International Remittances – The international remittance, or “cross-border remittance,” as it is called in today’s time, has proven for decades that money transfer can fuel an economic engine. Remittances from migrant workers to developing countries help not only their own households but also the country’s economy itself. The World Bank estimates for 2016 remittances were over USD 440 billion. More than twice that of foreign aid across the globe.

Introduction – International Remittances

Migration and Remittances represents numbers and facts behind the stories of international migration and remittances. Remittance has impact across the globe but growth in Africa has lagged behind then other regions though. The Importance of the Remittances by the African Diaspora and its problems are very different compare to the rest of the world. African per capita income is now increasing in tandem with other developing countries as African immigrants are highly skilled workers.

Drawing on authoritative, publicly available data. Some interesting facts: More than 247 million people, or 3.4 percent of the world population, live outside their countries of birth (2013 December Data as per study from the internet).

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Although the number of international migrants rose from 175 million in 2000 to more than 247 million in 2013 and surpassed 251 million in 2015, the share of migrants has remained just above three percent of the world population for the last fifteen years.

The United States ranks first as the most popular country for migrants to settle in, with Saudi Arabia, Germany, the Russian Federation, the United Arab Emirates, the United Kingdom, France, Canada, Spain, and Australia following closely behind. The countries with the highest immigration rates based on their population are not part of the high-income OECD countries. These nations include Qatar (at 91 percent), the United Arab Emirates (at 88 percent), Kuwait (at 72 percent), Jordan (at 56 percent), and Bahrain (at 54 percent). As per the World Bank’s 2015 data, the average fee charged for sending remittances globally was more than 7%. In South Africa, the percentage was equal to or greater than 17%.

International Remittances Outlook

Returning to our primary focus, the first question to be addressed is “Why the growth of remittances to Africa is not meeting global benchmarks”. Numerous developing nations face challenges in capitalizing on these money transfers. While there are numerous reports and studies available online regarding the early trends in global migration movements and the fluctuations in global currencies, we can gain insight into this issue.

The influence of remittances is remarkable, as evident from official records that highlight the Mexico-United States corridor as the biggest migration route globally, with around 13 million migrants in 2013. The corridor between Russia and Ukraine is the second most significant, with Bangladesh-India and Ukraine-Russia following close behind. During the reordering of international boundaries in the former Soviet Union corridors, numerous locals became migrants without physically moving. The challenging factors for them include the expense and convenience of transferring remittances.

International Remittances

Remittances are part of an individual’s access to financial services. A good remittance product improves value for the user in the short term and access to other financial products in the long term. It also increases competition and could move transactions to the formal sector. Remittances play a critical role in supporting the welfare of many individuals and households in developing countries.

Now the answer to the question “Why remittances to Africa are not growing” according to international standards and evaluating the impact of remittances on households?” These two questions are on our agenda for this post. Moreover, remittances can contribute to economic growth, with research indicating that they can have a greater impact than ODA and FDI. This might suggest that remittances serve as a social safety net for those individuals who are not the poorest but who would be in need of targeted social assistance without remittances.


In 2015, the top recipient countries of recorded remittances were India, China, the Philippines, Mexico, and France. As a share of GDP, however, smaller countries such as Tajikistan (42 percent), Kyrgyz Republic (30 percent), Nepal (29 percent), Tonga (28 percent), Tonga’s economy is weak, based to a large extent on remittances from expatriates and on foreign aid, and Moldova (26 percent) were the largest recipients. Why is there no African country on this list? Are we really sure the African remittance outlook is in “plug and play mode and not plug and pay and then pray”? The main issues in Africa revolve around government policies, lack of financial literacy for migrants, and the cost of remittances (most of our hard-earned money is eaten by money transfer agencies, banks, agents,  brokers, etc.).

It also needs to rest on other criteria than the financial savings from cheaper remittances, such as the improvements in their capabilities from being more informed customers and the potential savings from other aspects of financial management, such as the choice of debt levels and instruments. Regression analysis indicates, too, that remittances are negatively correlated with receiving any type of government benefit. Remittance corridors between South Africa and the rest of the Southern African Development Community (SADC), which are among the most expensive in the world,

Money Flow Around The Globe – Unbalanced

When we stop reinventing the wheel as remittance is not new and all the ecosystems around it, i.e., channels (digital or traditional), systems, methods, technical infrastructure, regulations, policies, and forex, on the sending side, and almost similar issues around the receiving side, are dealt with in many parts of the globe, i.e., Asia Pacific, there is too much to learn and adapt to give this need a flying start. No big changes in ultimate outcomes—migrants avoid switching to more expensive or less transparent remittance channels but do not change the amount or frequency of remitting.

The need is to change and design policies to reduce transaction costs, strengthen the formal financial infrastructure, and leverage remittances to improve access to financial services. Experimenting further with adding additional content on budgeting, saving, and debt management seems fruitful for policy refinement in this area.


As a remittance service provider, one needs to take care of the exchange rate and their need and greed for margins, transfer fees and charges, reputation, and image in the market, speed of processing, methods, and options to transfer, and after-and in-service customer support. Our second question here is, “What impact does remittance have on people’s lives or households? then can be answered simply by evaluating the impact of remittance on households and people’s lives through some interviews and real data on the ground.

The impact on receiving households is very much visible here in this video. A small, heart-touching video on the power of remittance Please click to watch it in full. It’s very clear from the video that recipient households spend more on education and healthcare, and urban recipients also report higher subjective health status and educational enrollment. The effect on inequality and poverty is not straightforward because households in the middle-income range benefit disproportionately from remittances.

International Remittances – The Need

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However, in those months when remittances increase, the monthly inflation rates typically decrease. Still, the regions with the higher rates of recipient households do experience lower levels of poverty, while individuals from recipient households have higher subjective and objective perceptions of welfare. Remittances arguably create a moral hazard at the public level, as the elderly and the poorest are less likely to be remittance recipients.

Most transfers take place via formal money transfer systems, but informal channels, such as a courier or a family member traveling to or from the source market (the “across the globe trend), account for nearly one-third of transactions. Informal remittances appear to be higher in rural areas, probably because of the undeveloped financial infrastructure in rural areas.

Remittances arguably play an important role in the political economy of social welfare. regulation, which allowed for non-bank formal providers to offer cross-border remittances independently of a bank. This was intended to spur innovation that would bring down the cost and improve the ease of sending remittances, and indeed, it did the job.

Neoliberal economic and social policies, founded on the idea that the private sector should drive the country‘s advancement, are intended to reduce public involvement in private lives by reducing regulations and the size of the civil service in the country. Remittances were most likely viewed as one of the components of that private sector. The elderly and the poorest are less likely to be remittance recipients than the younger and the better-off. At the same time, it needs to implement more inclusive migration policies by effectively allowing dual citizenship and granting a number of political and economic rights to expatriates.

Further, due to identification requirements and distribution challenges, many adults rely on informal channels. The barriers faced by many migrants when accessing formal transfer services include affordability and access to documentation.


Conclusion – As research has shown to be the case with cross-border remittances, even total amounts remitted are sensitive to priceA giant step forward for governments, policymakers, regulators, remittance service providers, and sender and receiver should be extra-ordinary education on financial literacy.

This will enable literally hundreds of millions of people to have and use the power of remittance and a bank account, get financially included, start and grow businesses, and prevent fraud. Transactions will then be safe, quick, and easy. As research has shown to be the case with cross-border remittances, even total amounts remitted are sensitive to price. An efficient domestic payment system infrastructure is key to reducing the costs of remittance services, especially in receiving countries.

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Posted by V Sharma

A Technology Specialist boasting 22+ years of exposure to Fintech, Insuretech, and Investtech with proficiency in Data Science, Advanced Analytics, AI (Machine Learning, Neural Networks, Deep Learning), and Blockchain (Trust Assessment, Tokenization, Digital Assets). Demonstrated effectiveness in Mobile Financial Services (Cross Border Remittances, Mobile Money, Mobile Banking, Payments), IT Service Management, Software Engineering, and Mobile Telecom (Mobile Data, Billing, Prepaid Charging Services). Proven success in launching start-ups and new business units - domestically and internationally - with hands-on exposure to engineering and business strategy. "A fervent Physics enthusiast with a self-proclaimed avocation for photography" in my spare time.


  1. Reblogged this on sheetal05 and commented:
    Are we really sure African remittance outlook is in Plug and play mode and not plug and pay and then pray! …..


  2. Pay Tech at

    Remittance save life , build business and career…. its very important factor in todays time where people live out of home but still needs to take care of home


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