There is a difference that is not very apparent when we think of remittance and development. For a blue-collar migrant, the fruit of the toil is the money he remits home. From his perspective, money sent home will feed the family and lift him from poverty, educate his children, or come handy to build a home.
Policymakers and financial institutions, on the other hand, view the billions in remittance inflows with a largely lifeless statistical eye and search for means to leverage it for collective reasons of public interest.
The question is how far have we been able to marry these perspectives – the individual vs the macro-economic? How do we build a bridge of trust between the two sides?
I believe that for policymakers, the challenge is to mobilise expatriate remittances with trickle-down benefits to migrants and their families in a sustainable manner. Governments or financial services entities in the remittance-receiving countries should find ways to channel these funds into vehicles that allow wealth creation, while serving the cause of national development.
The potential pool of funds that can be accessed for development is enormously large if you look at the migrant population. According to the International Organisation of Migrants (IOM), globally, roughly one in 33 people is a migrant, and if we attempt an imaginary assemblage of this multi-ethnic population of over 247 million in one geographic location, it would be the fifth most populous country in the world.
Together, they remit over $600 billion to their countries of origin, out of which a lion’s share of $456 billion goes to developing countries.
Migrant remittances have helped governments soften the impact of natural calamities like in the case of the Nepal earthquake or typhoons in the Philippines. Occasionally, governments have also come up with short-term instruments like diaspora bonds to tap remittances. I am reminded of our role as a partnering organisation in the success of the 1998 Resurgent India Bonds (RIB) initiative, which wooed investments from the Non-Resident Indian Community specifically to give a fillip to the trade account. Overall, building a long-term perspective into these instruments could bring in greater sustainability initiatives. However, that’s where they often falls short of expectations.
For instance, there could be special remittance bonds, sovereign or otherwise, that would allow migrants formal access to financial services and markets. These could perhaps be linked to personal milestones a migrant seeks like building a home, setting up a small business unit, and many more.
Endeavours in the direction of sourcing remittances for national development goals or to shore up foreign exchange reserves are not new. The LINKAPIL programme of the Philippines which allows OFWs take part in state projects, the co-development programme of France or Mexico’s 3×1 Matching Fund program are all steps in this direction. Such initiatives have brought greater depth to financial inclusion measures since it fosters trust between governments, financial institutions and the diaspora. I firmly believe governments need to go the extra mile to orient their diaspora on the benefits of their remittances on both the personal front and in the broader national interest. Ultimately, the two are closely intertwined. Their individual welfare is bound intricately to that of the greater good of their country.