Global Forum on Remittances, Investment and Development

  • 16th June 2017
  • by secretary

15 – 16 June 2017. New York. This Forum brought together key decision makers from the public and private sectors as well as civil society who work in the field of migration and remittances. During the two-day event, more than 300 participants gathered to share lessons learned and best practices on innovative business models, to stimulate long-lasting partnerships, and to raise awareness towards a more enabling market.

Specific objectives

  • Highlight the contribution of migrant remittances and diaspora investments to achieve the Sustainable Development Goals and its targets; 
  • Identify measures to reduce the transfer costs of remittances, through market competition, innovative business models and the use of modern technologies; 
  • Assess regulatory barriers and other constraints to lower remittance transfers, promote diaspora investments and facilitate financial inclusion; 
  • Explore innovative financing solutions to unlock migrant investments
  • Discuss the role of migrant remittances and diaspora investments in countries and communities hosting displaced populations; 
  • Highlight sustainable and innovative business models that expand current remittance markets and create synergies with other financial markets and products
Diaspora investors and mechanisms 
While migrant investment has demonstrated considerable potential for supporting economic growth back home, it is still hampered by a lack of appropriate financial instruments and information. This panel highlighed some ongoing initiatives aimed at facilitating diaspora investment, and discussed challenges and further opportunities in meeting diaspora investment needs.
  • Daniel Gonzáles, Program Officer, International Migration Initiative, Open Society Foundations 
  • Marion Jézéquel, Chief Executive Officer, Babyloan 
  • Pietro Mona, Deputy Head, Global Program for Migration and Development, Swiss Agency for Development and Cooperation, Federal Department of Foreign Affairs

Expanding opportunities and instruments for diaspora investment
This panel explored challenges and opportunities in promoting and supporting diaspora investment mechanisms. The panel brought perspectives from financiers and civil society stakeholders on ways and roles towards nurturing, enhancing and mainstreaming this growing market. The panel also addressed innovative or impact investing mechanisms that could be adapted to respond to diaspora investment needs.

  • Jennifer M. Brinkerhoff, Professor of Public Administration and International Affairs, George Washington University 
  • Eric V. Guichard, CEO, Movement Capital Ltd – Homestrings 
  • Justin Sykes, Managing Director, Innovest Advisory, Social Impact through Innovation 
  • Hassan Yusuf, Chief Executive Officer, International Bank of Somalia

14 June 2017. New York. Launch of a new IFAD report: Sending Money Home: Contributing to the SDGs, One Family at a Time is the first-ever study of a 10-year trend in migration and remittance flows over the period 2007-2016. While the report shows that there have been increases in sending patterns to almost all regions of the world, the sharp rise over the past decade is in large part due to Asia which has witnessed an 87 per cent increase in remittances.

According to the report, migrants will send an estimated $6.5 trillion between 2015 and 2030.

Transaction costs to send remittances currently exceed $30 billion annually, with fees particularly high to the poorest countries and remote rural areas. The report makes several recommendations for improving public policies and outlines proposals for partnerships with the private sector to reduce costs and create opportunities for migrants and their families to use their money more productively.

Other key findings from the Report:

  • Remittance flows have grown over the last decade at a rate averaging 4.2 per cent annually, from $296 billion in 2007 to $445 billion in 2016.
  • One hundred countries receive more than $100 million in remittances each year.
  • It is projected that an estimated $6.5 trillion (at no growth) in remittances will be sent to low- and middle-income countries between 2015 and 2030.
  • The top ten sending countries account for almost half of annual flows, led by the United States,

    Saudi Arabia and the Russian Federation.

  • Eighty per cent of remittances are received by 23 countries, led by China, India and the Philippines.
  • Asia receives 55 per cent of all remittance flows.

Diaspora Investment in Agriculture (DIA) initiative
This major partnership seeks to leverage the contributions of migrant workers and encourage their engagement in sustained economic development through investment in agriculture, particularly in rural areas.

Because of the close ties felt by those living abroad towards their communities ‘back home’, diaspora investors are not only well informed about the opportunities existing in their communities of origin, but are also more willing to invest in fragile markets than foreign investors.

The DIA initiative works to foster job growth in local communities, contribute to poverty reduction and curtail the need to migrate by: 

  1. Encouraging the global diaspora to invest in sustainable agricultural projects with real potential to impact the lives of poor rural people. 
  2. Enabling diaspora investors, diaspora organizations and actors on the ground to build the capacity necessary to undertake cross-border investments and gain access to markets for traditional products. 
  3. Stimulating agricultural production and reducing import dependency to enhance food security.
Rural SMEs in their homeland
In 2014, the Business in Development (BiD) Network Foundation, a Dutch NGO, in partnership with fund manager Shuraako, an American NGO with field offices in Somalia, initiated the Somali AgriFood Fund , a seed capital matching investment fund focused on driving diaspora investments into Somali agriculture, fisheries, food processing and livestock sectors. Investment projects ranged from US$20,000.

  • By January 2016, 199 candidates had applied to the AgriFood Fund and 6 business owners had been awarded financing for a total of US $435,600. 
  • The approved business plans involve 8 diaspora investors, of which 2 are women. These are all originating from the region they invest in and are contributing 40% to 60% of investment. 
  • The 6 awarded agribusinesses are expected to generate 196 new jobs and to open new market outlets for about 15,000 small-scale producers in the agriculture and fisheries sectors
  • The project has demonstrated that it is possible to attract diaspora investment into Somali agribusinesses and to generate employment and revenues through diaspora resources. Furthermore, it has raised interest from the national financial sector (local banks and micro-finance institutions) to develop activities aiming at diaspora investment into the local economy
  • IFAD is now planning to finance a follow-up phase, which will aim at upscaling good achievements by building the capacities of Somali public and private institutions to provide the diaspora with the services they need to invest into Somali SMEs

Related: Interview with Gilbert Houngbo, president of IFAD
15 June 2017Alesha Black, director of the Council’s Global Food and Agriculture Program, sat down with the recently appointed president of the International Fund for Agricultural Development (IFAD), Gilbert Houngbo.

Take a listen to the full interview (at the bottom of this blog post), check out highlights from their conversation below, and read Gilbert Houngbo’s new op-ed on remittances and financial inclusion.

Extracts from the transcript

First of all, in the last 40 years, the United States has been by far our top donor—giving close to $1 billion. You can imagine the role that US money has contributed to achieving poverty reduction. The leadership that we’ve seen from the United States, though, is not limited to the money and what the money achieves. As a member of our managing board, the United States has helped to make sure that IFAD is nimble, agile, and effective, and drawing lessons from the debate on development aid effectiveness in general.

I want to convey that technological innovation is part of the solution, and I want to be very forceful about that—today, I believe that at a policy level, we need to encourage countries to use technology at the national level, even beyond cellphone technology, to map soil, to have smarter use of fertilizer and water, which is linked to the climate dimension. More and more drones are being used to reduce the costs of production. Meanwhile, access to financial data, market information, technical information about production on cellphones is really happening. And again, back to my rural transformation point, when you have a youngster in a village, if they can have the same access that they could have in the capital, maybe they don’t feel the need to physically be there. That’s part of what’s happening in the development of technology and innovation is really going to be part of the solution.