The document summarizes an upcoming talk on "Africa's Challenge in Developing Migrant Remittance Markets" by Rishi Chakraborty. It defines remittances as funds transferred from migrant workers to their home countries, which provide income to households and can aid development and poverty alleviation. However, Africa faces high costs and inefficiencies in remittance markets due to low competition from a few dominant money transfer operators, high regulations and barriers to entry, poor rural coverage, and lack of access to financial instruments in recipient countries. The talk will discuss how increasing competition, improving regulations, enhancing rural access, and developing financial services could help lower costs and improve the efficiency of remittance markets in Africa.
2. Announcements
European Union in Crisis: Hopes and Woes of Politics and
Economics
Rishi Chakraborty-- Africa’s Challenge in Developing Migrant
Remittance Markets
Daniel Currie-- Problems With Small Governments
Abdul Hannan-- The Multilateral Trading System: Strengths &
Challenges from Least Developed Countries' Perspective
Undergraduate Economics Association
2
3. Economics Majors Expo
Members of the undergraduate club to join the economics
department in staffing the table at the Majors Expo
October 18th 12:00-3:00, GSU Metcalf Ballroom (775
Commonwealth Avenue)
Email uea@bu.edu
Undergraduate Economics Association
3
5. What are Remittances?
• IMF Definition:
Compensation to Foreign Employees
Migrant Worker’s Remittances
• Transfer of Funds between Individuals
• Migrant Workers to Country of Origin
• $375 billion & 12.1% growth (2011)
• Income to Households
• Development & Poverty Alleviation
• Human Capital Formation
Undergraduate Economics Association
5
6. Stable Source of Foreign Exchange
Undergraduate Economics Association
6
12. Potential Areas for Improvement
• Need for Research & Timely Information
Enhancing impact of public policy on remittances
• Increased Competition to Lower Costs
Reducing Regulations & Exclusivity Agreements
Providing Incentives for New Entrants
Microfinance for rural coverage & poverty alleviation
• Improving efficiency of Remittance Markets
Providing training & resources to post offices
Encouraging technological innovation (Cell phones)
Educating rural population in financial services
Undergraduate Economics Association
12
Hinweis der Redaktion
Also Net Unilateral Transfers in Current AccountBetween Individuals Across Countries
- Inherent problems not allowing African remittancemarkets to catch up with other developing regions remittance markets
US$40 billion a year by 30 million individualsTop 5 most expensive corridors in world in Africa (30-40% of all flows)Underdeveloped Rural Remittance ServicesCosts range from 12% to 25% of the remitted amount
Have to sign exclusivity agreements with MTOs to enter market65% of payout locations partner Western Union & Money GramHigh travel costs due to scarcity of branchesPost offices have large geographical presence butExceptions: Algeria (95% post offices with help of French postal services)Nigeria banned exclusivity agreementsOnly Congo, Ghana and Kenya authorizes MFIsAlso restrictions on amount for remittance inflows & outflowsMexico hads more payout locations than whole African continent
In Paper discuss informal means such as cell phone transfers etc.
Incentives forIncreased Competition will bring costsdownAllowing Microfinance services will provide remittances in addition to credit, interest, deposits, loans and other financial mechanisms to low income housholdsWill enable them to effectively use the remittances for poverty alleviationMFIs would double the number of payout locations in Africa (currently equal to Mexico)Providing training & resources to post offices in utilizing their presence in rural areas for remittancesCell phones transfer money directly (without any cost? – low cost?) and are fast, without being expropriatedIncreased technology increases payment networks and coverage in rural areas Financial Literacy for local population would not only increase those willing to use remittances, but can also encourage new entrants to the market. For instance, retail stores, post offices and local banks can enter the market and expand coverage in rural areas