Download Latin America and the Caribbean

Remittances and
rural development
Latin America and the Caribbean
Remittances and rural development in
Latin American and the Caribbean
This presentation and the accompanying paper deals
with the social and economic impact of migration
and remittances in the LAC region.
It analyses, in a gender perspective, the continuous
interaction of migrants with their communities of origin
and the unique role migrants play as agents of change.
It suggests IFAD should broaden its target group to
a transnational level, expanding its partnership with
migrants who have direct interest in the well-being
of rural communities they left behind.
Migration and remittances
• Latin America & the Caribbean has become important
source of out-migration
• In 2000, 14.5 million of the foreign-born population
living in U.S. were born in Latin America or
the Caribbean
• Volume of migration is grossly underestimated –
figures don’t account for illegal or temporary migrants
• Latinos = 13 % of U.S. population (32.8 million)
• Remittances in 2002:
USD 100 billion worldwide
USD 32 billion to the LAC region
Importance of remittances
in LAC region
• On average a migrant sends USD 200, 8 times a year
• Nearly 10% of average yearly income.
• Median income of migrants in U.S.(1999):
USD 21 000 Male
USD 17 000 Female
• In terms of GDP: El Salvador 15%; Nicaragua 29 %;
Haiti 24 %.
• Surpassed level of FDI and ODA to region
Average annual household remittances
and GDP per capita
GDP per capita
Average remittances received by recipient household
Ratio
4000
3500
4.00
3739
3.47
3.50
3000
2.51
2500
2.23
2360
1.60
1168
0
2104
2077
2048
1750
1.23
920
374
2080
2.50
2277
2171
466
2.00
1592
1478
1296
1000
500
2296
2152
2056
2000
1500
3.00
3024
1.10
0.97
0.90
0.81
0.77
1.50
1.00
0.50
0.00
Sources: GDP per capita: World Bank, World Development Indicators (Washington, DC, 2003); remittances: National Money
Transmitters Association (2003), Inter-American Dialogue (2004: 7). The average annual remittance received by remittance
receiving households was obtained by multiplying the monthly average amount sent by all immigrant remittance senders multiplied
by eight. The latter is the average number of times immigrants send money to their relatives throughout the year.
Profile of remittance senders
• Older migrants are less likely to remit
• Men are more likely to remit than women.
(not the case in the D.R.)
• Higher education correlates with a lower likelihood
of remitting
• The longer the period spent away from the country
of origin, the less likely a migrant is to remit
• When a migrant has immediate family in the U.S.,
the likelihood of remitting decreases
The emergence of transnational
communities
• Today’s migrants no longer sever ties with home
country
– Communities spanning borders: immigrants build
social fields that link together country of origin
and country of settlement
– Business transnational in nature (clients, supplies
and investors across borders)
– HTAs help migrants retain a sense of community
as they adjust to new country
Socio-economic effects of remittances
• Pros:
– important source of foreign exchange
– Finance imports
– Increases household income and improves
standard of living of recipients
– Multiplier effect in local economy
• Cons:
– Reduce incentive to invest
– Encourage migration
– Growth of inequity (recipients vs. non-recipients)
– Used for consumption purposes
– Creates dependency
Effects of migration
at communities level
• Migration changes:
– traditional make-up of families (prevalence of female
headed households; children raised by relatives)
– age ratios of communities
– gender roles & relations
– flow of cultural values, ideas, knowledge, etc.
Use of remittances
Household Uses:
• Alimentary needs
• Healthcare
• Education
• Home improvement
• Investment in micro-enterprises, land
Collective Uses:
• Improvement of town’s infrastructure (paving
of roads, healthcare services, education, etc.)
• Investment in income and employment generating
projects
Mechanisms for transferring
remittances
• Money transfer companies, credit-cards, Postal service,
banks or credit unions (12 to 15 % fees)
• Informally or hand-carried, due to lack of contact
with financial institutions
• 43% of LAC migrants in U.S. do not have a bank
account (<20% of Central Americans and Caribbeans
have bank account)
• Need to strengthen local financial institutions,
rural financial infrastructure  increase savings
and local development
Using the skills & knowledge
of migrants
• Human capital resources of migrants not sufficiently
explored by LAC countries
• Latin American & Caribbean efforts:
– Jamaican return migrants programme
– Mexican “Proyecto Esperanza”
• Migrants have systematically expressed interest
in sharing skills/knowledge gained abroad with
communities of origin
Other untapped resources
• Tourism:
– In many countries significant portion of tourists are
visiting migrants (e.g. 40% in Dominican Republic)
– Visiting migrants generate large amount of wealth
– e.g. Dominican visiting tourists tend to stay
 15 days, spend  USD 65 per day
• Ethnic Markets:
– Migrants demand for traditional, “nostalgic”
goods growing
– Governments beginning to hold trade,
real estate fairs
IFAD and remittances in Latin America
and the Caribbean
• Sensitization efforts among Salvadoran migrant
communities in U.S.
– Through workshops in Washington D.C.,
San Salvador, and Los Angeles
– Result of these workshops - increased interest,
mobilization and empowerment of migrant
associations
• Pilot co-financing project through PRODAP II
in El Salvador
• Incorporation of migrants as partners in design
an project implementation
Possible scenarios for IFAD to
maximize effects of remittances
• Expand target group/strengthen linkages HTAs –
rural communities
• Encourage HTAs’ participation in identification, design,
co-financing, implementation of projects
• Identify effective mechanisms for tapping knowledge,
entrepreneurial skills and enthusiasm of migrants
• Promote rural tourism and market fairs of “nostalgic”
products among immigrant communities
• Strengthen local financial institutions to increase their
participation in remittance market – expand funding
sources and client base
• Encourage gender disaggregated studies on migrants
and remittances.
• Partner with other organizations working on this area
(WB, IDB-MIF, WDCCU, Ford Foundation, etc.)
Focus of the discussion
• Taking into consideration that remittances are private
transfers between the migrant and his/her family what
can IFAD do to increase the impact of remittances
on rural poverty reduction?
• How could we tap on the human capital (knowledge
acquired by the migrants) as well as the interest they
have in helping the families and communities they
left behind?
• Can the pilot experience of co-investing remittance
resources and IFAD project resources in community
development projects, presently under implementation
in El Salvador, be replicated in other remittance
recipient countries?
• What can IFAD do to increase migrant's and remittance
recipient families' access to rural
financial institutions?