

arMay Ju

lSe

pNov Ja

n0%

2%

4%

6%

8%

10%

12%

14%

-1%

0%

1%

2%

3%

4%

5%

6%

7%US general and Hispanic unemployment


Tunis recommendations

Increase competition

Empower market actors

Achieve effective and efficient

regulation

Adopt new technologies

Expand access to financial services

Make more financial services available in

rural areas


Financing Facility for Remittances $18 million dollar multi-donor fund

Consultative Group for Assistance to the Poor European Commission Government Luxembourg Government Spain Inter-American Development Bank UN Capital Development Fund, and Housed at the International Fund for Agricultural

Development

FFR manages 40 projects in 38 countries around the globe

Open to private, public and civil society organizations


What we do… Annual Calls for Proposals Global Forum on Remittances “Sending Money Home” series of studies RemittancesGateway.org portal Dissemination

European Parliament G8 Working group on remittances Global Forum on Migration & Development Conferences


Why we do it…

Lower the cost of remittances through competition

Improve capillarity, service rural areas Broaden the scope of financial services Bank the unbanked

… to empower migrant workers and their families to advance on the road to financial independence.


Projects

FONKOZE Microfinance (Haiti) Solutions to rural challenges helped after

earthquake Universal Postal Union

Postal networks (Senegal) HIRDA (Netherlands-Somalia)

Migrant organization


2010 Call for proposals

Grant financing for projects related to maximizing the development impact of remittances

up to $250,000 for projects

up to $500,000 for mobile financial services


Topic areas

Mobile financial services

Housing

Postal networks (Micro-) Insurance

Microfinance networks Migrant pensions and other government-to-person payments

Financial services innovations

Securitization

Migrant entrepreneurship and investment (funds)

Open window (innovative projects in other areas)


Basic information

Who can apply? Private sector Public sector Civil society

Cross-sector partnerships encouraged Execution period: 2 years Deadline (short) concept proposals: June

7th 2010


Must have Legal status in country where you operate Audited financial statements

Act on behalf of themselves (not as an intermediary)

Provide counterpart 10-30% non-profit 50% for for-profit (minimum half of which in

cash) Project must be in IFAD member count


RemittancesGateway.org

Institutionally neutral platform Documents News Discussion Agenda Profiles

All are welcome to contribute


QUESTIONS & ANSWERS


Contact information…

Robert W. [email protected]+39 06 5459 2059

www.ifad.org/remittanceswww.remittancesgateway.org

Remittances: Lessons Learned and Private Sector Opportunities

Economy & Finance

financial crisis remittances

financial servicesmake

financial statements

financial independence

cost of remittances

rural challenges

financial services available

rural areas3