How Remittances Improve Life In Rural Areas

There is often much discussion about how remittance services have the power to improve the economy on a global scale, but have we neglected to shed light onto the forgotten, and more obvious, beneficiaries?

It was in Bangkok that members of the private sector, policy makers and civilians congregated for a three-day period to drive home the message that highlighted the importance of remittance programs for members in rural communities receiving funds.

According to All Africa, The Global Forum on Remittances meeting came to an end on May 23, and was organized by the International Fund for Agricultural Development (IFAD) and the World Bank.

Over 350 international constituents of the forum pledged to make every remittance dollar count. They shared the hope that new services would help to improve rural livelihoods and pull those who live in such areas from economic isolation.

Kevin Cleaver, associate VP of IFAD, stated, “We know that out of the nearly $500 billion sent in global remittances every year, around $220 billion go to people living in poor and remote villages.”

He added, “We now have a clear mandate: Harness the power of this money to change their livelihoods.”

In the past, central bank regulators have been blamed for interfering with remittance flows with overly strict regulations. Remittance transfers have been suppressed by such regulations, and thus indirectly stopped emerging markets from growing further.

Remittance money sent home to rural areas such as Northern Africa has the power to transform rural areas in several ways.

According to a report issued by IFAD, remittances help to stimulate agricultural production, which is a necessary component to strengthen international trade and economic progress. If more money could be used to fund improving farming life and agricultural development, there would be less pressure to migrate and families could stay together.

Moreover, IFAD reports that 60 percent of the world’s poorest people live in these rural areas. They are often food deprived and rarely meet health living standards. Those living in rural areas live an unjust life, with little opportunity to education and health institution. Basic human needs such as water and shelter are frequently not met.

Participants that attended the forum heard anecdotes from around the world, which helped them to understand how remittance programs have the potential to offer the rural poor a better quality of life through better financial security. Remittances could also be used to fund first-ever insurance policies, or to help someone’s small business vision come to life.

Remittance transactions have even helped to serve the previously unbanked. A London-based participant, Developing Markets Associates, said its Central Asian country banks have helped many remittance recipients. Their services lead to over 11,000 consumers opening their first bank account.

To read the full story at All Africa click here, or to access the IFAD report click here.