|Remittances: A new finance source for world’s poorest nations?
Geneva: 5 July 2006: “Remittances are increasingly drawing the attention of the international community because of their tremendous potential in contributing to the economic development of countries,” said UN Under-Secretary-General and High Representative for the Least Developed, Landlocked Developing Countries and Small Island Developing States, Anwarul K. Chowdhury, at a press briefing in Geneva on Tuesday.
The press briefing was held to launch the report of the Ministerial Conference of the Least Developed Countries (LDCs) on enhancing the development impact of remittances, held in Cotonou, Benin, in February this year. It was the first ever ministerial-level conference focusing on the subject.
“The volume of these remittances is enormous. In 2005, the developing countries received $ US 173 billion in terms of migrant worker remittances. And this is only the official, formal flow of resources. If we take into account the informal flow, the amount will be almost double,” said Mr. Chowdhury.
The High Representative noted that the 50 LDCs, of which 34 were in Africa, received as much as US $11 billion in remittances each year. In some of the smaller LDCs, such as island states like Cape Verde or small landlocked countries like Lesotho, remittances contributed nearly one-third of their gross domestic product (GDP).
“Remittances contribute in a big way to the eradication of poverty and in providing families with the means to access better health services and to educate their children,” said the UN envoy. He further highlighted that the ministers attending the Conference in Benin earlier this year had discussed how remittances could contribute to the development objectives of countries.
There had been three main areas of focus. First, participants had discussed how to facilitate remittances being sent by migrant workers to their countries of origin by reducing transfer costs and improving the opportunities for such transfers. Second, the conference had discussed the use of fiscal incentives to encourage remittances, including offering opportunities for better investment and higher interest rates, opportunities for investment in small and medium-sized enterprises or micro-finance institutions. A third area of focus had been how the LDCs as a whole could learn from each other by sharing best practices and taking advantage of the knowledge and experience that diaspora associations could provide.
A proposal had been made at the Benin meeting to establish an observatory for the LDCs that would serve as a storehouse of information on remittances and on best practices, and that would provide opportunities for networking.