Official statistics recorded US$80 billion in migrant remittances to developing countries in 2002.
Taking into account informal flows and underreporting of official data, estimates put the value much higher, at between US$100 and 200 billion.
This was disclosed in an interview with Honourable Alpha Babatunde Lewally who has just returned from a seminar on home remittances for economic development in Lagos, Nigeria, organized by the West African Institute for Financial and Economic Management (WAIFEM).
He added that global flows of migrant remittances and transfer channels had recently become highly publicized topics.
The lawmaker noted that many aspects which contributed to a better understanding of remittance flows or their roles, however, were less well known partly because they were somewhat buried in a rich but fragmented body of work or were not yet as well researched.
The study, he said, aimed at contributing to filling this, by offering and introduction to remittances, their developmental contributions and especially by focusing on issues related to banking and financial services.
Hon Lewally maintained that it thus complemented recent work on remittances, emphasizing macro-economic aspect; a body of work on flows and issue with geographic focus on Latin America, the Caribbean, and the United States; extensive work on informal transfer systems; and extensive body of work in the migration literature.
The legislator stated that remittances had become the second largest capital flow behind Foreign Direct Investment (FDI) and ahead of overseas Development Assistance (ODA).
In 2001, remittances represented 43% of total FDI flows and 260% of ODA; remittances flows have surpassed ODA since 1995.
He disclosed that today’s remittances constituted the fastest growing and most capital flow to developing countries. “Remittances have made more than doubled in value in the past decade and also grow faster than migration- a trend which is likely to continue”.
Hon Lewally pointed out that while FDI and ODA had occupied the limelight of development finance to date remittances had made a quiet yet substantial contribution to international capital flows as well as to national balance of payment, forex reserves, and especially, to the welfare of receiving households in developing countries.
Regionally, he lamented, Latin America and the Caribbean received the lion share of remittances in nominal terms with $25 billion followed by South Asia with $16 billion.
He echoed that donors had begun to recognize the role of remittances and had become interested primarily in how to facilitate an increase of the flow and use of remittances for developmental benefits. This include how to facilitate a reduction in transaction cost and better access to formal sector transfer services; as well as how to integrate and improve access to a broader range of financial services through remittances as an entry point. “The single biggest contribution of remittances was to the welfare and improved livelihood of the receiving households, be it in terms of basic necessities such as food or clothing, or better health and education, or to a smaller extent in terms of savings or business investment. Remittances also finance some informal lending”. The bulk, an estimated average of 80% of remittances however, goes to consumption, thereby building human and social capital.