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2. Top remittance corridors
3. Biggest recipients
4. Remittances to Mexico
5. Remittances compared to official development aid
6. Cost of remittances
International development aid isn’t only the business of states and international institutions. Remittances are a large part of this aid. Remittances are money sent back home by migrant workers. The total amounts are more important than official, government funded foreign aid and some developing countries are heavily dependent on them in the sense that remittances represent a large share of their national income or GDP.
Officially recorded remittance flows to developing countries are estimated to have been above $350 billion in 2011, up 8 percent over 2010. Migrants send more than $400 billion to developing countries in 2012. Up 6.5% from 2011. In comparison, official development aid amounted to $133 billion in 2011, roughly a third.
If we include remittances to the rich world, the total is more than $500 billion. Given the fact that a lot of money is not sent home officially through money senders such as Western Union - but rather in suitcases, letters etc. – the real totals are probably even higher.
Remittances therefore are immensely important for poverty reduction in poor countries. In 2012, 120 million people in Africa received remittances. That’s more than one in ten Africans.
17% of global remittances originate from the US. Saudi Arabia and the Gulf countries are also important sources. Tajikistan is the country most dependent on remittances in the world. Transfers from the million or so Tajiks living abroad are equivalent to 45 percent of GDP. To some extent remittances flows mirror migration flows: the more immigrants/emigrants a countries has, the more money flows out/in.
The top recipients of officially recorded remittances for 2012 are India ($70 billion), China ($66 billion), the Philippines and Mexico ($24 billion each), and Nigeria ($21 billion). Other large recipients include Egypt, Pakistan, Bangladesh, Vietnam, and Lebanon (source).
As a percentage of GDP, the top recipients of remittances, in 2011, were Tajikistan (47 percent), Liberia (31 percent), Kyrgyz Republic (29 percent), Lesotho (27 percent), Moldova (23 percent), Nepal (22 percent), and Samoa (21 percent).
Remittances to Mexico exceed $20 billion a year. Mexico the largest recipient of money sent from the U.S.
(source, based on information from Raúl Hernández-Coss for the World Bank; click image to enlarge)
As seen from the following graph, this kind of informal aid has indeed become more important than the formal, government sponsored or international development aid:
Here is a beautiful visualization of remittance flows.
Sending money home costs money. Lowering average remittance fees to 5% from the current average of 12% would put $4 billion more in the pockets of migrants and their families.