Download Diasporas and South-South Trade

South-South Diasporas and Remittances:
The Trade & Entrepreneurship
Dimension
Presentation at
South-South Migration And
Development:
Discussing New Evidence From The
Acp Observatory On Migration
Brussels, Belgium
June 3-4, 2014
Keith Nurse
Executive Director
UWI Consulting & WTO Chair
University of the West Indies
Cave Hill Campus
Barbados
[email protected]
Despite the disproportionate attention that has been given to
immigration pressures on the United States and other OECD
countries, there have been other major migration streams
around the world. These too have been driven by a
combination of demographic and economic fundamentals as
well as by political events. ... The future rise of South-South
migration will, no doubt, take those analysts who ignore
history by surprise. It will not take economic historians by
surprise. After all, when those 50 million Europeans left home
before 1914, there were at the same time far more than 50
million who left China and India for jobs elsewhere in the
periphery. South-South migration is not new. It is just ignored
by economists.
Source: What fundamentals drive world migration?
Timothy J. Hatton and Jeffrey G. Williamson NBER Working Paper Series, 2002
The Global Middle Class and the Rise
of the South (UNDP 2013)
2009
2020
2030
Europe
664
703
680
Central & South
America
181
251
313
Asia – Pacific
525
1740
3228
Middle East &
North Africa
105
165
234
North America
338
333
322
Sub-Saharan Africa
32
57
107
Remittances and Migration in the ACP
(Source: ACP Human Mobility Report 2011)
Regions/Indic
ators
Remittances
Share (%)
Migrants
Share (%)
Population
Shares (%)
Africa
73
76
94.5
Caribbean
25.5
22
4.4
Pacific
1.5
2
1.1
South-South Remittances in
Perspective
• Remittances to developing countries are estimated at $404 billion
in 2013, up 3.5 percent compared with 2012.
• Growth in remittance flows to developing countries is expected to
accelerate to an annual average of 8.4 percent over the next three
years, raising flows to $436 billion in 2014 and $516 billion in 2016.
(Source: World Bank, Migration & Development Brief 22, 2014).
• South-South remittances are a significant share of this but the data
capture in this area is very weak due to the nature of the
transactions and the low level of reporting in developing countries.
• Estimates range from a low of 9.3% to a high of 29.5% and an
intermediate rate of 18.2%.
(Source: Ratha & Shaw 2007).
South-South Remittances
(based upon the methodology outlined in Ratha & Shaw (2007))
Allocation rule
based on migrant
stocks
Remittances from
the South
Remittances from
the North
Total Remittances
to Developing
Countries (2013)
Allocation rule
based on migrant
stocks and hostcountry incomes
Allocation rule
based on migrant
stocks, hostcountry incomes,
and sendingcountry incomes
29.5%
9.3%
18.2%
$119.18b
$37.57b
$73.53b
70.5%
90.7%
81.8%
$284.82b
$366.43b
$330.47b
USD 404 billion
South-South Remittances, 2005 and 2013
(Source: Ratha & Shaw 2007 and own estimates)
140
120
100
80
60
2005
40
2013
20
0
Allocation by migrant Allocation by 1 plus Allocation by 1&2 plus
stock
host country incomes
sending countries
income
Remittances are Impacted by a Range of Factors
– Case of Bangladesh
In Bangladesh, the fall in remittances stems
from a combination of factors, including fewer
migrants finding jobs in the Gulf Cooperation
Council (GCC) countries, more migrants
returning from GCC countries due to
difficulties in resolving legal status, and the
appreciation of the Bangladeshi taka against
the US dollar.
(Source: World Bank, Migration & Development Brief 22, 2014).
The Cost of Remitting is determined by the
Business Context
Often remittance fees vary significantly in the
same bilateral corridor depend- ing on the
direction of the flow. For example, the cost of
remitting $200 from Kuala Lumpur to Jakarta is
about 6 percent, whereas that from Jakarta to
Kuala Lumpur is more than 13 percent. Similarly
the cost of sending money from Kiev to Moscow
is more than double the cost of remitting in the
reverse direction.
Source: Ratha & Shaw 2007
Strategies for Reducing the Cost of South-South
Remittances
(Source: Ratha & Shaw 2007)
• South-South remittance costs tend to be higher than North-South
remittances because of lack of competition in the remittance market in both
the sending and the receiving countries.
• Often remittance fees vary significantly in the same bilateral corridor
depending on the direction of the flow.
• Remittance costs can be reduced by encouraging competition in the
remittance market:
– by encouraging banks, microfinance institutions, credit unions, and post office saving banks to
offer remittance services;
– by sharing existing payment platforms and networks;
– and by avoiding exclusive partnership arrangements between major money transfer operators
and post office networks.
Key Issues in the Money Transfer Business of
relevance to S-S Remittances
(Source: Orozco 2012)
Cost to remit
Scope
• Fees
• Exchange rate
difference
• Exchange rate
commission
• Products on
offer
• Number of
countries in
operation
• Presence in
migration
corridor
Payment
points
• Number & share
of locations
• Type of payment
points, e.g.
banks, MFIs, etc.
Competition
• Market share
• Rural/urban
presence
• Quality of
customer service
Trade in Services and
the Diasporic Economy
Mode IV
Movement
of Natural
Persons
Diasporic Tourism:
-Festivals
-Medical
-- Education
Mode II
Consumption
Abroad
Provision of services:
- Telecoms
-ICTs
- Media
-Mobile banking
Trade in
Services
Mode I Cross
Border
Supply
CSS & IP:
- Health professionals
-Creative industries
- Music industry
Mode III
Commercial
Presence
Diasporic
Investment:
-Remittances
-- Newspapers
-- Transport
Mobile Money Transfers – The Role of Firms
French telecom operator Orange is a pioneer in the SouthSouth remittance market. Last July, Orange launched an
international money transfer service that allows customers to
send funds between Mali, Senegal, and Cote D’Ivoire using
only their mobile phones. (The three countries have a long
history of intraregional migration, and share a common
language and currency.) While other telecom operators
provide some remittance feature, usually within the mobile-tobank account or mobile-to-agent models, the Orange service is
the first international, direct mobile-to-mobile transfer system.
In 2012 remittance flows from Cote D’Ivoire to Mali alone
were $153 million (compare that to flows from France to Mali
at just $73 million) so there is big earnings potential for
Orange.
Source: http://www.financialaccess.org
Remittances – Just the tip of the
Iceberg
Remittances (official)
Remittances (unofficial)
Diaspora Savings
Mobile Banking
Mortgage Payments
Earnings from MTOs
Thank you for your
kind attention.
Check out the ten minute
version of the documentary
Forward Home – The Power
of the Caribbean Diaspora
http://vimeo.com/56997742
(http://www.youtube.com/watch?v=cj0vLkUyRtU).
The research was published in a Special
Edition of the Canadian Foreign Policy
Journal (2011: 17.2)
http://www.tandf.co.uk/journals/rcfp.