• Challenges to sending money back home

Challenges to sending money back home

Migrant remittances are the most tangible and perhaps the least controversial link between migration and development. This paper finds that remittances provide a convenient angle for approaching the complex migration agenda. They play an effective role in reducing poverty. Since remittances are personal flows from migrants to their friends and families, they tend to be well targeted to the needs of the recipients. These flows typically do not suffer from the governance problems that may be associated with official flows.

The author points out that remittances should not be taxed or directed to specific development uses. Instead, the development community should make remittance services cheaper and more convenient and indirectly leverage these flows to improve the financial access of migrants, their beneficiaries, and the financial intermediaries in the origin countries. A strong flow of remittances can also improve the receiving country's creditworthiness, lowering their cost of borrowing money in international markets.

The paper recommends that a research and policy agenda to maximise the development impact of international remittances would include the following four elements: a) monitoring, analysis, and projection; b) retail payment systems; c) financial access of individuals or households; and d) leveraging remittances for capital market access of financial institutions or countries.

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