Money transfers and financial education1

Money
transfers and
financial
education

Migration in ACP Countries :
Promoting Development and Enhancing Protection

Objectives
Overview of the main aspects of the phenomenon of money
transfers, the latest trends and challenges with respect to
development

Reflection on possible actions that could be taken to
improve the management of transfers and their impact on
economic and social development

Specific focus on financial education as an area of possible
action to be developed concerning migrants and their
families


Money transfers

 Definition

 Trends

 Links to development


Definition

Migrant remittances calculate the net financial flow between a
migrant and a household in their country of origin, regardless of
the length of their migration and independently of migrant status
(employee or self-employed, regular or otherwise, etc.) and
sources of income (wages, welfare, etc.)

Transfers to developing countries reached USD 351 billion in
2011, an increase of 8% compared to 2010.


Money transfer flows to developing countries have regained their
dynamism, but should increase at a slower pace in 2012-14

Source: World Bank


Leading countries in terms of
destination of transfers
Top 10 recipients of Top 10 recipients of migrant
migrant remittances remittances as a share of GDP


Sources of transfers by region in 2010


Average cost of sending transfers to Trends in the costs of transfers
developing regions


Significance for the ILO: transfers as a
workers’ right
Conventions 97 and 143:
“Any Member for whom this convention is in force undertakes to allow, taking into consideration the
limits set by national legislation on the export and import of currencies, the transfer of any part of
the earning and savings of migrant workers which they wish to transfer”.

ILO Multilateral Framework on Labour Migration (Migration – ILC 2004)
15.4. promoting and providing incentives for enterprise creation and development, including
transnational business initiatives and micro-enterprise development by men and women migrant
workers in origin and destination countries;
15.5. providing incentives to promote the productive investment of remittances in the country of
origin;
15.6. reducing the costs of remittance transfers, including by facilitating accessible financial services,
reducing transaction fees, providing tax incentives and promoting greater competition between
financial institutions;
15.7. adopting measures to mitigate the loss of workers with skills


ILO declaration of principles: Microfinance for Decent Work (GB294; Nov.
2005),
The Governing Body gave the ILO the mandate to: “Facilitate the access of migrant
workers to remittances, through financial literacy programmes, measures to reduce
their costs and risks and leverage remittances for investment via links to micro lending
programmes”.

Global Jobs Pact
Calls on states to act: to “build a stronger, more globally consistent supervisory and
regulatory framework for the financial sector so that it serves the real economy and
promotes sustainable enterprises and decent work and offers better protection for
individual savings and pensions”.

Result 7 of 2010 – 2011 P&B
Indicator 7.2. Number of Member States that, with ILO support, adopt gender-sensitive
labour migration policies and practices that reflect the ILO Multilateral Framework with
a view to promoting productive employment and decent work for migrant workers.


Group Work

Understanding the determining factors
and positions of the main stakeholders
in the remittance cycle


Positive impacts of money transfers

• Increases the income of the country
• Improves solvency and access to international capital
markets
• Supports entrepreneurial activity
• Represents sustainable and counter-cycle sources of
income
• Contributes to savings
• Creates demand for local goods and services
• Stimulates cross-border trade and investments
• Reduces poverty
• Feeds into household savings and investment

Negative impacts

• Increases the demand for imported goods, causing an
appreciation of currency and reduced competition for
exports
• Inflation
• Increases inequalities between households
• Causes dependence and “moral hazard”
• Increases property prices
• Indirectly, loss of skilled labour
• Cannot offset a failure to act by the State or foreign
development aid


Remittances and development: key
issues
• Reduces informality, improves competition and reduces
costs
• Allows financial intermediation projects with
cooperatives and MFIs
• Creates an interest for banking establishments to offer a
larger range of financial services
• Offers products that include education and health
• Supports projects that improve investment opportunities
in the country of origin
• Technical assistance for financial education
• Implicates governments and the private sectors as
activators of the business environment

Circuits chosen and impact on
development

Informal circuits linked to consumption: increase in
household income has an effect on development

Formal circuits: greater impact, a multiplying effect
and associated financial services
• Savings: allows an injection of capital that can be loaned to
investors
• Loans: property or business start-up
• Health insurance


Work with migrants and their families

Objective:
Increase the ability of migrant workers and their families
to make rational and enlightened decisions on the use of
transfers
Means:
• Transparency of information
• Consumer protection
• Financial inclusion, including financial education
• Financial and other incentives for investments


Work with financial institutions

Objective:
Create a competitive payment system market with suitable
and innovative financial services

Means:
• Adapted legal and statutory environment
• Technical assistance to support innovations
• Support for the interplay between financial and non-
financial services


Thank you for listening


Money transfers and financial education1

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