Migration: are remittances the real issue?

A lot of discussions have been taking place in the international arena, which focus on how remittances (money) sent home by migrants affect development. The main question is: what is the relationship between these remittances and the development of the countries they are sent to? Indeed, globally these small monetary transfers constitute a significant amount of financial flow, even though they are difficult to quantify. In 2014, the World Bank estimated their value at about $583 billion. This means that total remittances around the world add up to a larger amount than that of official development aid.

Over the past few years, the international community has paid more attention to how migrants can contribute to the development of their countries of origin through the money they send home. It’s an important aspect of international policy-making, but it is equally important to raise the question of whether this ever-growing focus on remittances actually promotes a distorted view of the link between migration and development (M&D).

Two sides of the coin

The impact of remittances is undeniable. Transfers, sent home by migrants who are often forced to leave their home country on account of a lack of opportunity, often consist of relatively small amounts in themselves but represent a lifeline for the recipients, in their millions around the world. Not only does the income increase their standard of living, but it covers basic needs such as food, education, health and housing. Remittances can also increase resilience in cases of natural disasters and other unexpected events.

The positive effects of transfers can be reduced, however, when individuals are overly dependent on them as a source of income. In other cases, remittances exacerbate economic, social and structural inequalities between recipients and non-recipients, or those who may truly need aid. In addition, migrants may face considerable social pressures to send money overseas, to pay for basic services and overcome gaps in social-security and education systems, eventually replacing states’ responsibility towards development.

Just part of the solution

Are remittances the real issue here? The link between migration and development is a complex and non-linear one. Indeed, working on M&D implies recognizing the mutual effects, positive as well as negative, of migration on development (and vice versa). Migration could be perceived as the outcome of enhanced development, as a driver of it, and as an inherent consequence of development initiatives that lead either to migration or displacement.

It is therefore important to adopt approaches that do not exclusively focus on the role that migrants can play in development – approaches that bear the risk of shifting the responsibility of development on to their shoulders – but rather that build on the overall complexity of the M&D links.

In this framework, remittances can be seen as but one of the components of a comprehensive agenda that addresses the systematic lack of basic services for recipient communities. M&D initiatives should aim at promoting policies and programmes that create enabling environments for migrants and their families – including through the reduction of remittances transfer costs – and more generally, by including all aspects of migration in development planning policies.

Any discussion about remittances should consider both the costs and the opportunities, and take into account the wide range of social and economic issues that shape migration flows. While remittances are an important tool for development, the international community must remember that, if recognized as a tool alongside official development aid, there will be many strings attached.

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Author: Olivier Ferrari is a migration and development specialist at the International Organization for Migration, where his work focuses on the local dimensions of the M&D nexus.

Image: Shakir Hussein (L), owner of money transfer business Mustaqbal Express, wires money for Mohammed Ahamed (at counter) for Ahamed’s former wife in Somalia, in Minneapolis June 23, 2014. REUTERS/Eric Miller