Remittances: The New Development Finance?

This paper discusses remittances as a new source of development finance for poor countries. It states that:

• Remittances have become steadily larger and more important as a source of development finance for poor countries;
• They are second only to foreign direct investment (FDI) as a capital flow into developing countries;
• They serve as a means for financial institutions to increase their outreach and relevance to poor clients.

The paper builds on a global conference held on the developmental impact of remittances and explores the role for development agencies and governments in improving the development impact of remittances and promoting access for poor people.

The paper lists the following areas where donors and governments can build an infrastructure for remittances as a financial service that benefits the poor:

• Improving transparency and competition;
• Introducing appropriate regulation;
• Making better data available;
• Extending access to rural populations;
• Treating remittances as a financial services and not just a migration issue.

The paper concludes by listing some important developmental steps derived from the global conference:

• To develop a set of core principles guiding future involvement of stakeholders in remittances;
• To spread global knowledge through conferences, publications and a website;
• To develop more accurate public data on remittances and migration.