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These remittances have proved to be a powerful force in drastically improving the quality of people’s lives, added Sudhesh Giriyan, COO at Xpress Money, a global money transfer brand.
Giriyan’s statement comes after a report released by the International Fund for Agricultural Development (IFAD) that shows regular remittances to families in developing markets help reduce the level of poverty, and help escape from falling back into the poverty trap.
Over the years, developing economies have received an overwhelming volume of remittances. It is estimated that remittances to developing countries increased by 51 per cent between 2007 and 2016.During this time period, growth in remittance flows to the Asia-Pacific region (87 per cent), Africa (36 per cent), Latin America and the Caribbean (18 per cent), and the Near East and Caucasus (37 per cent) spurred long-term economic development and asset building.
Remittances sent to families will be used to reach individual goals such as better health and nutrition, educational opportunities, improved housing and better sanitation. Remittances also form a strong base for future economy as it kickstarts entrepreneurial activities and sparks micro-businesses that deliver a long-term economic boost.
“Remittances play a very important role in linking economies outside standard aid and trade flows. They promote income equality, benefit all economies in the send and receive value chain, and lead to new micro-businesses and SMEs being developed. Remittance flows aren’t just used for daily consumption, but also for long-term asset building. Research shows that families save about 25 per cent of remittances received globally – which translates to over $100 billion sunk into improving health and education, and investing in assets,” said Giriyan.
The report also highlights a drop in average remittance fees from 9.8 per cent in 2008 to 7.45 per cent (as of June 2017) and notes that remittance houses and international MTOs offer far better fees than other vendors in the financial value chain.
The findings are in direct support of the UN Sustainable Development Goal of creating lower cost remittance channels, and also dovetail with Xpress Money’s aim of delivering superior service with competitive fees.
Despite falling fees, MTOs have continued investing heavily in expanding their physical network across new markets. Payout locations have increased over 400 per cent in the top 23 recipient markets, rising to 1.5 million from an initial 350,000. This has extended financial inclusion to new audiences, leading to more transparent financial transactions and revenue generation opportunities for all economies involved in the financial value chain.
“As the remittance industry continues to evolve, it has taken up the baton for creating financial inclusion and extending secure and legally licensed money transfer channels to global audiences. Apart from benefitting customer audiences, a denser network of accessible outlets encourages safe and legal transfers that facilitate AML, counter-terrorism and anti-counterfeiting efforts,” said Giriyan. – TradeArabia News Service
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