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Date: Mon, 05 Nov 2007 17:36:54 -0500
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Subject: Africa: Sending Money Home


Africa: Sending Money Home

AfricaFocus Bulletin
Nov 5, 2007 (071105)
(Reposted from sources cited below)

Editor's Note

"Remittance flows to and within Africa approach US$40 billion.
North African countries such as Morocco and Egypt are the
continent's major recipients. East African countries heavily depend
on these flows, with Somalia standing out as particularly
remittance dependent. For the entire region, these transfers are 13
per cent of per capita income." - Sending Money Home, International
Fund for Agricultural Development.

In recent years the economic importance of remittances for
developing countries has attracted increasing attention. But,
with the exception of Latin America and the Caribbean, empirical
research has been scanty. "Sending Money Home" is the first
report to try to estimate remittance flows from migrants from every
continent, concluding that in 2006 some 150 million migrants sent
more than $300 billion to their home countries.

This AfricaFocus Bulletin contains excerpts from that report, which
is also available on-line at
  http://www.ifad.org/events/remittances/maps, as well as a recent
Foreign Policy in Focus commentary by Francis Calpotura of the
Transnational Institute for Grassroots Research and Action (TIGRA,
http://www.transnationalaction.org). The Oakland, California-based
group focuses on organizing migrants to increase the impact of
their remittances, including lobbying for better terms with money
transfer companies. Working primarily with Mexican hometown
associations in the United States, TIGRA has organized surveys
among migrants, organizing them into "Million Dollar Clubs" of
immigrant communities and groups estimated to be sending at least
one million a year home to their communities.

Member organizations are principally from Latin America, but also
include African immigrant groups such as the Somali Action Alliance
in Minneapolis. They are currently organizing a campaign for
Western Union to sign a "Transnational Community Benefits
Agreement."

For earlier references to research on remittances and development,
see the listing in http://www.eldis.org, available at
http://tinyurl.com/yvyoyf, and that from http://www.livelihoods.org
at http://tinyurl.com/yvrt89

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Sending Money Home: Worldwide Remittance Flows to Developing
Countries

International Fund for Agricultural Development

This report has been elaborated based on a study commissioned by
IFAD to the Inter-American Dialogue in collaboration with the
Multilateral Investment Fund of the IDB and contributions
from the European Union, Government of Spain, Government of
Luxembourg, CGAP and UNCDF.

[Excerpts only. For full report, including summary data for 51
African countries, see http://www.ifad.org/events/remittances/maps

For more information, please contact: Pedro de Vasconcelos,
Remittances Programme Coordinator, IFAD ([log in to unmask])]

Remittances, the portion of migrant workers' earnings sent back
home to their families, have been a critical means of financial
support for generations. But, for the most part, these flows have
historically been "hidden in plain view", often uncounted and even
ignored. All that is now changing - as the scale of migration
increases, the corresponding growth in remittances is gaining
widespread attention.

Today, the impact of remittances is recognized in all developing
regions of the world, constituting an important flow of foreign
currency to most countries and directly reaching millions of
households, totaling approximately 10 per cent of the world's
population. The importance of remittances to poverty alleviation is
obvious, but the potential multiplier effect on economic growth and
investment is also significant.

The driving force behind this phenomenon is an estimated 150
million migrants worldwide who sent more than US$300 billion to
their families in developing countries during 2006, typically
US$100, US$200 or US$300 at a time, through more than 1.5 billion
separate financial transactions. These funds are used primarily to
meet immediate family needs (consumption) but a significant portion
is also available for savings, credit mobilization and other forms
of investment. In other words, the world's largest poverty
alleviation programme could also become an effective grass roots
economic development programme, particularly in the rural areas
that present some of the greatest challenges to financial
inclusion.

Three aspects could further enhance this development:

* Improvements in data collection,
* Reduction in transaction costs, and
* Increased efforts to leverage remittance flows for greater
development impact.

Africa

Migration

Sub-Saharan Africa has over 30 million people in the diaspora. Of
all the world's regions, however, Africa's predominant migration is
intraregional. The fluid migration within West Africa, for
instance, is partly due to the region's status as a geopolitical
and economic unit, but also by a common history, culture and
ethnicity among many groupings. There is also significant
international migration to former European colonial powers, such as
France, England, the Netherlands and Italy, among other countries.

Remittances

Remittance flows to and within Africa approach US$40 billion. North
African countries such as Morocco and Egypt are the continent's
major recipients. East African countries heavily depend on these
flows, with Somalia standing out as particularly remittance
dependent. For the entire region, these transfers are 13 per cent
of per capita income and on a country-by-country average represent
4 per cent of GDP and 4 per cent of exports.

Rural remittances

Remittances to rural areas are significant and predominantly
related to intraregional migration, particularly in Western and
Southern Africa. The mobility of Africans within theses region has
been followed by the sending of regular amounts of money. Two
thirds of West African migrants in Ghana remit to rural areas in
their countries of origin.

Market and financial access

When compared to other regions, money transfers to Africa are among
the most problematic mainly due to the fact that the continent
faces two major challenges: high rates of informality, particularly
within the continent, and a regulatory environment that foments
monopolies. In turn, transfer costs are higher and remittance
senders obtain less value for their money. Most African countries
restrict money transfers to banking depository institutions, and
restrict outbound flows of money unless used for trading.

As a result, informality emerges as a solution to the need to
remit. Another effect, however, is the persistence of monopolies by
banks and the few money transfer operators handling transfers. In
all of West Africa, for example, 70 per cent of payments are
handled by one money transfer operator. Moreover, 50 per cent of
payments are handled directly by banks and the rest by MFIs either
as sub-agents of banks, with some exceptions (in Senegal, for
example, MFIs operate as independent agents). Nigeria is a case in
point: nearly 80 per cent of transfers are handled by one money
transfer agency and banks are the sole remittance payers in the
country. Africans in South Africa are also faced with significant
regulatory restrictions in sending money, and thus rely on informal
networks.

Because regulatory environments often prevent other non-banking
financial institutions from making transfers or restrict outbound
transfers, financial access is also a casualty. As few institutions
participate in the transfers, and banks do not cater to lowerincome
individuals, financial access among African senders and recipients
is relatively low. In some countries like South Africa barriers to
entry relate to their legal status, thus disenfranchising migrants.
Other countries such as Kenya are seeking to deepen financial
access by leveraging remittance transfers through the use of mobile
telephony.

Facts and figures for Africa

* Total number of migrants: 29,199,544

Total remittances (US$ million): $38,895

* North Africa: $17,129
* West Africa: $10,803
* East Africa: $5,153
* Central Africa: $1,317
* Southern Africa: $4,493

Indicators

* Annual average remittances per capita: $83
* Annual average remittances per migrant: $1,358
* Remittances as percentage of GDP: 4%
* Remittances as percentage of exports: 4%
* Ratio of remittances per capita and GDP per capita: 13%
* Average share of migrants in total population: 7%
* Average share of migrants in countries with a population under 1
million: 20%
* Average share of migrants in countries with a population over 1
million: 5%

Top 5 recipients by volume received (US$ million)
* Morocco: $6,122
* Nigeria: $5,397
* Algeria: $5,164
* Egypt: $3,479
* Tunisia: $1,491

6 out of 52 countries receive more than US$1 billion

Main destination and migrant percentage to that destination
* North Africa (France): 33%
* West and Central Africa (Cote d'Ivoire): 14%
* Southeast Africa (Tanzania): 11%

Cost of sending $200: 8%-11%

**************************************************************

Remittances: For Love and Money

Francis Calpotura | August 14, 2007

Foreign Policy in Policy
Editor: John Feffer

http://www.fpif.org/fpiftxt/4467

[Francis Calpotura is the executive director of the Transnational
Institute for Grassroots Research and Action (TIGRA). Originally
from the Philippines, he has been involved in cross-border
organizing around economic justice for the last 20 years. TIGRA is
based in Oakland but has affiliates throughout the United States.
To get involved with their current Western Union campaign, visit
http://www.transnationalaction.org.

Yania Marcelino was a six-year-old girl in the Dominican Republic
when her mother left their family to find work in another country.
She went first to Puerto Rico, then later to New York City to work
as a seamstress. There she began sending money back to Marcelino
and her three siblings and four cousins. The children often had to
travel 15 or 20 kilometers to get to the wire transfer agency, and
sometimes the money sent was lost.

For nine years, her mother tried to be part of their lives through
letters, sometimes including money for them to take pictures to
send to her. She sent a dress and shoes for Marcelino's first
communion, but they never arrived. At 21, Marcelino was ready for
university but could not pay for it. Her mother applied to bring
her to the United States, but Marcelino had become pregnant and
couldn't get a visa. By the time her immigration paperwork went
through, she was 24 with a baby to support.

"It took me three months to find work [in the United States]," she
says. "And I started to send money."

Today, Marcelino works part-time as a neighborhood organizer for a
community organization in Providence, Rhode Island. On weekends,
she also works as a hairdresser to support her three children. She
continues to raise money to send to her hometown, most recently
$2,500 to pay for a local girl's operation.

Part of her community activism involves serving on a local
coordinating committee for the Transnational Institute for
Grassroots Research and Action (TIGRA). This national network of
immigrants like Marcelino together sends millions in remittances,
or money transfers, to families throughout the Global South. By
coming together, these immigrants have begun to see the power of
organizing their dollars and numbers. Remittances from immigrants
now represent more than the global total of overseas development
assistance. It can be a powerful driver of sustainable economic
development.

Labor Moves North, Money Flows South

Globalization has transformed the lives of hundreds of millions of
people in this generation. Countless individuals have moved from
villages to towns, from cities to overseas in search of ways to
provide for their families and escape poverty, violence, and an
uncertain future. Many have come to the United States to work as
low-wage laborers. Part of the largest influx of immigrants since
the turn of the 19th century, they have created an unprecedented
level of money transfer from the global North to the South as they
send money home to their families.

Sending a remittance is an individual act of love from the sender
to the receiver. But if seen as a collective practice, it is
transformed into economic power that can be of service to family
and community. Cross-border organizing around remittances can
ultimately pose a challenge to the current model of unequal
development that has forced people to leave their homes.

Neoliberal economic policies of unfettered trade (e.g. under the
North American Free Trade Agreement or NAFTA), privatization of
state-run industry and services, and the triumph of investor rights
over labor rights have together failed to reduce poverty or create
economic growth. In fact, they have made conditions worse. Since
these economic policies have not been working, people have resorted
to a grassroots transfer of labor and capital. Workers migrate away
from their families to serve as labor in rich countries and send
capital in the form of remittances back to their loved ones in
impoverished communities around the world. In this way, mobilizing
remittances toward sustainable development can be a means of using
neoliberalism against itself.

These remittances have eclipsed the amount rich countries spend on
foreign aid. In 2005, migrant workers sent a total of $232 billion
to their country of origin, more than three times the amount of
official development assistance. In many parts of the developing
world, remittances account for 30% or more of the gross domestic
product. Inflows from Mexicans living abroad, for example,
represent the country's second largest source of foreign income
behind oil exports. Hometown Associations

TIGRA is part of the growing grassroots movements linking
immigrants with their communities of origin. Many immigrants in the
United States, especially from Mexico, have come together in
"hometown associations," directly linking communities here with
their home communities. These connections can provide a substantial
alternative to foreign aid and investment, as these cross-border
ties are strengthened. This is crucial since international
financial institutions that provide "aid" often contribute to the
harmful economic policies that have displaced people from their
home countries.

More than 1,000 Mexican hometown associations exist in the United
States. These associations send money to rebuild after natural
disasters, promote health and education efforts, and support the
development of basic infrastructure. As these associations have
grown in financial importance, the Mexican government has taken
note, matching the contributions of these groups to several Mexican
states by 3 to 1.

But the Mexican government's increasing reliance on these
associations is part of the flawed neoliberal model that dictates
a decreased role for government in providing basic services and
investing in sustainable development. Rather than mitigate the
economic factors that have forced so many to migrate, the Mexican
government has chosen instead to support the export of its second
most profitable resource, labor. Building an Alternative

TIGRA encourages community and ethnic associations to conduct
surveys to establish that their members contribute at least $1
million of remittances per year. These Million Dollar Clubs (MDCs)
have formed across the United States from Oakland to New York, Los
Angeles to Minneapolis, and Fargo to El Paso. Involved immigrant
and community organizations include the Fifth Avenue Committee in
Brooklyn, Pilipino Workers Center in Los Angeles, Casa Aztlan in
Chicago, and Somali Action Alliance in Minneapolis. As a MDC,
immigrants can speak with one voice as "millionaires" for their
local area, demand accountability of those who prey on their
vulnerability, and set priorities for reinvestment.

At the next level up, La Liga (The League) networks the Million
Dollar Clubs and their allies globally as economic leverage to
promote sustainable development. It allows member organizations in
both host and home countries to have the ability to jointly apply
pressure to receiving and sending governments to respond to
community needs and change policies that exacerbate migration. La
Liga is also involved in setting up a Transnational Community
Reinvestment Fund (TCRF) that will provide an alternative to
foreign "aid" and international financial institutions. The
founding convention of La Liga is set for May 2008 in Mexico City.
In the meantime, TIGRA is conducting consultations across the
United States to determine what a truly democratic TCRF would look
like.

The Fund seeks to support and promote alternative models of
community development whose values of solidarity, sustainability,
and holistic human development are central to the economic
enterprise. The functions of the Fund will include providing
grants, loans, and technical assistance to strengthen and promote
alternative economic development initiatives in communities of the
global South and North that have borne the brunt of neoliberalism.
This can include, but is not limited to, building affordable
housing, development of local-serving business ventures, and
establishing cooperative and community-owned institutions. TIGRA is
expected to launch the Fund in the spring of 2008.

Western Union and the Money Transfer Scam

An immediate challenge faced by immigrant communities is the high
fees associated with remittance transactions. Being forced to spend
billions in transfer fees to send money back home for food, urgent
medical care, and education is a major economic security issue for
immigrants. Studies show that if money transfer fees were cut in
half, 33 million people could be lifted out of poverty in the
developing world. Immigrant workers spend up to a week's wages to
pay these monthly fees; for families in their home countries, the
fee represents almost two month's worth of wages.

This is why TIGRA organizers have as their current central focus a
campaign to pressure the global money transfer giant, Western
Union, to lower fees and prioritize community reinvestment in
sustainable development. Such a move would make the money transfer
industry more accountable to its customer base: immigrants who
often work low-paying jobs with little regulation. This scenario is
grounded in economic reality; wire transactions cost less than $5
to a company that charges $20 or more.

Specifically, TIGRA is urging Western Union to adopt a
Transnational Community Benefits Agreement (TCBA) that would lower
fees, establish fairer exchange rates, and provide community
reinvestment for sustainable development. A year's worth of
dialogue with the company has borne little fruit thus far.
Organizers with TIGRA are threatening a September boycott of the
company if Western Union continues to deny compliance with the
tenets of the TCBA.

Ultimately, however, TIGRA's success depends not on how much
Western Union lowers its fees, nor even on the total number of
dollars reclaimed for marginalized communities in rich and poor
countries. As one Dominican activist said, "We don't want to do
this just to get some money in people's hands. If we're going to
work on this, it has to be about building a network to stop the
monster of neoliberalism."

*************************************************************
AfricaFocus Bulletin is an independent electronic publication
providing reposted commentary and analysis on African issues, with
a particular focus on U.S. and international policies. AfricaFocus
Bulletin is edited by William Minter.

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