How Migrant Workers Fuel Sustainable Progress Across the Globe
Brussels, 17th of June 2024 – According to the IOM, migrant workers inject almost $800 billion into the local economies of their home countries through remittances.
In an increasingly interconnected world, the role of migrant workers and entrepreneurs transcends geographical borders, with their contributions extending far beyond the countries they now call home.
But what exactly are remittances, and how do they wield such profound influence?
What are remittances?
Remittances are the funds sent by migrant workers to their home countries, most typically sent to family, friends, and members of their local community. These transfers are used in a variety of ways, from supporting daily household expenses to education opportunities and business investments.
Remittances are sent via bank transfer, online apps, or through informal networks. With the advent of online banking, widespread smartphone use and blockchain technology, the channels for sending remittances have multiplied in recent years, making it easier than ever for migrant entrepreneurs to send remittances to their home countries.
Impact of Remittances
The impact of remittances can be felt throughout communities in migrant entrepreneurs’ home countries. Acting as cultural and economic bridges between their home countries and countries of residence, the funds that migrant entrepreneurs support education, business and greater global connectivity.
Remittances can improve access to education by providing families with the financial means to pay for school fees, books, and other educational resources. This investment in education helps bridge disparities, allowing migrant families to afford vocational training and higher education. Remittances can also be used to fund businesses in their local community, create jobs for workers and driving economic growth.
How do remittances help us achieve our sustainable development targets?
By maintaining these connections and collaborations, the remittances of migrant entrepreneurs support global cooperation in key development areas set out by the Sustainable Development Goals (SDG), including quality education (Goal 4), decent work and economic growth (Goal 8), and industry innovation and infrastructure (Goal 9).
Remittances provide a fast path to reducing poverty for the family members they left behind. By migrating and starting a business, a migrant’s income can multiply by a factor of 10. These gains are then shared through remittances which support short-term needs such as food, housing, healthcare, education, and business investments, and long-term development such as exports and imports, sharing their skills and knowledge, and investing in real estate and businesses in their destination communities, creating employment and contributing to economic growth.
How can we support the positive impact of remittances?
Even though the amount of remittances sent to countries is higher than development aid and foreign direct investment, remittances can often be costly to transfer.
According to the World Bank, sending remittances costs an average of 6.39% of the total amount sent, meaning that established players in the transfer field are making huge profits from these much-needed payments.
Governments can enhance the developmental impact of remittances by reducing the cost of sending money and promoting access to savings, loans, and insurance products linked to remittances.
Those sending remittances can also benefit an increasingly competitive market that grew following pandemic-era restrictions on physically sending remittances. Mobile money providers offer the least costly method of sending money at 4.5% of the total amount sent.
Increasing Global Solidarity
The flow of remittances represents more than mere monetary transactions – it embodies a tapestry of familial ties, cultural bonds, and economic sustainability between humans across the globe.
From bolstering education to fostering entrepreneurial endeavours, these financial streams catalyse progress across diverse sectors.
As we navigate this landscape, it becomes imperative for governments and stakeholders to cultivate an environment where the fruits of migrant entrepreneurship can flourish unhindered, ensuring that the dividends of their labour uplift communities and advance sustainable development on a global scale.
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