Remittance flows a great poverty alleviation tool

Remittance flows a great poverty alleviation tool, says report

A study commissioned by the UN agency International Fund for Agricultural Development (IFAD), estimates that remittances -- the portion of migrants' earnings sent back to their families -- reach 10% of the world's population, most of it in the developing world.

An estimated 150 million migrants worldwide sent more than US$ 300 billion to their families in developing countries during 2006.

There are over 50 million migrants from Asia and the Pacific. India is Asia's main exporter of migrants, accounting for 22% of total migrants. Asia receives almost US$ 114 billion in remittances annually -- the highest regional total in the world. And India is the top recipient country, receiving US$ 24.5 billion.

The impact of remittances on rural areas in developing countries in Asia is substantial. In Asian countries that are 65% or more rural, the ratio of remittances per capita to per capita GDP is 23%, and the highest in the world.

These funds are used primarily to meet immediate family needs but a significant portion is also available for savings, credit mobilisation and other forms of investment.

The report calls remittances the world's largest poverty alleviation programme and says it could become an effective grassroots economic development programme, particularly in rural areas that present some of the greatest challenges to financial inclusion.

To aid and enhance the process, the report suggests improvements in data collection, reduction in transaction costs, and increased efforts to leverage remittance flows for greater development impact.

Many Asian migrants and their dependents do not have access to basic financial services. For example, only 11% of Indians in the state of Kerala -- a major exporter of labour -- have bank accounts. Transaction costs too can be high in some countries, as much as 3% per transaction in Central Asia.