The World Bank has announced that remittance flows to developing countries are expected to exceed the earlier estimates by the bank and will amount to $406 billion, a 6.5 percent increase from the previous year. The bank also predicts these remittances will grow by 7.9 percent in 2013, 10.1 percent in 2014 and 10.7 percent in 2015 to reach $534 billion in 2015. Worldwide remittances, including those to high-income countries, are expected to total $534 billion in 2012, and projected to grow to $685 billion in 2015, according to the latest issue of the Bank’s Migration and Development Brief
However, despite the growth in remittance flows overall to developing countries, the continuing global economic crisis is dampening remittance flows to some regions, with Europe and Central Asia and Sub-Saharan Africa especially affected, while South Asia and the Middle East and North Africa (MENA) are expected to fare much better than previously estimated. “Although migrant workers are, to a large extent, adversely affected by the slow growth in the global economy, remittance volumes have remained remarkably resilient, providing a vital lifeline to not only poor families but a steady and reliable source of foreign currency in many poor remittances recipient countries,” said Hans Timmer, Director of the Bank’s Development Prospects Group.
Another obstacle to growth of remittance flows is the high cost of sending money, which averaged 7.5 percent in the third quarter of 2012 for the top 20 bilateral remittance corridors and 9 percent for all countries for which cost data are available. The average remittance cost for Sub-Saharan Africa was 12.4 percent, the highest amongst all developing regions.
The Migration and Development Brief also notes that the promise of mobile remittances has yet to be fulfilled, despite the skyrocketing use of mobile telephones throughout the developing world, the Bank declares. The Bank accuses national central banks in several countries of forbidding non-bank entities to conduct financial services and asks for a deregulation of the market. “Cross-border mobile remittances have not taken off due to a variety of regulatory and operational challenges. AML/CFT and “know-your-client” requirements also exacerbate the regulatory hurdle for mobile money operators that raise cost and operational burden.”, the Bank explains. “Mobile remittances fall in the regulatory void between financial and telecom regulations, a reality which creates regulatory uncertainty for potential market entrants,” it adds.
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