Nations not fully benefitting from remittances, says UN

GENEVA – Migrant workers from the world’s poorest countries sent home US$27 billion in 2011 despite the global financial slowdown, but developing nations are failing to benefit fully from the cash, the UN has said.

Remittances ‘could prove particularly valuable for capital-scarce developing countries’, by helping to reduce poverty, improve healthcare and education, the United Nations Conference on Trade and Development said in a new report on Monday. According to the report, titled ‘Harnessing Remittances and Diaspora Knowledge to Build Productive Capacities’, some US$27 billion in remittances were sent to the world’s 48 least developed countries (LDCs) last year. Remittances thus represent the second largest source of foreign financing for such nations after official development assistance, which brought them US$42 billion in 2010.Yet, despite the fact that migrants were sending home double the amount that poor countries received in foreign direct investments, little of the remittance cash was being used as capital to raise loans with foreign lenders, UNCTAD Secretary General Supachai Panitchpakdi said.Speaking to reporters in Geneva ahead of the report’s publication, he lamented that this was a missed opportunity.While other areas were hard-hit by the global economic slowdown, remittances had proved resistant to the crisis, he pointed out, stressing they were increasingly needed for keeping poor economies running.Remittances to the world’s poorest nations in fact grew eightfold between 1990 and 2011, Panitchpakdi said, adding that this was largely due to a soaring number of migrants from such countries.Between 2000 and 2010, migrants from LDCs rose from 19 to 27 million, he said.Taffere Tesfachew, who heads UNCTAD’s least developed countries unit, meanwhile lamented that only six or seven of the 48 LDCs have policies in place to deal with remittances.LDCs also had an incomplete understanding of how much money was being sent home since much of the cash went through informal channels to avoid the ‘exceptionally high’ commissions demanded by official money transfer companies, he said. – Nampa-AFP