Remittances and Microfinance: A Practical Application

Remittances are a major source of income from Latin American migrants working in other countries. Approximately 18 million families in Latin America receive around U.S. $38 billion per year from migrants working in the United States of America. A large section of this group of emigrants also forms the target population for microfinance services.

This article provides a view of the principal experiences accomplished in the framework of a joint project of the Internationale Mikro Investitionen (IMI) network entities in Latin America under the sponsorship of the Multilateral Investment Fund, MIF. Further, the article states:

• The objectives of the project - introducing remittance services and its link-up with the institutions' other services;
• Steps in the introduction of remittance services;
• Preferences of the customers receiving remittances, identified as:
  • Security and speed of the service;
  • Proximity of the offices;
  • Cost of the transactions.

Finally, the article gauges the future requirements of remittance services and assesses demand for:

• Additional financial services linked to remittances;
• Services such as automatic tellers, or debit and credit cards among others, that facilitate access to the funds from the remittances received;
• Options that reduce the direct costs of transfers.