Background
The International Day
The International Day of Family Remittances (IDFR) is a universally-recognized observance . The Day recognizes the contribution of over 200 million migrants to improve the lives of their 800 million family members back home, and to create a future of hope for their children. Half of these flows go to rural areas, where poverty and hunger are concentrated, and where remittances count the most.
Through this observance, the United Nations aims to bring greater awareness of the impact that these contributions have on millions of households, but also on communities, countries, and entire regions. The Day also calls upon governments, private sector entities, as well as the civil society, to find ways that can maximize the impact of remittances through individual, and/or collective actions.
The IDFR is now fully recognized at the global level, and included as one of the a key initiatives to implement the , also calling for the reduction of remittance transfer costs, and greater financial inclusion through remittances. The Day also promotes achievement of the Sustainable Development Goals (SDGs) and furthers the 2030 Agenda for Sustainable Development.
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Importance of remittances
The vast contribution of family remittances to national economies is clear: the projected sum of money in international remittances to be sent to developing countries between 2015 and 2030, is US$5 trillion. Collectively, these flows are three times greater than global official development assistance.
But behind the global numbers are individual remittances of US$200 or $300 that migrants send home regularly, so that their families can buy food, pay for housing, and meet necessary expenses.
Remittance services are now much quicker and less expensive thanks to digital technologies. However, the cost of transferring US$200 across international boundaries is still high.
Less than 20 years ago, remittances were literally unaccounted for, and the contributions of migrant workers remained unrecognized – though not to their families. But for the development community, it has been a gradual realization that remittances are a potentially powerful tool. Documentation of the scale and scope of remittances has been key in building this consensus.
The role of remittances in achieving the SDGs
The 2030 Agenda for Sustainable Development, adopted in September 2015, is a global commitment to eradicate poverty and achieve sustainable development by 2030, ensuring that no one is left behind. Its 17 specific Sustainable Development Goals (SDGs) address the major challenges facing the world today.
SDG 10.c commits, by 2030, to reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent. Migrant remittances, however, contribute directly and indirectly to several SDGs in addition to 10.c, as outlined in IFAD’s report.
Contribution of migrant workers
Most migrants work at difficult and often dangerous jobs at the low end of the international economy, in order to support those who remain at home. They have their own specific goals: reduced poverty, better health and nutrition, education, improved housing and sanitation, and greater resilience in the face of uncertainty with the help of savings. They are working towards a more stable and sustainable future – a goal that the international community shares.
The crucial contribution of migrant workers, through remittances and investments, has also been recognized in the , adopted in December 2018. Its Objective 20 indeed calls for specific actions to maximize the impact of remittances and includes the International Day for the global community to get engaged. Implementation of Objective 20 has been assessed during the first International Migration Review Forum (IMRF), which took place in May 2022. Remittances were recognized to be crucial to unlock opportunities for migrants and their families, particularly in light of the shift towards greater digitalization to further enhance financial inclusion.
Potential for investment
Current estimates are that 75 per cent of remittance flows go to meet immediate needs, but the other 25 per cent – over US$100 billion a year – is available for other purposes. Given better opportunities to save and investment options, migrants’ families will be better able to channel remittances toward long-term needs and live better lives. And because many migrant workers will eventually return home, helping them build assets is a central development policy objective.
The projected US$5 trillion in aggregate remittances to be received by families living in developing countries over the period of the 2030 Agenda represent a tremendous opportunity. Remittances count especially in the small rural towns and villages of developing countries. In 2021, almost one hundred low- and middle-income countries, the majority with large rural populations, each received at least US$100 million in remittances. It is here that remittances can help make migration more of a choice than a necessity for future generations.
The role of governments
Remittances are private funds, transferred through private channels. It is obvious but also important to acknowledge the growing levels of support and endorsements from the private sector, which has increased its support for the remittances agenda. There are regulatory and policy aspects to leveraging the power of remittances, and hence governments can substantially increase their positive impact, particularly in the poorest and most remote rural areas. And through further coordinated initiatives, international financial institutions can better support the primary goal of enhancing well-being of migrant workers and their families.
Did you know?
- In 2023, international remittances to low- and middle-income countries amounted to US$669 billion.
- Family remittances have a direct impact on the lives of 1 billion people – either as senders or receivers.
- Monthly transfers by migrant workers average US$200-US$300.
- Half of all remittances worldwide are sent through digital channels.