Remittances: Strategic and Operational Considerations

This document discusses migrant remittances in the context of development finance. It introduces key principles and potential areas where the International Fund for Agricultural Development (IFAD) can support remittances. This document is an Annex to IFAD Decision Tools for Rural Finance.

Remittances are a major source of income for the rural poor. IFAD focuses on improving access to rural financial services by building capacity of rural financial institutions. IFAD support for remittances should deliver improved access to affordable, reliable remittance services as well as greater availability and cross-selling of other financial services. IFAD should also support activities to strengthen institutional capacity and create accessible service points for rural and low-income clients. Finally, it should target larger, more accurate flows of information on regulatory compliance requirements.

IFADs objective should be to increase access to remittance services in rural areas through professional entities at affordable, competitive prices. It should:

• Consider relevance of remittances to the institutions client market;
• Consider regulatory environment and overall capacity of the market and the institution;
• Facilitate demand-driven initiatives by experienced, capable partners;
• Promote transparent and fair pricing of financial services;
• Promote compliance with regulatory requirements;
• Look for opportunities for collaboration with other donors.