THE WORLD BAN
Remittances
in Africa
A Catalogue of Studies and
Technical Assistance by the
World Bank, Development Agencies
and Government in Africa
March 2011
The World Bank Group
The European Commission
ACKNOWLEDGMENTS
This report was authored by Ehui Adovor, with editorial assistance provided by Sheldon
Lippman. Overall guidance and supervision was provided by Soheyla Mahmoudi, Project Task
Team Leader and Senior Operations Officer, African Diaspora Program; and Isra Salim, Junior
Professional Associate, African Diaspora Program. Key assistance was provided by Thilasoni
Benjamin Musuku, Payment Systems Specialist, Finance and Private Sector Development; Carlo
Corazza, Financial Sector Specialist, Financial Infrastructure; and Isaku Endo, Financial Sector
Specialist, Financial Infrastructure; Kai Schmitz, Senior Financial Sector Specialist, Payment
Systems Development Group, Financial and Private Sector Vice Presidency. Comments and
assistance were also received from other team members from the Payment Systems
Development Group (PSDG) and Development Economics Prospects Group (DECPG).
The World Bank would also like to acknowledge and thank the African Union Commission
(AUC) and development partners: the European Commission (EC), the African Development
Bank (AfDB), and the International Organization for Migration (IOM) for their helpful insights,
comments, and contributions.
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ABBREVIATIONS AND ACRONYMS
ACP
AECF
AFD
AfDB
AML/CFT
API
AIR
ARPI
CAEMC
CEMAC
BIS
BCEAO
CGAP
CPSS
DEC
DFID
DRC
DRIL
EC
EIB
FAR
FATF
FDI
FedACH
FFR
FSAP
FSS2020
GDP
GTZ
G-8
GRWG
IADB
IAMTN
ICT
IDA
IDB
IFC
IFAD
ILO
IMF
IOM
IT
M-Banking
African, Caribbean and Pacific Group of States
Africa Enterprise Challenge Fund
Agence Francaise de Development
African Development Bank
Anti-Money Laundering/Combating the Financing of Terrorism
Arab Payments and Securities Settlement Initiative
African Institute for Remittances
African Remittances Payment Initiative
Central African Economic and Monetary Community
Economic and Monetary Community for Central Africa
Bank for International Settlements
Banque Centrale des États de l’Afrique de l’Ouest
Consultative Group to Assist the Poor
Committee on Payment and Settlement Systems
Development Economics
UK Department of International Development
Democratic Republic of Congo
DFID Remittance Information Library
European Community
European Investment Bank
Future of African Remittances
Financial Action Task Force
Foreign direct investment
Federal Reserve Automated Clearing House
Financing Facility for Remittances
Financial Sector Assessment Program
Financial System Strategy 2020 (Nigeria)
Gross Domestic Product
German Agency for Technical Cooperation (Deutsche Gesellschaft für Technische
Zusammenarbeit)
Group of Eight
G8 Global Remittances Working Group
Inter-American Development Bank
International Association of Money Transfer Networks
Information communications technology
International Development Association
Inter-American Development Bank
International Finance Corporation
International Fund for Agricultural Development
International Labor Organization
International Monetary Fund
International Organization for Migration
Information technology
Mobile banking
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MFA
MFW4A
NGO
ODA
OECD
PSDG
SADC
SME
SWIFT
UNCDF
USAID
WAEMU
Ministry of Foreign Affairs (Italy)
Making Finance Work for Africa Partnership
Nongovernmental organization
Official development assistance
Organization for Economic Co-operation and Development
Payment Systems Development Group
Southern Africa Development Community
Small and medium-size enterprise
Society for Worldwide Interbank Financial Telecommunications
United Nations Capital Development Fund
United States Agency for International Development
West African Economic and Monetary Union
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CONTENTS
Executive Summary ..........................................................................................................................................8
1.
Introduction............................................................................................................................................. 10
1.1 Background ..............................................................................................................................................................................10
1.2 Migration Patterns ................................................................................................................................................................10
1.3 Remittance Flows ..................................................................................................................................................................11
1.4 Formal Remittances .............................................................................................................................................................11
1.5 Informal Remittances ..........................................................................................................................................................13
1.6 Costs ............................................................................................................................................................................................13
1.7 Regulatory Framework .......................................................................................................................................................14
1.8 Partnerships in Remittance Programs .........................................................................................................................15
1.9 Methodology Organization of Report ...........................................................................................................................16
References: Chapter 1 .................................................................................................................................................................17
2. Technical Assistance to Government for Putting in Place the Necessary Framework .................. 18
2.1 World Bank...............................................................................................................................................................................18
2.1.1 East and Central Africa ...............................................................................................................................................19
2.1.2 Southern Africa ..............................................................................................................................................................20
2.1.3 West Africa ......................................................................................................................................................................20
2.1.4 North Africa.....................................................................................................................................................................21
2.2 Development Partners ........................................................................................................................................................21
2.2.1 DFID ....................................................................................................................................................................................21
2.2.2 IFAD ....................................................................................................................................................................................21
2.2.3 EU ........................................................................................................................................................................................22
2.2.4 GTZ.....................................................................................................................................................................................22
References: Chapter 2 ................................................................................................................................................................23
3. Carrying out of Training and Capacity-Building Programs ............................................................... 24
3.1 World Bank...............................................................................................................................................................................24
3.1.1 East and Central Africa ...............................................................................................................................................24
3.1.2 Southern Africa ..............................................................................................................................................................24
3.2 Development Partners ........................................................................................................................................................24
3.2.1 AfDB ....................................................................................................................................................................................25
3.2.2 Credit Suisse Bank ........................................................................................................................................................25
3.2.3 DFID ....................................................................................................................................................................................25
3.2.4 EU ........................................................................................................................................................................................25
3.2.5 IFAD ....................................................................................................................................................................................26
3.2.6 Opportunity International UK.................................................................................................................................26
References: Chapter 3 ................................................................................................................................................................26
4. Study of Remittance Flows Within Africa ............................................................................................. 28
4.1 World Bank...............................................................................................................................................................................28
4.1.1 Migratory patterns .........................................................................................................................................................28
4.1.2 Remittance Flows .........................................................................................................................................................28
4.1.3 Costs ...................................................................................................................................................................................29
4.1.4 Formal and informal means of sending remittances ....................................................................................30
4.1.5 East and Central Africa ...............................................................................................................................................31
4.1.6 North Africa.....................................................................................................................................................................32
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4.1.7 West Africa ......................................................................................................................................................................32
4.2 Development Partners ........................................................................................................................................................32
4.2.1 ACP Group of States .....................................................................................................................................................32
4.2.1 AfDB ....................................................................................................................................................................................32
4.2.2 BIS .......................................................................................................................................................................................33
4.2.3 DFID ....................................................................................................................................................................................34
4.2.4 G8 .........................................................................................................................................................................................34
4.2.5 GTZ ......................................................................................................................................................................................34
4.2.6 IOM ......................................................................................................................................................................................35
4.2.7 USAID .................................................................................................................................................................................35
References: Chapter 4 ................................................................................................................................................................35
5. Policy Research and Dialogue on How Remittances Contribute to the Development of SubSaharan Africa ................................................................................................................................................. 38
5.1 World Bank...............................................................................................................................................................................39
5.1.1 National level ..................................................................................................................................................................39
5.1.2 Household level .............................................................................................................................................................40
5.1.3 Community level ...........................................................................................................................................................41
5.1.4 East and Central Africa ...............................................................................................................................................41
5.2 Development Partners ........................................................................................................................................................42
5.2.1 BIS .......................................................................................................................................................................................42
5.2.2 GTZ ......................................................................................................................................................................................42
5.2.3 IFAD ....................................................................................................................................................................................43
5.2.4 ILO .......................................................................................................................................................................................44
5.2.5 IMF ......................................................................................................................................................................................44
5.2.6 IOM ......................................................................................................................................................................................45
5.2.7 USAID .................................................................................................................................................................................45
References: Chapter 5 ................................................................................................................................................................45
6. Development of Content and Technology Platforms of Country-Based Payment and Settlement
Systems for Remittances ................................................................................................................................ 48
6.1 World Bank...............................................................................................................................................................................48
6.1.1 East and Central Africa ...............................................................................................................................................48
6.2 Development Partners ........................................................................................................................................................49
6.2.1 DFID ....................................................................................................................................................................................49
6.2.2 GTZ ......................................................................................................................................................................................49
6.2.3 IFAD ....................................................................................................................................................................................50
6.2.4 Government of Italy .....................................................................................................................................................50
6.2.5 Opportunity International UK.................................................................................................................................50
6.2.6 Other Partners in Mobile Banking ........................................................................................................................51
References: Chapter 6 ...............................................................................................................................................................51
7. Examples of Country Programs ................................................................................................................ 52
7.1 Ethiopia — Leveraging Remittances through Diaspora Bonds and Securitization .................................52
7.2 Zambia — Improving Payment Systems through Technology ..........................................................................52
7.3 Uganda — Improving the Regulatory Framework for Payment Systems ....................................................53
7.4 Kenya — Leveraging Remittances by Reforming the Mobile Money Transfer System ..........................55
References: Chapter 7 ................................................................................................................................................................55
Annex 1. Top Emigration Countries of Tertiary Educated, 2000 ............................................................ 57
Annex 2. Top 10 Remittance Recipients (Sub-Saharan Africa), 2007 .................................................... 58
Annex 3. Money Transfer Operators in Sub-Saharan Africa .................................................................. 59
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Annex 4. Mobile Payments Map .................................................................................................................. 60
Annex 5. Venues for Dissemination of Remittance Research and Studies .......................................... 61
Annex 6. MFW4A Remittances Donor Mapping, Master Project Database ......................................... 67
Attachment 1. The Nineteenth APEC Ministerial Meeting .................................................................... 81
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Executive Summary
Remittances in Africa is a review that catalogues the main studies, policy, and technical assistance
programs undertaken on remittances in Africa that have been carried out by the World Bank,
development partners, and governments in order to provide support leading up to the creation of the
African Institute for Remittances (AIR) project. The review includes work on remittance costs and trends,
scope and importance of remittances to Africa, financial markets and infrastructure that drive up
remittance costs, the impact of new technology on remittances, the legal and regulatory framework
governing remittance flows, and the impact of remittances on households and national policy. This
review is considered a ―living‖ document and will be revised and updated periodically to reflect ongoing
activities and trends.
Migrant remittances have become a major source of financing for developing countries and are
particularly important in Sub-Saharan Africa. The increasing role of remittances, especially their ability to
remain resilient during periods of economic and financial crises, has spurred an interest in development
practitioners who wish to understand the nature, potential development impact, and policy implications
of remittance flows.
The main findings from the review reveal that:
(a) Remittances are used mainly for household consumption and investment. The evidence from
studies reveals remittances reduce the level and severity of poverty among households—but the
remittance market in Africa is largely undeveloped, and a potential exists for the improvement of
remittance services and consumer products that will be valuable to migrants.
(b) The cost of remittances to Sub-Saharan African countries is high, which makes formal remittance
channels unattractive to remittance senders.
(c) Estimates suggest that 45-65 percent of remittances in Sub-Saharan Africa are transferred through
informal channels.
(d) Data on remittance flows between countries in Africa need to be improved. Due to the large
amount of remittances that are channeled through informal means; some countries in SubSaharan Africa do not report remittance data in their Balance of Payments.
(e) The regulatory framework in many African countries is a hindrance to non-bank financial
institutions such as microfinance institutions and other money transfer operators—the regulatory
framework highly favors banking institutions. This leads to a lack of competition among
remittance service providers, increases costs for remittance senders, and prevents access for rural
dwellers who are not reached by existing money transfer operators.
(f) In Kenya and South Africa and other such countries, where regulation on non-bank financial
institutions has been eased to an extent, mobile money transfer systems have gone viral, with MPESA in Kenya reaching out to several million people in rural areas.
(g) A key objective of governments, international organizations, and development partners is to
reduce the cost of remittances through improvements in payments systems infrastructure and
regulatory framework affecting remittance services.
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1.
Introduction
Migrant remittances to Africa have increasingly become a major source of financing for households,
communities, and governments in Africa. According to IFAD (2009c) more than 30 million Africans live
outside their countries of origin, sending more than US$40 billion to their families and communities back
home each year. In many African countries, migrant remittances have outstripped foreign direct
investment (FDI) and official development assistance (ODA). In Morocco, for example, remittances make
up 637 percent of FDI and 452 percent of ODA; in Egypt, 467 percent of FDI and 225 percent of ODA; and
in Cape Verde, 929 percent of FDI and 103 percent of ODA (AfDB 2009a).
1.1 Background
African migrants residing in member countries of the Organization for Economic Co-operation and
Development (OECD) were found to send twice as much as migrants in other developing countries—
with those from poorer African countries more likely to remit than those from relatively wealthier
African countries. In Ethiopia, remittances from migrants totaled US$780 million in 2010. Kenyans in the
Diaspora sent home nearly US$1.6 billion in 2008, achieving a per capita remittance of US$42 dollars,
while Ugandans in the Diaspora sent US$723 million back home. Rwanda received US$172.40 million in
2009 from Rwandans abroad. North Africa is the largest remittance recipient region in Africa, followed
by East Africa, West Africa, Southern Africa, and Central Africa (Bollard and others 2010).
Actual remittance flows for Africa are much higher than the statistics suggest, as they are heavily underreported. Less than two-thirds of African countries (one-third of Sub-Saharan countries) report remittance
data; and most often, flows through informal channels are not captured at all.
At the household level, remittances have become an important source of consumption and social
investment. They help take care of daily consumption needs such as food, education, and healthcare.
They also help households increase their savings and investments in small and medium-size businesses
and play a significant role in financing housing construction and development.
Estimates suggest that 30-40 percent of all remittance flows go to rural areas. Studies show that
households, which receive remittance transfers, are typically better off than those that do not have
remittances as a source of income. Remittances are also sometimes known to be counter-cyclical—
meaning, in times of crisis they can be relied on to stimulate the economy when there is a downturn, thus
providing a stable source of finance. In times of natural disasters, they have been known to help
households cope better with losses. They also have a substantial effect on improving balance of payments
and increasing foreign exchange earnings at the national level in countries.
1.2 Migration Patterns
In 2005, there were an estimated 15.9 million emigrants from Sub-Saharan Africa around the world.
Among the top emigration countries, Cote d’Ivoire and Ghana send 2.4 million and 1.7 million migrants,
respectively, to other parts of the world. Other top emigration countries are Mali, Burkina Faso, Eritrea,
Nigeria, Mozambique, Zimbabwe, South Africa, Sudan, and the Democratic Republic of Congo (DRC).
The Burkina Faso – Cote d’Ivoire corridor is among the top migration corridors in the world, with about 1
million migrants.1 In North Africa, the Algeria – France migration corridor is the largest, with about 1.4
million migrants, while the Egypt – Saudi Arabia migration corridor also constitutes a large number with
1.2 million migrants leaving Egypt for Saudi Arabia (World Bank 2008).
The destination of African migrants varies. Most migrants from African countries stay within Africa, with
over 69 percent of total migration flows from Sub-Saharan Africa occurring within the region. Ratha and
Shaw (2007) estimate that the volume of South-South migration (i.e., migration between developing
countries) is more than South-North migration in Sub-Saharan Africa (72 percent). This is determined
largely by social, family, ethnic, and religious networks; as well as cultural proximity, seasonal migration
opportunities, including cost; less-required travel documentation; and civil conflicts.
About 25.2 percent of migrants from Sub-Saharan Africa migrate to high-income OECD countries—with
about 9 percent and 3 percent migrating to other countries and non-OECD countries, respectively.
Europe is the second-most popular destination for African migrants and is a particularly popular
destination for migration from North Africa. Morocco and Algeria have their largest share of migrants in
this region. Most African countries do not send many migrants to the Asia–Pacific or Middle East,
regions, with the exception of Egypt, which has a large share of migrants in the Middle East. Migration to
North America is also not very common, although a significant fraction of countries send 10–20 percent of
their migrants to that corridor (Singh and others 2009).
Smaller countries tend to have higher rates of migration and higher rates of skilled migration. For
example, Lesotho, The Gambia, Cape Verde, and Liberia have among the highest rates of emigration of
tertiary-educated professionals. See Annex 1 for a list of the top emigration countries of tertiary-educated
migrants. A number of migrants from Sub-Saharan Africa are also refugees fleeing conflict. Estimates
show that refugees as a percent of total migrants from Sub-Saharan countries make up about 17.4 percent
of the population, compared to 7.1 percent from the rest of the world (World Bank 2008).
1.3 Remittance Flows
Total remittances to Africa have increased in the last few years. Between 2000 and 2005, for example,
remittances to the region increased by more than 55 percent to nearly US$7 billion (Singh and others
2009). Yet, Africa still receives only 4 percent of total remittances—the smallest share to developing
countries and just 33 percent of that received by India. Nigeria is the only country within Africa among
the top 25 remittance-receiving countries, although other countries receive a larger share of remittances as
a share of their GDP: Lesotho (27.3 percent), Togo (10.1 percent), Senegal (9.8 percent), Cape Verde (9.0
percent), and The Gambia (8.2 percent). See Annex 2 for a 2007 list of the top 10 remittance recipients in
Sub-Saharan Africa.
1.4 Formal Remittances
Other top migration corridors in Africa are Zimbabwe – South Africa, Mali – Cote d’Ivoire, Eritrea –Sudan, Ghana –
Cote d’Ivoire, Mali – Burkina Faso, Eritrea – Ethiopia, Mozambique – South Africa, Sudan – Saudi Arabia, and
Lesotho – South Africa.
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11
Remittances would be even greater in Africa if the amount of flows going through informal channels was
taken into account. Formal remittance channels include banks, electronic payment systems, microfinance
institutions, money transfer operators, non-bank financial institutions, remittance service providers, and
sometimes post offices.
Banks in several African countries are the only financial institutions authorized to perform money
transfers. This provides limited options for remittance services. Currently, 80 percent of the banks in 39
African countries pay remittances, but the percentage jumps to 90 percent in countries where only banks
are authorized to pay remittances. The IFAD estimates that banks in partnerships with Western Union
service about 41 percent of payments and 65 percent of all payout locations. In countries where only
banks are authorized to pay remittances, half are agents of Western Union and MoneyGram, the largest
money transfer operators in Africa. Theba Bank, a miners’ bank in South Africa, on the other hand offers
low-cost transfers from South Africa directly to the accounts of migrant families that have bank accounts
in Mozambique and Swaziland (Orzoco 2003).
Electronic payment systems, which involve the use of technology in the financial services industry
without the reliance on bank branch networks, is on the increase within Africa through microfinance
institutions and mobile phone operators. Increasing use of branchless banking will increase competition,
reduce costs, and reach underserved customers in rural areas. A study by the Consultative Group to
Assist the Poor (McKay and Pickens 2010) shows that on average branchless banking is 19 percent
cheaper than traditional banks, and smaller transactions are cheaper when using branchless banking than
traditional banks. Branchless banking is also 54 percent cheaper than informal methods of money
transfer. Currently, branchless banking is being used in Kenya (M-PESA), Tanzania, Uganda (Zap), South
Africa, and other countries within Africa.
Microfinance institutions provide microfinance services, including money transfers. Microfinance
institutions account for only 3 percent of remittance payout locations in Africa (McKay and Pickens 2010).
The DRC, Ghana, and Kenya are the only countries in which microfinance institutions are allowed to
carry out international money transfers. However, they serve as payout locations for other money
transfer operators within Africa.
Money transfer operators offer cash-to-cash transfers in many cases. Recent developments of products
have shown services in the form of electronic means. Annex 3 lists participating money transfer operators
in the African remittance market by country and shows that the largest money transfer operators in
Africa are Western Union and MoneyGram, which are estimated to control 65 percent of the remittance
market in Africa (IFAD 2009a). Both companies have agreements with several banks, foreign exchange
bureaus, and post offices that act as payment agents in several African countries. In Nigeria, for example,
nearly 80 percent of transfers are handled by one money transfer operator that, due to exclusivity
agreements, prevents other money transfer operators from contracting agreements with banks that are
the only authorized remittance payers in the country (IFAD 2009a).
Non-bank financial institutions are not under bank regulation or supervision and do not require a
banking license to operate. Examples of non-bank financial institutions include credit unions,
cooperatives, and microfinance institutions. However, in most cases they can only serve as payment
agents for money transfer operators, as many are not authorized to pay remittances directly. They play a
significant role in serving populations in rural areas in Africa.
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Remittance service providers tend to be businesses that provide remittance services to clients and charge
fees directly or through agents. Remittance recipients receive transfers in stores, banks, post offices, or
microfinance institutions. The IFAD (2009a) reports that bank remittance service providers in Africa
constitute over 50 percent of the businesses paying money transfers. Another 65 percent of all payout
locations are serviced by banks in partnerships with Western Union and MoneyGram.
Post offices may also serve as payout locations for international money transfer operators, although the
role they currently play is limited. In total, only about 20 percent of all post offices in Africa pay
remittances, with the notable exception in Algeria where post offices account for 95 percent of remittance
payers (IFAD 2009a).
New opportunities are also available for remittance transfers using mobile phones and SMS messages.
Annex 4 shows a map of mobile payment operations in all parts the world. Even though mobile
payments are limited in Africa, the map shows M-PESA in Kenya and Wizzit transfers as examples of
peer-to-peer transfers developed in Africa.
1.5 Informal Remittances
Informal transfers between migrants are largely based on trust and confidence among customers. SubSaharan Africa is believed to have the highest share of remittances channeled through informal modes of
transfer partly due to high transfer costs. Estimates of informal remittances in Africa are difficult if not
impossible because they are largely unrecorded. Sander and Maimbo (2003) found that ―fewer than twothirds of all African countries, and just one-third of Sub-Saharan countries, report official figures. The
official figures however only include cross-border flows captured by central banks as part of international
transactions‖. A larger share is not captured through informal channels. However, it is well known that
these flows are often transferred through informal channels such as friends and family members traveling
home, or informal money-transfer networks such as the hawala system in Somalia. 2 Other methods
include the use of taxi services between South Africa and other border towns in Botswana, Malawi, and
Mozambique. The estimated remittances sent to Sub-Saharan Africa through informal channels could add
45–65 percent of formal flows (Ratha and Shaw 2007).
1.6 Costs
Remittance costs are one of the key determinants as to whether migrants use formal and informal modes
of transfer. Formal channels of transferring remittances have been known to be more expensive and
complicated. In general, the cost of sending money to Africa remains relatively high and subject to wider
variations than other migration regions due to the lack of competition among remittance service
providers. Transfer costs from the United States to Africa are generally among the lowest, followed by
transfer costs from Europe. The cost of sending remittances within the African continent is far higher.
Ratha (2003, 157-75) estimates that if transaction costs were lowered by even 5 percent, overall
remittances to developing countries would increase by US$3.5 billion.
Hawala is an informal system of transfer based on trust and found predominantly in the Middle East, India, and
Islamic societies. Transfers between parties are not documented.
2
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1.7 Regulatory Framework
The high cost of remittances in Africa is due to several factors, not the least of which is the banking,
regulatory, and monitoring framework. Reducing the cost of remittances and encouraging competition in
the payment system market will thus be achieved through the improvement in payments systems
infrastructure and regulations affecting remittance services.
Regulations in several African countries highly favor banking institutions, which severely limit entry for
microfinance institutions and other non-bank institutions to carry out international money transfers.
Typically, central banks and other such national institutions authorize foreign currency transactions and
cross-border payments.
In countries where only banks are authorized to perform money transfers, the market for remittance
service providers is small and tends to be concentrated in urban areas. A study of 50 countries in Africa
shows that 8 countries authorize banks only and 32 authorize banks and foreign exchange bureaus to
perform foreign exchange transactions. Six countries allow banks, foreign exchange bureaus, and
microfinance institutions to pay out remittances directly, and 4 allow banks, foreign exchange bureaus,
and microfinance institutions plus retail locations to pay remittances (IFAD 2009a). Only the DRC,
Ghana, and Kenya permit microfinance institutions to carry out international money transfers. Even in
the 3 countries, microfinance institution participation is limited by a lack of technical capacity that
enables them to function as payers.
In countries where only money transfer operators are authorized to conduct international money
transfers, money transfer operators have exclusivity agreements that limit the number of agents
(microfinance and other non-bank financial institutions) they can conduct business with. Market
competition would be enhanced by the removal of exclusivity arrangements with agents or the possibility
of multiple exclusivity agreements that would allow money transfer operators to connect directly with
microfinance institutions.
The payment system infrastructure in some African countries is also not adequately developed to handle
money transfers. Small value transfers are conducted using products and platforms of the Society for
Worldwide Interbank Financial Telecommunications (SWIFT), which processes the payment through
correspondent bank networks. However, the existing international correspondent banking networks in
several African countries are not well adapted to process low-value retail flows. Therefore, it is important
that regulatory frameworks are updated to allow non-bank players to enter the market. Changes in
regulations encouraging the development of cell phone and other technology-based instruments and
regulations governing access of remittance agents to clearing and settlement systems would foster
competition among remittance service providers and encourage migrants to use formal methods of
transfer.
The legal and regulatory framework of Anti-Money Laundering and Combating the Financing of
Terrorism (AML/CFT) protects the integrity of remittance flows from these potential abuses. In principle,
financial institutions should be required to undertake measures in customer due diligence to identify and
verify customers. For cross-border transfers, the Financial Action Task Force (FATF) Recommendations
require countries to take measures to require financial institutions to obtain senders’ information. The
FATF Recommendation 7 allows countries to adopt a minimal threshold of no more than US$1,000 or
14
Euro 1,000 in obtaining sender’s information. This threshold creates room for migrant remittance
transfers, which are usually much less than US$1,000. With respect to remittance service providers, FATF
Recommendation 6 provides for all remittance service providers to be either licensed or registered by a
designated, competent authority. The FATF Recommendations contain language that permits countries to
some degree to adopt a risk-based approach to combating money laundering and terrorist financing
(FATF 2007 in Attachment 1). The risk-based approach enables competent authorities and obligated
institutions to use measures to prevent or mitigate money laundering and terrorist financing
commensurate to the risks identified.
1.8 Partnerships in Remittance Programs
With the growing demand by governments for studies and policy advice on leveraging remittances for
development, the World Bank intends to roll out a focused program on a pilot basis that will strengthen
remittance flow measurement, assist countries to improve supervision and regulation of remittance
markets, and facilitate collaboration with other development partners to improve financial service
outreach, particularly to rural areas. The World Bank and development partners have conducted many
conferences to discuss remittance issues and disseminate their research and studies (see Annex 5); and
have entered into partnerships as summarized below.

The Africa Remittances and Payment Initiative partners with Central Banks of various African
countries.

The Making Finance Work for Africa (MFW4A) partnership to promote private and public sector
initiatives held a partnership forum on Making Finance Work for Africa in 2008.

The African Development Bank African Remittances Roundtable 2009 Conference on Payment Systems
Redefining the Landscape of Payment Systems included representatives from central banks,
commercial banks, non financial institutions.

The UK Department for International Development is a partner in Making Finance Work for
Africa.

The AFPRI will work with the already existing Southern African Development Community
(SADC) Payments Systems Initiative, which was started in 1996 to improve national and regional
payment systems in the region.

A Private-Public Sector Partnership on remittances was launched in 2008 under the General
Principles for International Remittance Services to develop an actionable structure between
regulators and the operators on implementing the general principles.
The Making Finance Work for Africa is an initiative launched at the Heiligendamm G8 Summit in 2007 to
build a strategic partnership among stakeholders and donors for the development of the financial sector
and enhance its contribution by increasing aid efficiency to promote economic growth and poverty
reduction in Africa. The partnership’s activities broadly include donor coordination, advocacy,
knowledge generation and dissemination, networking, and monitoring of financial sector performance.
15
One of the objectives of the Making Finance Work for Africa partnership is to improve donor
coordination and provide a platform for donors and development partners to exchange experiences and
better synchronize their intervention in the financial sector. To that effect, the Secretariat has developed
the Remittances Donor Mapping, as part of the MFW4A Donor Project Database. The Remittances Donor
Mapping is an important tool in the remittances area as it offers an overview on the projects across Africa
and provides extensive information to all development partners on the ongoing projects on the continent.
It helps to build bridges between donors and promotes more joint approaches to tackling remittancesrelated topics.
With inputs and contributions from most of the donors and development partners involved in African
remittances issues, the Remittances Donor Mapping includes (as of December 31, 2010), 52 remittancesrelated projects from 21 donors and development partners, and spread across the entire continent as
regional projects and/or country-specific projects. Partners’ contribute to the value of the mapping
through regularly sharing information and updating of the database. An extract of the MFW4A
Remittances Donor Mapping is provided in Annex 6.
1.9 Methodology Organization of Report
This review has been prepared to help inform the activities of the African Institute for Remittances (AIR).
The methodology used includes desk reviews of reports, policy papers, research publications, project
documents, and academic literature on remittances in Africa. This review is considered a ―living‖
document and will be revised and updated periodically reflecting ongoing activities and trends and
capturing any new publications and reports on remittances in Africa. By providing background activities
of the World Bank and other development partners on remittances in Africa, the document aims to avoid
duplications and to help facilitate the creation of the AIR project.
Each of the chapters of this report in discussion of AIR-related activities provides an overview of the
work on remittances conducted by the World Bank, divided regionally into East and Central Africa,
Southern Africa, North Africa, and West Africa. Each chapter further reviews projects and research
carried out by various development partners.
Following this introductory chapter, Chapter 2 provides an overview of the technical assistance to
governments for putting in place the necessary regulatory and legal framework for remittances.
Chapter 3 describes the training and capacity-building programs that are carried out to enable
governments in remittance-receiving countries to increase the development impact of remittances.
Chapter 4 looks at the remittance flow within Africa, including the uses of remittances in Africa. Chapter
5 looks at the programs and literature that discuss the policy research and dialogue within the World
Bank and development partners. Chapter 6 covers development of the technology platforms that are
bringing innovation to the payment and settlement systems for remittances. Finally, Chapter 7
summarizes examples of programs initiated by countries to maximize the impact of remittances and
reduce remittance costs.
16
References: Chapter 1
AfDB (African Development Bank). 2009a. Approach to African Migrant Remittances: The Migration and
Development Initiative. OVIP. Tunis, Tunisia
Bollard, Albert, David McKenzie, and Melanie Morten. 2010. The Remittance Patterns of African Migrants in
the OECD. World Bank Policy Research Working Paper 5260. Washington, D.C.
IFAD (International Fund for Agricultural Development). 2009a. Sending Money Home to Africa: Remittance
Markets, Enabling Environments, and Prospects. Rome, Italy: IFAD.
IFAD. 2009c. FFR Update: Financing Facility for Remittances. IFAD Newsletter. 4 th Quarter 2009. Issue 1.
http://www.ifad.org/remittances/newsletter/1.pdf
McKay, Claudia, and Mark Pickens. 2010. “Branchless Banking 2010: Who’s Served? At What Price?
What’s Next?” CGAP Focus Note No. 66. CGAP. Washington, D.C. www.cgap.org.
Orzoco. 2003. Worker Remittances: An International Comparison. Working paper commissioned by the
Multilateral Investment Fund. Inter-American Development Bank.
Ratha, Dilip. 2003. “Worker's Remittances: An Important and Stable Source of External Development
Finance.” in World Bank, Global Development Finance: Striving for Stability in Development Finance,
Volume I: Analysis and Statistical Appendix. Washington, D.C.: World Bank
Ratha, Dilip, and William Shaw. 2007. South-South Migration and Remittances. Development Prospects Group.
World Bank Working Paper No. 102. Washington, D.C.
Sander, Cerstin, and Samuel Munzele Maimbo. 2003. Migrant Labor Remittances in Africa: Reducing
Obstacles to Development Contributions. Africa Region Working Paper Series No. 64. World Bannk.
Washington, D.C.
Singh, Raju Jan, Markus Haacker, and Kyung-woo Lee. 2009. Determinants and Macroeconomic Impact of
Remittances in Sub-Saharan Africa. IMF Working Paper 9/216. Washington, D.C.
World Bank. 2008. Migration and Remittances Factbook. Development Prospects Group. Washington,
D.C.
17
2. Technical Assistance to Government for Putting in Place the
Necessary Framework
Technical assistance provided to government institutions improves the regulatory and legal framework
and expands and strengthens existing payment system infrastructure to increase the flow of remittances
through formal channels. This chapter describes the activities of the World Bank and other development
partners in providing technical assistance to governments in Africa.
2.1 World Bank
Many countries in Africa face difficulties in improving payment and remittance systems. A good and
reliable payment system is crucial in providing reliable and efficient remittance systems and in helping
flows of remittances through formal channels. For this reason, the African Remittances and Payments
Initiative (ARPI) was set up to address the significance of remittances to African countries, and assess the
importance of improving payment systems infrastructure in order to make effective and functional
transfer systems accessible to all populations.
The World Bank is engaged in various projects and programs across the continent and has actively
supported reforms of the national payment systems in the last 15 years. It has been working on reforms
of the national payment systems in Rwanda, Angola, South Africa, and Ethiopia; and the countries served
by the regional banks, BCEAO, and BEAC. In addition to grants and loans for supporting payment
system development, the Payment Systems Group of the World Bank, has provided specific technical
advisory services on a form-fee basis to develop payment systems components with a financial
sector/payment systems component.3
A comprehensive Microfinance Institution Guideline was developed by CGAP in 2008 for microfinance
institutions wishing to introduce money transfer payments into their operations. Guidelines include
understanding the business environment of financial and regulatory issues, assessment of operational
strategy for increasing profits and staying in business, product development, and marketing services. 4
The Finance and Private Sector Development unit within the World Bank Africa Region provides
technical advice and analysis to governments, central banks, and microfinance institutions through the
Future of African Remittances (FAR) project for helping improve financial capacity in countries in
promoting transparent and fair pricing and the use of technology to improve operational services, and
strengthening the quality of financial services—thereby lowering remittance costs, increasing flows, and
encouraging innovation.
On a larger scale, the AIR Project, which will be carried out by the World Bank, will provide the technical
support to build and strengthen the capacity of remittance senders and recipients, as well as financial
intermediaries, to develop and implement strategies and operational instruments. This support will be
3 By
4
requests of the Governments of Libya and Mauritius.
See more on microfinance guidelines at CGAP website, www.cgap.org/p/site/c/.
designed to use remittances as development and poverty reduction tools among African Union member
states. Specific technical assistance programs conducted in regions of Africa are discussed below.
2.1.1 East and Central Africa
CEMAC Regional Institutions Support Project. The World Bank provides credit and grant support to the
Central African Economic and Monetary Community comprised of Cameroon, the Central African
Republic, Chad, the Republic of Congo, and Equatorial Guinea. The Project support is used to strengthen
the capacity of the telecom and information technology (IT) sector. The Bank-financed project, launched
in 2003, supports measures to encourage the use of a regional payments system to expand access to
financial services through banks and microfinance institutions by simplifying access to the system,
encouraging the use of the systems by microfinance institutions, discouraging paper-based transactions,
and encouraging electronic means of payment.
Burundi. The World Bank supports the implementation of the IT program directed at the payment system
component of the Burundi Central Bank. The Africa Region is also working with national authorities to
strengthen the financial system by modernizing the financial sector infrastructure and payment systems.
Through the World Bank’s Financial Sector Assessment Program (FSAP), recommendations were made to
produce a comprehensive clearing and settlement infrastructure, which includes the automation of smallvalue transactions (checks and transfers) within an electronic clearing system and a real time gross
settlement system for large transactions.
Ethiopia. The World Bank supports national efforts to build a more transparent, well-governed, wellregulated, and competitive financial sector through implementation of an automated transfer system in
Ethiopia.
Rwanda. The World Bank provides support for the implementation of new payment and securities
settlement systems, and creation of a new legal framework and oversight department. The Bank also
supports the Central Bank of Rwanda on advancing the branchless banking model and on various issues
relating to the modernization payment systems infrastructure with particular emphasis on ensuring the
involvement of ―buy-in‖ by all stakeholders.
Kenya. Financial and Legal Sector Technical Assistance Credit (2004) facility provides support for the
review and amendment of Kenya’s financial sector laws, including the acquisition of an integrated real
time gross settlement system and Scripless Securities Settlement System and Central Depository System
to facilitate safe, secure, and efficient transfers in Kenya. 5 A technical assistance project aimed at creating
a sound financial system and strengthening legal and judicial capacity will ensure broad access to
financial services. Kenyan authorities have used the project to identify measures to upgrade all aspects of
the national payment system and consult on improving the regulation of mobile and electronic payments.
Tanzania. Through the Second Financial Institutions Project, the World Bank issued a credit of US$27.5
million through the IDA aimed at increasing financial sector competition by enhancing the national
payment system. The project focused on strengthening financial infrastructure by enhancing the
5A
Scripless Securities Settlement System is an electronic means of conducting transactions that enable the electronic
settlement of transactions without the use of a paper certificate, through a computer-based central depository and
settlement system.
19
supervisory capacity of the Central Bank and improving national payment system efficiency. A
component on financial education was included to address low awareness of available financial products
and benefits promoting increased household access to financial and payment services and to facilitate
efficient financial intermediation.
Uganda. The report Making Finance Work for Uganda reviews the performance of the Bank of Uganda in
improving payments and remittance systems. 6 The report identifies several legal and regulatory
constraints facing the Bank of Uganda and suggests swift enactment of payment systems legislation in
order to increase the effectiveness and competition among financial institutions. The report builds on
earlier efforts in strengthening the financial sector and ensuring increased access to formal financial
services by rural savers and micro-entrepreneurs.
2.1.2 Southern Africa
Botswana. The Financial Sector Assessment Program (FSAP) of Botswana (2008) provided guidance to
formalize and publicize the Botswana Interbank Settlement System governance arrangements. The
Botswana Interbank Settlement System is an electronic interbank payment system that allows funds to be
transferred between participating institutions on an irrevocable and real time basis. The FSAP helped to
expand the real time gross settlement system and introduce an expanded set of settlement mechanisms.
Malawi. The Financial Sector Reform and Strengthening Initiative in Malawi provided technical
assistance to help prepare the Financial Sector Development Strategy, which targeted the creation of an
efficient retail payment system with banking sector involvement, and the improvement of the legal and
regulatory framework to enable contractual efficiency. As part of efforts to increase rural access to
financial services, the Africa Region provided technical advice to Malawian authorities on harmonizing
competing switching infrastructure and thus strengthening the payment system by establishing
communications platforms and inter-operable networks to facilitate efficient transmittal services.
2.1.3 West Africa
WAEMU. The Private Sector Development Rural Finance Study assesses the effectiveness of the
PARMEC Law (1993), a law governing mutual or cooperative savings and credit institutions enacted by
the West African Economic and Monetary Union (WAEMU) on microfinance institutions in WAEMU
countries. The CGAP was involved in adjusting the PARMEC Law in order to make it more acceptable to
international standards.7
BCEAO Regional Payments Systems provide a line of credit to assist the WAEMU through Banque
Centrale des Etats de l'Afrique de l'Ouest (BCEAO) in establishing and installing an appropriate set of
regional payment mechanisms that would make payments safe, secure, convenient, and deliverable in a
For more on Making Finance Work in Africa, see World Bank website, http://go.worldbank.org/WVFPF5CYJ0.
PARMEC: Projet de Décret d'Application de la Loi Portant Réglementation des Institutions Mutualistes ou Coopératives
d'Épargne et de Crédit.
6
7
20
timely manner in accordance with WAEMU and international standards. The BCEAO Regional Payment
Systems span over several years and have seen significant contributions to the development of non-cash
transactions, strengthening of banks, deepening of the financial sector, increased regional integration, and
expanded trade and investment among and within member countries.
Nigeria. By leveraging ongoing policy dialogue with the authorities under the Making Finance Work for
Nigeria project, the Finance and Private Sector Group of the World Bank applied its technical expertise in
payment system development and provided policy advice to improve the country’s remittance market as
part of its implementation support for the country’s financial sector reform strategy (called FSS2020). In
this regard, the authorities limited exclusivity clauses in contracts between banks and money transfer
operators.
2.1.4 North Africa
Algeria. In partnership with the IMF, the World Bank conducted a Financial System Stability Assessment
to strengthen the AML/CFT regime in all sectors.
Morocco. The Financial Sector Development Policy Loan Project aims to strengthen the enabling legal
and institutional environment for financial intermediation and risk management, and to increase the
private sector’s role and participation in the provision of financial services.
2.2 Development Partners
Development partners have been playing a significant role in providing technical assistance on both
small and large scale to various African countries. The development partners—UK Department of
International Development (DFID), the International Fund for Agricultural Development (IFAD), the
European Union (EU) and the German Technical Cooperation (GTZ)—have initiated the projects
described below.
2.2.1 DFID
Financial Deepening Challenge Fund for M-PESA. The matching grant from DFID helped set up a mobile
phone-based banking service, M-PESA, in Kenya by matching Vodafone’s £1 million investment.
Vodafone developed the M-PESA commercial platform in partnership with the Kenyan mobile phone
operator, Safaricom. M-PESA provides a fast, safe, and affordable way to send and receive money
through mobile phones without the need for a bank account. More than 1.6 million Kenyans have now
signed up for the mobile phone banking service.
2.2.2 IFAD
IFAD has provided technical assistance for several projects in West Africa.
21
Strategic Framework 2007-2010. The Strategic Framework includes guidelines on integrating rural
finance institutions into national payment systems, developing inclusive financial systems, and fostering
innovations to increase the rural poor people’s access to remittances (IFAD 2007).
The Rural Finance Policy 2009. The Rural Finance Policy 2009 (IFAD 2009d) builds on the Rural Finance
Policy of 2000 and provides guiding principles to develop and improve rural finance systems. The policy
report provides advice to governments on public-private partnerships as well as an operating framework
on how to use information and communication technologies, such as mobile phones, to provide
remittance services, and ways to leverage the growth in migrants’ capital and remittances flows to rural
areas.
Sierra Leone Remittances Plus Grant. The support will provide business development support and
assistance to at least 37 new businesses and 349 existing businesses that receive remittances from family
and friends in Sierra Leone. The grant will support financial literacy and marketing strategies, which will
encourage people to make productive use of remittances. Financial and business development services
will be delivered to remittance recipients in order to leverage the use impact of remittances for
development purposes.
Expansion of Tele-cash in Rural Cameroon. A €133 000 grant will introduce tele-cash remittance systems
to 24 low-income, underserved localities that rely mainly on remittances (using costly informal means)
from their relatives in urban areas in Cameroon. An estimated 360,000 people are expected to benefit
from the project. This tele-cash remittance system is operated through the Cameroon Cooperative Credit
Union League network.8
2.2.3 EU
EIB Regmifa Microfinance Fund for Africa. This fund from the European Investment Bank (EIB) provides
technical assistance in the form of equity and direct lending to regulated and non-regulated microfinance
institutions, local banks, and other financial institutions, which provide financing to micro, small, and
medium-size enterprises in Sub-Saharan Africa. The support is targeted to the growth of microfinance
institutions in Africa; improvement of the quality, availability, and accessibility of financial services; and
development of modern financial institutions and sustainable microfinance operations.
Tunisia. The European Investment Bank is providing technical assistance to the Government of Tunisia to
increase savings and the use of banking services for transfer purposes by Tunisian migrants. The desired
impact is to channel remittances into small-scale and infrastructure projects financed by public-private
partnerships.
2.2.4 GTZ
Uganda: Financial System Development. The GTZ has provided technical assistance and training to
support Uganda’s financial sector development program. The effort addresses issues that deal with the
lack of access to suitable financial services for the rural population, particularly women and small-scale
The Cameroon Cooperative Credit Union League Tele-cash Remittance System, in partnership with MTN
Cameroon, will provide SIM cards and assist in solving network problems for the municipalities served. The League
also partners with a local company, SoftTech.
8
22
farmers. The program provided policy advice and training to microfinance institutions to improve their
efficiency and performance, and supported financial service organizations with product development.
References: Chapter 2
IFAD (International Fund for Agricultural Development). 2009d. Rural Finance Policy 2009. Rome, Italy.
www.ifad.org/ruralfinance/policy/index.htm
IFAD. 2007. Strategic Framework 2007-2010. Rome, Italy. www.ifad.org/sf/strategic_e.pdf
23
3. Carrying out of Training and Capacity-Building Programs
Training and capacity-building programs are carried out to enable governments in remittance-receiving
countries to increase the development impact of remittances by building and strengthening the capacity
of payment systems infrastructure that will provide cheap, safe, and reliable transfers. This chapter
discusses some of the key programs supported by the World Bank and development partners.
3.1 World Bank
The African Migration Project will conduct pilot surveys of migrant households in Ghana. The Migration,
Remittances, and Development in Africa Household Survey (World Bank 2010a) will be replicated in
other African countries to fill the knowledge gap on the magnitude, causes, and impacts of migration and
remittances in the targeted country—and to build and strengthen the capacity of countries in conducting
surveys. Other regional capacity-building programs are discussed below.
3.1.1 East and Central Africa
Tanzania: The Financial Institutions Development Project. This project’s component on financial
education addressed low-level awareness about available financial products. The project included
benefits to promote increased household access to financial and payment services and to facilitate
efficient financial intermediation.
3.1.2 Southern Africa
Southern Africa Development Community Payment System Project. This project provided assistance to
SADC countries to define domestic payment systems reform strategies and plans that would contribute
to the development of harmonized policies and systems for cross-border payments. The project was
broadly in line with the economic integration strategy for member states with a significant positive
impact on strengthening regional cooperation and economic integration. Authorities are using the basic
structure of the project to facilitate an ongoing assessment of development needs, strategic plans, and
policy approaches to payment systems. In recent years, attention has been focused on the cost of
remittances in the SADC region. National authorities are seeking re-engagement with the World Bank to
assess the practical use of existing transmittal infrastructure and application of the resulting payment
instruments, procedures, processes, and market practices as well as the enforcement issues in existing
legislation and regulatory guidelines to reduce costs and promote financial access.
3.2 Development Partners
The AfDB, DFID, EU, IFAD, Credit Suisse Bank, and Opportunity International UK have supported
various training and capacity-building programs on remittances in Africa through projects and
initiatives.
3.2.1 AfDB
The Migration and Development Initiative. The objectives of this AfDB initiative are (a) to set up a multidonor trust fund to support projects initiated by migrants and diasporas, (b) initiate and support the
development of innovative financial products, (c) support pilot projects with high success potential but
still considered too risky by financial institutions because of their innovative character, (d) support the
development of local infrastructure projects sponsored by migrants and (e) facilitate sharing knowledge
and experiences among African countries.
3.2.2 Credit Suisse Bank
The Credit Suisse Microfinance Capacity-Building Initiative. The main objective of this initiative is to
support enhanced human resource capabilities of microfinance institutions by setting up structures that
will foster innovation among microfinance institutions, finding new ways to facilitate poor people's
access to financial services, and providing staff training to build capacity and facilitate financial
innovation and learning in these institutions.
3.2.3 DFID
Africa Enterprise Challenge Fund (AECF). The AECF is part of the larger Financial Deepening Challenge
Fund of DFID to stimulate the private sector to develop innovate ways of improving agriculture and
financial markets for the poor in rural areas. The AECF will be launched in 10 African countries. It will
ultimately improve access to financial services and livelihoods in rural areas through grants to private
companies and NGOs in amounts between US$150,000 and US$1.5 million.
3.2.4 EU
Leveraging remittances to promote Migrant Entrepreneurship Program has been set up in the
Netherlands, Ghana, and Suriname to facilitate the creation of new businesses by entrepreneurial and
enterprising migrants. Its services are primarily offered to migrants who wish to set up a business in their
countries of origin.
Migration and Asylum Thematic Program. The EU has provided assistance with funding through the
Migration and Asylum Thematic Program. It will be implemented by various organizations and agencies.

Profiles in selected countries in West and Central Africa. A tool for strategic policy development
in Cameroon, Cape Verde, DRC, Ghana, Ivory Coast, Mali, Mauritania, Niger, Nigeria, and
Senegal, the program is implemented by the International Organization for Migration (IOM) to
strengthen administrative capacity to collect and analyze policy-relevant migration data and to
improve the utilization of migration data and policy analysis within and between the selected
countries of West and Central Africa.
25

Returning Enterprising Migrants Adding Development and Employment (REMADE) in Ghana.
REMADE has been designed to strengthen the link between migration and development through
the development of the private sector in Ghana.

Linking microfinance institutions. Organizations in the EU are harnessing the potential of
migration for development by linking microfinance institutions with immigrant associations in
Benin, Burkina Faso, Ethiopia, Ghana, Kenya, Mali, Nigeria, Senegal, Tanzania, and Uganda.

Successful Paths, Supporting Human and Economic Capital of Migrants in Senegal. This
initiative for migration, implemented by the Italian Veneto Region, takes aim at strengthening the
institutional cooperation between sending and receiving countries. It has been derived to
eradicate the difficult access to credit for migrants by improving the system of guarantees needed
to promote entrepreneurship and business start-ups in Senegal. It is also promoting innovative
paths to support the return of human and economic capital to Senegal through successful
implementation of adequate tools.

Global initiative. Promoting innovative migrant remittances in Africa, Asia, Eastern Europe, and
the Middle East aims to support remittance services that are cost-effective, easily accessible, and
offer broader economic opportunities to the rural poor.
3.2.5 IFAD
Postal financial services. The IFAD seeks to build capacity for the use of postal services in rural areas of
Western Africa. Extension of international and domestic postal financial services, including remittancerelated services, will be extended to rural areas of French-speaking countries in Western Africa in
partnership with postal organizations and related ministries. The extended postal service would increase
the number of remittance recipients by linking them with rural post offices, which will have the ability to
deliver remittances through postal checking or savings accounts, and other non-postal financial
institutions.
3.2.6 Opportunity International UK
Opportunity International UK supports several African countries through microfinance institutions. It
does this by enhancing the institutional viability of seven of its network partners in Ghana, Malawi,
Mozambique, Uganda, Zambia, and Zimbabwe. By strengthening the capacity of microfinance
institutions in product development, the network partners can better respond to client demands and
financial transparency requirements and secure access to larger amounts of domestic and international
capital needed for expansion. Opportunity International UK helps microfinance institutions develop new
credit, savings, insurance, and remittance-related products.
References: Chapter 3
World Bank. 2010a. Africa Migration Project. Website: go.worldbank.org/V6Y4QOL7A0
26
27
4. Study of Remittance Flows Within Africa
By using the resources from various studies of remittance flows within Africa, the lessons learned and
good practice examples can be expected to help improve the financial services and access to banking
products and services for remittance senders and recipients. This chapter provides an overview of major
studies conducted on patterns of remittance flows, actors, and uses of remittances in Africa prepared by
the World Bank and development partners.
4.1 World Bank
Various units and departments within the World Bank have conducted studies to understand migratory
patterns, costs, and modes of remittance transfer within Africa.
4.1.1 Migratory patterns
In Supporting Remittances in Southern Africa, Truen and others (2005) estimate that approximately 2.1
million migrants from the SADC region reside in South Africa due to working opportunities in the
mining sector, the relative economic stability, and other opportunities. This study categorizes legal
migration to South Africa into 4 components: (a) migrants employed by mining companies and subcontractors, (b) migrants with work permits, (c) seasonal agricultural workers, and (d) asylum seekers
and refugees. Estimates suggest that there are about 280,000 Mozambicans who remained in South Africa
after fleeing the civil war in Mozambique in the 1980s.
South-South Migration and Remittances (Ratha and Shaw 2007) highlights migration patterns between
developing countries using census data and methodology developed by the World Bank in 2005. Their
study claims migration patterns between developing countries are quite significant and tend to occur
between countries of different income levels (e.g., South Africa attracts migrants from Lesotho,
Mozambique, Namibia, and Zimbabwe) and between low-income countries of different levels (e.g.,
migration from Mali, Niger, Cote d’Ivoire, and Ghana). South-South migration also tends to be influenced
by costs and proximity, which is usually lower because most of the migration between these regions is
cross border; by the lack of documents needed to travel across these borders; and, to an extent, by ethnic,
family, and religious ties.
The Migration and Remittances Factbook (World Bank 2008) presents numbers and facts behind the
stories of international migration and remittances, drawing on authoritative, publicly available data. It
provides a snapshot of statistics on immigration, emigration, skilled emigration, and remittance flows for
194 countries and 13 regional and income groups.
4.1.2 Remittance Flows
The 2010 Remittance Outlook (Ratha and others 2010) notes an increasing trend in remittances over the
years within Sub-Saharan Africa. Estimates show that official remittances increased from US$13 billion in
2006 to US$21 billion in 2008 and 2009. Forecasts for 2010 suggest that remittance flows to Sub-Saharan
Africa have remained relatively flat since 2009, falling by 3 percent as a result of the global financial
downturn.
Despite the fall in remittances in Sub-Saharan Africa and worldwide, the Outlook notes that remittances
still remain resilient, particularly in Sub-Saharan Africa where declines were modest because of the
financial crisis. Nigeria, the largest recipient of remittances in Africa received about US$10 billion in
remittances in 2009—and along with flows to Kenya and Uganda that showed higher growth or smaller
declines than expected. Egypt and Morocco, the largest remittance recipients in North Africa, received
US$7 billion and US$6 billion, respectively.
Remittance flows between developing countries, or the South-South corridor, are quite significant. A
good example of South-South remittances is highlighted in Supporting Remittances in Southern Africa
(Truen and others 2005), which assesses remittance patterns, flows, regulatory framework and latest
technological advances in the remittance market in the South Africa corridor. Characterized by high
levels of migration, both short term and long term, the study on remittances flows between SADC
members found that the volume of remittances is quite large but with only about 41.9 percent carried by
formal financial service providers. The volume of informal remittances may be the result of extremely
severe foreign exchange restrictions in South Africa, which is highly regulated and allows only banks to
handle foreign transactions. This increases the ease of sending transfers through informal remittances.
4.1.3 Costs
Remittance flows through formal channels are defined by many factors, including costs, cultural
familiarity, convenience, and speed. The cost of sending remittances is one of the key influencing factors,
and the use of regulated channels is likely to increase when costs go down. South-South Migration and
Remittances (Ratha and Shaw 2007), in estimating the cost of remittances, finds it is more costly to send
US$200 between the South-South remittance corridor than the South-North and North-South corridors.
These findings reveal that the high cost of remittances between the South-South corridors may be due to
the lack of competition in sending and receiving countries in developing countries.
In 2008, the Payment Systems Development Group (PSDG) launched the first Remittance Prices
Worldwide Database (updated April 2010). The database, covering 178 country corridors, provides
information on the cost of sending and receiving small amounts of money from one country to another. It
highlights the efforts by the World Bank to increase transparency and competition among remittance
service providers by allowing comparisons among countries, supporting consumers’ choices, and putting
pressure on service providers to improve their services. Research on the cost of sending US$200 across
various country corridors, for example, shows that 3 of the bottom 5 corridors with the highest costs of
sending remittances are in Africa. The average cost of sending US$200 to these corridors is US$35, while
the cost of sending the same amount of money to Asia and from the United States to some countries in
Latin America costs US$4 to US$8.
The PSDG, within the World Bank Financial and Private Sector Vice-Presidency, in partnership with the
Committee on Payment and Settlement Systems (CPSS) published the General Principles for
International Remittance Services (BIS/World Bank 2007), which are universally recognized as the
29
international standards on remittances. The document provides guidance through 5 general principles to
analyze the payment system aspects of remittances to assist countries that want to improve their market
for remittance transfers. The general principles include detailed guidance and implementation strategies
on improving transparency, infrastructure, the legal and regulatory framework, competitive market
conditions, sound and appropriate governance, and risk management practices. The general principles
ultimate objective is the reduction of the cost of sending remittances. The G8, the G20, and the Financial
Stability Forum have endorsed the general principles.
Similarly, What Explains the Cost of Remittances? (Beck and Peria 2009), exploring the characteristics of
119 remittance sending and receiving countries, reports that countries with a higher number of migrants,
a higher number of market players, and greater bank competition (larger numbers of banks) in receiving
countries show lower average costs of transferring remittances.
A recent study by the Development Prospects Group, Migrant Remittance Flows (Irvine and others 2010)
based on a survey of 33 central banks in Africa, sets out to find how data on remittances is collected. The
study shows a need for better coordination between both sending and receiving countries. It also
suggests that countries must consider new channels and technologies (including mobile networks) for
collecting data. The study also noted that African countries have made progress in removing some
regulatory obstacles, including rendering exclusivity agreements illegal, that will help spur competition
in the remittance transfer market and decrease costs.
4.1.4 Formal and informal means of sending remittances
Two main channels, formal and informal, are the primary means of sending remittances.
Formal channels of sending remittances include the use of banks and non-bank institutions, microfinance
institutions, money transfer operators, credit unions and cooperatives, post offices, and technologies
using mobile banking. Western Union and MoneyGram have been identified as the two main formal
money transfer operators within Africa.
New and unconventional methods are being developed to make formal remittance transfers cheaper,
faster, and safer. Mzansi money transfer (South Africa) allows users to send and receive money anywhere
in South Africa without the need for a bank account. This service is not restricted to Standard Bank
branches but is available at any of the participating banks and the South African Post Office. Evidence
suggests that technological innovations in remittance payments and transfers can increase competition in
the market and significantly lower the costs of transfers (CGAP 2010).
The use of mobile money schemes to facilitate the delivery of financial services is on a steady increase in
Africa. Mobile users of M-PESA9 in Kenya find branchless banking easy to use, accessible, and safe The
CGAP study, Poor People Using Mobile Financial Services (Morawczynski and Pickens 2009) further
notes that the introduction of M-PESA has enabled easier money flows in Kenya and the ability to
penetrate previously underserved rural areas. Furthermore, women in rural areas reported using MPESA to solicit funds from their husbands (and other contacts) in cities and urban areas, requiring less
9
Mobile payment service provided by SAFARICOM has over 7 million users since it was launched in 2007.
30
frequent visits home. M-PESA is used in Kenya to save money (for consumption) or to transfer to their
relatives. On average, users make about 15 deposits per month into their accounts. M-PESA now reports
more than 11,000 agents (four times the combined number of bank branches and ATMs in Kenya).
Evidence from Branchless Banking Pricing Analysis (McKay and Pickens 2010) notes that the cost of
using branchless banking on average is 19 percent cheaper than using banks and 54 percent cheaper than
using informal remittance channels. Branchless banking is also found to be cheaper when the transaction
is smaller, encouraging the need to improve branchless banking models in other African countries.
Informal channels. Due to the relatively high costs of remittance through formal channels, many
migrants prefer to remit through informal channels for their ease and lower costs. Remittances:
Transaction Costs, Determinants, and Informal Flows (Freund and Spatafora 2005) notes that migrants
prefer informal channels because they are faster and more convenient, are not constrained by any
regulatory banking and foreign exchange regulations, and do not require remitters to have bank
accounts. Using a theoretical econometric model, the study reports that as expected, bank concentration,
financial development, and dollarization have a positive and significant effect on the cost of remittances
and suggests that an improvement in financial services and greater competition will decrease transaction
costs. Furthermore, when costs associated with remittances are between 2 and 5 percent, informal
remittances may be anywhere from 46 to 65 percent of total remittances, with the most extreme use of
informal channels found within Sub-Saharan Africa, Eastern Europe, and Central Asia.
4.1.5 East and Central Africa
Studies in East and Central Africa have analyzed remittance transfers, including studies on improving
the regulatory framework and payment systems at the country level.
Uganda. In 2005 a joint team from the World Bank and the IMF conducted a review of the financial sector
in Uganda to determine the progress made and impediments to implementation of the Financial Sector
Assessment Program (FSAP). Recommendations were made to identify concrete additional proposals to
improve efficiency and outreach of the financial system. A 2008 mission prepared a detailed report on the
national market for remittances, and provided the authorities with an assessment and recommendations.
Burundi. The Africa Region is working with national authorities to strengthen the financial system by
modernizing the financial sector infrastructure (payment systems) and improving financial sector
regulations in ways that create synergies among different service providers such as commercial banks
and the country’s postal service, including inter-operability of payment processing platforms.
Rwanda. As part of Rwanda’s Financial Sector Development Program, the Africa Region diagnosed and
recommended solutions for a number of weaknesses in the financial sector—the key component being
recommendations related to strengthening the national payment systems by improving processing
efficiency.
Ethiopia. Efforts to build a more transparent, well-governed, well-regulated and competitive financial
sector by the national authorities have included implementation support for an automated transfer
system.
31
4.1.6 North Africa
Morocco. In the context of the Arab Payments and Securities Settlement Initiative (API), a World Bankled team conducted a review in November 2006 of the remittance market in Morocco on the basis of the
General Principles of Remittance.10 The mission team provided local authorities with a broad analysis of
the remittance market and specific comments on proposed regulations for money transfer operators. In
particular, the Central Bank of Morocco adopted a regulation for money transfer operators based to a
large extent on the General Principles.
4.1.7 West Africa
Mali. Seeking to bridge existing knowledge gaps in the area of rural finance, an Africa Region study of
Mali rural finance was conducted covering the supply of financial services, including cases studies of
rural finance providers and the legal environment within which rural financial markets operate and the
constraints this represents for improving access to financial and payment services in rural areas.
4.2 Development Partners
Development partners, including the African, Caribbean, and Pacific (ACP) Group of States, AfDB, BIS,
GTZ, IOM, and USAID have conducted various studies and projects on remittance flows within Africa.
4.2.1 ACP Group of States
ACP Observatory on Migration. The Secretariat of the ACP Group of States recently launched the ACP
Observatory on Migration. The aim of the project is to establish a network of research institutions and
governmental entities dealing with migration in the six regions of the ACP Group of States, namely West
Africa, Central Africa, East Africa, Southern Africa, the Caribbean, and the Pacific. Activities will be
centered in 12 pilot countries, 8 of which are in Sub-Saharan Africa (Angola, Cameroon, the DRC, Kenya,
Lesotho, Nigeria, Senegal, Tanzania); but it is foreseen that other countries will join the process. The
Observatory will be able to produce much needed data on South-South ACP migration flows for
migrants, researchers, civil society, general public, governments and policy-makers.
4.2.1 AfDB
Alliance for Improving Remittance Flows to Africa. The AfDB, in partnership with the Multilateral
Investment Fund of IADB, has launched the Alliance for Improving Remittance Flows to Africa with the
aim of sharing knowledge of remittance good practice from Latin America to African countries. The
initiative also seeks to strengthen the AfDB operations with improved sector strategies, policies, and
Refer to the following study (p. 5), which makes reference to assessment and operations carried out in
Morocco: http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/2820441260476242691/PaymentsWeek2009Cirasino.Remittances.pdf
10
32
project design and implementation, as well as capacity building for the AfDB in the areas of microfinance,
financing of small and medium-size enterprises, and remittances. The country focus is on Uganda.
The Migration and Development Initiative. The aim of the initiative, launched in 2009, is to maximize the
development impact of remittances by increasing their productive use, promoting business opportunities,
and creating jobs. The AfDB intends to contribute to mobilizing remittances to recipient countries and
increasing the flow of resources to the end beneficiaries while allowing better control on the amount
transferred by the migrants, promoting more effective uses of funds for social consumption (by
supporting mutual schemes in health, and public private partnership in education and health), and
supporting productive use of available resources with the involvement of local entrepreneurs.
Migrant Remittances: A Development Challenge. This study report (AfDB 2009b) analyzed remittance
trends in four country corridors in Africa: the Comoros, Mali, Morocco, and Senega. In its profile of the
corridors, the study examined trends in the volume of flows, the modes of transfer of remittances, the
mechanisms governing the remittances market, and the supply and demand determinants of remittances.
Results indicated that remittances represent between 9 and 24 percent of GDP and between 80 and 750
percent more than ODA. Remittances tend to benefit poor households, mainly in remote areas by helping
to meet their basic needs and allowing them to purchasing critical goods and services, including food,
education, and healthcare.
Remittances to Uganda and Rwanda. The study (2008-9) conducted by the African Development Bank
assesses flows of formal and informal remittances in Uganda and Rwanda, and highlights the differences
between its results and official figures. In Uganda, the Central Bank statistics have recorded a significant
increase over the past few years (tripling from 2005 to 2007) after a 2006 AfDB survey of recipients.
Migration and Remittances in Africa. In partnership with the World Bank, the Migration and
Remittances in Africa research project intends to study remittance trends and flows into Africa using
household surveys and analysis to strengthen the research capacity for policy makers in six African
countries: Burkina Faso, Kenya, Nigeria, Senegal, South Africa, and Uganda.
4.2.2 BIS
The BIS has worked in partnership with other development organizations to serve as a guide to improve
payment systems worldwide.
General Guidance for National Payment System Development. A CPSS task force on Payment System
Principles and Practices was established in May 1998 to consider principles to govern the design and
operation of payment systems in all countries. In 2006, the BIS published the General Guidance for
National Payment System Development (BIS 2006) to provide an analysis of the remittances payment
system and general principles to guide countries in improving the market for remittance services. The 14
guidelines also include sections and examples on various ways in which payment systems could be
implemented.11
CPSS also co-operated with the World Bank on the publishing of General Principles for International Remittance
Services (BIS/World Bank 2007).
11
33
The CPSS (1999) published the ―Green Book‖, which covers the SADC countries: Angola, Botswana,
Lesotho, Malawi, Mauritius, Mozambique, Namibia, South Africa, Zambia, and Zimbabwe. The report
provided an overview of the payment systems in the respective countries and assessed the role of nonbank and bank financial intermediaries, infrastructure to support the system, and the role of the Central
Bank in interbank transfers for both domestic and international transactions.
4.2.3 DFID
Informal Remittance Systems in ACP Countries. Using a survey of remittance corridors connected with
the United Kingdom, including Ghana, Kenya, and Nigeria, DFID identified challenges facing the
remittance market in the United Kingdom (DFID 2004). These challenges included the inability of
remittance service providers to identify potential customers, uncertainty in the transfer corridors
regarding the size of the market, consumers’ preferences and behavior, and the lack of coordination
between the regulators of the market. The survey makes recommendations to help increase the flow of
remittances through registered channels.
Sending Money Home: A Survey of Remittance Products and Services in the United Kingdom. This
survey (DFID 2005) was conducted on money transfer products offered to Diaspora members in the
United Kingdom to address information asymmetry between senders and remittance companies. The
primary remittance-receiving countries, including Ghana and Nigeria, were included in the survey.
Results showed that fees for sending remittances ranged between 2.5 percent and 40 percent with banks
and building societies charging higher fees than money transfer operators. Banks also required several
forms of identification while money transfer operators were more convenient and offered better service.
4.2.4 G8
Global Remittances Initiative. The G8 Initiative will include a component on remittance transfers in
Africa. The initiative was launched in 2008 and aims to improve the data collection and the regulatory
framework, and to make it more conducive to lowering the costs of transfers, reduce transfers through
the informal sector, and enhance the developmental impact of these transfers.
4.2.5 GTZ
Remittance website. The GTZ has developed and operates a website that enables migrants to compare
remittance costs across various institutions. 12 The service is available for migrants from Algeria, Egypt,
Ethiopia, Ghana, Mali, Nigeria, and Senegal and is aimed at lowering the costs of remittance transfers by
increasing the transparency of the money transfer market and fostering competition among money
transfer institutions.
A GTZ study, focusing on five country corridors, including Ghana and Morocco, was conducted to
determine the cost of money transfers from Germany to Ghana and Morocco in order to find out the
reasons for the high cost of remittances. The results of the study indicate that the cost of sending transfers
12
Access the GTZ website at www.geldtransFAIR.de.
34
through formal channels (money transfer operators and banks) were high; the difficulty in getting
information about transfer services and conditions for transfer (passport, identification) discouraged
people from sending transfers through formal channels. The findings of the study have encouraged the
entry of three new Moroccan banks, which operate financial transfer services in Germany, into the market
(Holmes and others 2007).
4.2.6 IOM
Angola. A Study of the Impact of Remittances from Portugal and South Africa. The IOM (2010)
commissioned the report on the impact of remittances on Angolans living in Portugal and South Africa.
The report highlights the differences in migratory patterns of Angolans in South Africa, the majority
reportedly from poor socio-economic backgrounds and working in low-skilled jobs, while Angolan
migrants in Portugal were reported to have been from middle- and lower-middle-class backgrounds.
Migrants reportedly used two main types of transfer channels: recorded services (remittance and courier
companies) and hand delivery. Remittances were used for consumption and to meet the household
needs.
Econometric Analysis of The Remittance Determinants Among Ghanaians and Nigerians in the United
States, United Kingdom and Germany. This IOM study (Ecer and Tompkins 2010) finds that remittances
are driven by the needs of the migrants’ families in the receiving country. The results also demonstrate
that funds received are used for basic household needs such as food, education, and health expenses, but
not significantly toward improving agricultural methods or investment in small businesses. The analysis
finds that remittances for altruistic reasons may be associated with higher levels of remittances, while
more self-interested reasons for remitting are associated with lower levels.
4.2.7 USAID
West African Financial Flows and Opportunities for People and Small Businesses. This USAIDcommissioned report comprised interviews with 120 individuals, both migrants and traders. The report
(USAID 2006) studied the nature, practices, and challenges of intra-regional cross-border payments in
West Africa.
West Africa Cross-Border Remittances Pilot. This USAID-initiated pilot supports the introduction of
cross-border, multi-currency transactions using mobile telephone technology in West Africa, beginning
with Ghana, Nigeria, and Senegal/UEMOA. The project seeks to equip intra-regional traders, intraregional remittance senders, and the unbanked with legal options to effectively transfer money over
mobile phones across the West African region. A minimum of US$10 billion in cash crosses the borders of
West African region annually. The project identifies barriers to implementation and organizes a pilot
program for money transfers between Ghana, Nigeria, and Senegal/UEMOA. The project is currently in
the review and evaluation phase.
References: Chapter 4
35
AfDB. 2009b. Migrant Remittances, A Development Challenge. Tunis, Tunisia.
Beck, Thorsten, and María Soledad Martínez Pería. 2009. What Explains the Cost of Remittances? World
Bank Policy Research Paper.
BIS (Bank for International Settlements)/World Bank. 2007. General Principles for International Remittance
Services. Prepared by the Committee on Payment and Settlement Systems and World Bank. BIS,
Basel, Switzerland; and World Bank, Washington, D.C.
BIS. 2006. General Guidance for National Payment System Development. Prepared by CPSS. Basel,
Switzerland.
CGAP (Consultative Group to Assist the Poor). 2010. Update of (2008) Notes Regulation of Branchless
Banking in South Africa. CGAP. World Bank. Washington, D.C.
CPSS (Committee on Payment and Settlement Systems). 1999. “Green Book”. Payment Systems in SADC.
CPSS Publication No. 30. BIS. Basel. Switzerland.
DFID (Department for International Development). 2005. Sending Money Home: A Survey of Remittance
Products and Services in the United Kingdom.
www.eldis.org/vfile/upload/1/document/0708/DOC17981.pdf
DFID 2004. Informal Remittance Systems in Africa, Caribbean and Pacific (ACP) Countries. Research
project under EC-PREP. http://www.dfid.gov.uk and www.ec-prep.org
Ecer, Spencer, and Andrea Tompkins. 2010. 2010. Econometric Analysis of The Remittance Determinants
Among Ghanaians and Nigerians in the United States, United Kingdom and Germany. International
Organization for Migration. Onlinelibrary.wiley.com.
Freund, Caroline, and Nikola Spatafora. 2005. Remittances: Transaction Costs, Determinants, and Informal
Flows. World Bank Policy Research Paper No. 3704. Washington, D.C.
Holmes, Elizabeth, Carola Menzel, and Torsten Schlink. 2007. Remittances from Germany and their Routes to
Migrants' Origin Countries: A Study on Five Selected Countries. Eschborn, Germany: GTZ.
www2.gtz.de/dokumente/bib/07-1374.pdf
IOM (International Organization for Migration). 2010. Angola: A Study of the Impact of Remittances from
Portugal and South Africa. IOM Migration Research Series No. 39. Geneva, Switzerland.
Irvine, Jacqueline., Sanket Mohapatra, and Dilip Ratha. 2010. Migrant Remittance Flows: Findings from a
Global Survey of Central Banks. World Bank Working Paper No. 194. Washington, D.C.
McKay, Claudia, and Mark Pickens. 2010. “Branchless Banking 2010: Who’s Served? At What Price?
What’s Next?” CGAP Focus Note No. 66. CGAP. Washington, D.C. www.cgap.org.
Morawczynski, Olga and Mark Pickens. 2009. Poor People Using Mobile Financial Services: Observations
on Customer Usage and Impact from M-PESA. CGAP Brief August 2009. World Bank. Washington,
D.C.
Ratha, Dilip, and William Shaw. 2007. South-South Migration and Remittances. Development Prospects Group.
World Bank Working Paper No. 102. Washington, D.C.
Ratha, Dilip, Sanket Mohapatra, and Ani Silwal. 2010. “Outlook for Remittance Flows 2010-11:
Remittance Flows to Developing Countries Remained Resilient in 2009, Expected to Recover during
2010-11.” Migration and Development Brief 12, World Bank, Washington DC. April.
36
Truen, Sarah, Richard Ketley, Hennie Bester, Ben Davis, Hugh-David Hutcheson, Kofi Kwakwa, and
Sydney Mogapi. 2005. Supporting Remittances in Southern Africa: Estimating Market Potential
and Assessing Regulatory Obstacles. Prepared for Finmark Trust and CGAP by Genesis Analytics
(Pty) Ltd. Johannesburg, South Africa.
Truen, Sarah, Richard Ketley, Hennie Bester, Ben Davis, Hugh-David Hutcheson, Kofi Kwakwa, and
Sydney Mogapi. 2005. Supporting Remittances in Southern Africa: Estimating Market Potential
and Assessing Regulatory Obstacles. Prepared for Finmark Trust and CGAP by Genesis Analytics
(Pty) Ltd. Johannesburg, South Africa.
USAID (United States Agency for International Development). 2006. West African Financial Flows and
Opportunities for People and Small Businesses. Prepared by CARANA Corporation and Dr.
Manuel Orozco of the Inter-American Dialogue.
World Bank. 2008. Migration and Remittances Factbook. Development Prospects Group. Washington,
D.C.
37
5. Policy Research and Dialogue on How Remittances Contribute to
the Development of Sub-Saharan Africa
Remittances have been identified as having the potential to contribute to the development of Sub-Saharan
Africa through various means. This chapter starts out by looking at negative impacts of remittances and
the need for a strong regulatory framework. It continues with the work done by the World Bank and
development partners in the research and dialogue that helps target appropriate policy that could
increase the development impact of remittances.
Negative Impacts of Remittances. Remittances can have unintended negative consequences if the right
mechanisms are not in place to monitor their flows. One such effect is the increase in money laundering
activities through remittance companies. Al-Barakaat, a Somali remittance company, for example, was
closed down by the U.S. Government in November 2001 for allegedly providing as much as US$25
million per year in financial support to international terrorism. During October 2001, the Norwegian
Government also closed down the operations of Somali remittance companies in Norway due to
allegations that these companies were associated with terrorism (Omer 2005). Remittance companies that
were not registered or licensed to operate in host countries, and which did not implement effective antimoney laundering regimes, were more vulnerable to possible money laundering and terrorist financing
by criminals and terrorists.13
Remittances could also have less desirable outcomes such as those attributable to the so-called ―Dutch
Disease‖, which tends to draw resources from the tradable to non-tradable sectors of the economy
(Barder 2006). In countries like Kenya and Somalia, large inflows of remittances over time have been of
concern because of Dutch Disease and the potential it could have on causing the exchange rate to
appreciate and lower exports. Another less desirable effect is the potential to worsen the welfare of
families that do not receive any remittances.
Regulatory Framework. The Making Finance Work for Africa team (World Bank 2007) in their research
notes that regionally integrated payment systems tend to be more efficient and stable than a national one.
The study identifies the need for an appropriate framework to include laws and regulations of broad
applicability to payment systems. The appropriate regulatory framework must also address insolvency
and the enforcement of contractual relationships, rules, standards, and procedures in payments or
securities system as well as the harmonization of laws and regulations governing the cross-border
operations of financial sector firms and banks.
The World Bank Measuring Payment System Development Survey (Cirasino and Garcia 2008) identifies
two types of payment systems: (a) retail payment systems and (b) large value payment systems. Retail
payment systems deal with small amounts of remittance transfers, typically less than US$500. The
potential benefits of a well-developed retail payment system include access for the underserved
population, especially in rural areas, and efficient services for consumers. However, retail systems in
several Sub-Saharan African countries are characterized by a low degree of interoperability due to the
Refer to Regulation Impact Statement – Enhanced AML/CTF Regulation of the Alternative Remittance
Sector, http://ris.finance.gov.au/files/2011/03/04_Remittance_Dealers_RIS.pdf (Attorney General’s
Department, Australia, October 2010).
13
lack of appropriate infrastructure to process electronic payments of retail value. The Retail Payment
Systems Sub-Component 1 of the Survey, which measures the infrastructural ability of a country to
process retail payments, notes that apart from South Africa, no other country in Africa scored high in the
Retail Payment Systems Sub-Component.
Large-value payment systems process relatively larger amounts of individual payments and the timing in
which the payments are made. The real time gross settlement system was developed in response to the
growing awareness of the need for sound risk management in large-value funds transfer systems. A real
time gross settlement system offers a powerful tool to the reduction of settlement risk in securities and
foreign exchange transactions and to increase financial stability. Most countries in the Measuring
Payment System Development survey reported using the real time gross settlement system in response to
large-value funds. A few countries in Sub-Saharan Africa reported using the check-clearing system or
other central bank systems in parallel with the real time gross settlement system.
5.1 World Bank
The World Bank has led efforts to study the impact of remittances on development in Sub-Saharan Africa
with resulting analysis of the impact of remittances at the national, household, and community level, as
well as regional levels, as discussed in this section.
5.1.1 National level
World Bank studies about impact on poverty and growth suggest that remittances generally have a
positive effect on economic growth and poverty in Africa. In their statistical analysis, Adams and Page
(2005), using 74 developing countries (including 33 from Africa), estimate that on average a 10 percent
increase in the share of international remittances in a country’s GDP will lead to a 6.1 percent decline in
the share of people living in poverty. A later study by Adams (2006) using household survey data in
Ghana shows that both internal and international remittances reduce the severity and depth of people
living in poverty by increasing household income (expenditure), with international remittances having a
more significant impact on both the level and depth of poverty than internal remittances. Ratha and
Mohapatra (2009) also suggest that remittances may have reduced the share of poor people in the
population by 11 percent in Uganda.
The growing role of remittances as a source of external financing has been highlighted in various studies.
Remittances have been identified as a stable, resilient, and more dependable source of income for
countries. Botswana, Cote d’Ivoire, Lesotho, Mauritius, Swaziland, and Togo, for example, receive more
remittances than total official development assistance or foreign direct investment. Ratha, Mohapatra,
and Plaza (2008) also note that grants from the United States and European foundations—known as
―institutional remittances‖ to finance development programs—have focused on HIV/AIDS, malaria, and
other such issues in Africa and have increased in recent years.
The evidence that remittances are counter-cyclical and a more resilient source of external financing
during economic shocks is supported by research by the Development Prospects Group (Mohapatra and
Ratha 2010), which observes that remittances to Sub-Saharan Africa during the global financial crisis of
2008 remained resilient and moderately flat compared to other flows. The authors explain that the
39
counter-cyclical nature of remittances could be due to the fact that remittances constitute a small part of
the migrants’ income and therefore will continue even in times of financial hardships.
However, in an earlier work, Ratha and Mohapatra (2009) caution that the evidence on the long-term
growth effects of remittances is mixed. This is due to the lack of proper instrumentation to measure the
effects and the challenge of finding a correlation between growth and income, even though there exists
causality between growth and remittances.
5.1.2 Household level
Remittances have effects on households through consumption and investment in social and economic
goods. Lindley (2006) shows that households receiving international remittances in Somalia improved
their livelihoods and helped finance education, in some cases allowing the family to choose higher-cost
forms of education. Children in the households of people receiving remittances also had relatively good
school attendance rates.
Similarly, female-headed households in Ghana that received remittances spent more on education and
health than male-headed households (who tended to spend on consumption and durable goods).
International remittances lowered the expenditure share for food and increased the expenditure share for
all other categories except education. Internal remittances on the other hand increased the share of
expenditure for health and education (Guzmán and others 2007).
Remittances also contribute to the growth of financial services in a country. Using data from Somalia,
Waldo (2006) demonstrates the importance of remittances as the only provider of financial services
during a period of political strife in Somalia and the absence of financial institutions for most households.
With the absence of banks and inflationary pressures caused by the lack of monetary control on foreign
printed currency, Somalia witnessed the emergence of private activities in trade, money transfer services,
transport, and telecommunications, funded by remittances from the Diaspora (Kulaksiz and Purdekova
2006). Waldo (2006) also notes remittance companies specializing in global transfers in Somalia grew in
response to the need for financial services to deliver money to a country in conflict.
Remittances have a role in times of economic and political shocks and natural disasters and as a buffer
against household consumption and income. In Somalia, a country without access to international capital
markets and a long history of political instability, remittances in the range of US$50 to US$100 served as a
cushion against economic shocks when economic activity came to a standstill as a result of civil war. The
households that received these remittances were able to consume outside their production-possibility
frontier (Kulaksiz and Purdekova, 2006).
In Ethiopia, Burkina Faso and Ghana, remittances served as insurance during natural disasters. Countries
with a higher emigrant-to-population ratio (10 percent) had a larger increase in remittances (0.5 percent
of GDP) in the year following a natural disaster and an increase by 1 percent of GDP over the period of
two years after the disaster (Mohapatra and others 2009). 14 In the case of Burkina Faso and Ghana, the
evidence suggests that households that received remittances from high-income OECD countries built
Estimates are based on Living Standards in Burkina Faso (2003), Ghana (2005), and the 2004 Welfare Monitoring
Survey in Ethiopia.
14
40
houses made of concrete rather than mud to help cope with natural disasters, while those receiving
remittances in Ethiopia relied on cash reserves during natural disasters for food security rather than sell
productive assets such as livestock.
5.1.3 Community level
Lindley (2006) provides an example of community-level effort by the Somali Diaspora in Australia, New
Zealand, North America, Europe, the Middle East, and Africa. This community is held together by
family and clan connections that make regular contributions to the Irro Primary School in Bursalah in
Puntland. These funds go toward the education of 400 students ranging in ages 5 to 16 years. Similarly a
survey of 175 Somali remitters in London showed that half of them had made average donations of about
US$150 for educational purposes in Somalia in 12 months (Maimbo 2006).
5.1.4 East and Central Africa
East African Community Regional Financial Integration Study. The World Bank (2007) study on the East
Africa community identified the use of retail payment systems as an important tool in leveraging greater
connectivity at the wholesale level.15
Uganda. The Making Finance Work for Uganda study focused on increasing the breadth and depth of
the Ugandan financial sector.16 The report included recommendations focused on improving access by
strengthening payment and remittance systems—building up on earlier work on financial sector
strengthening and ensuring increased access to formal financial services by rural savers and microentrepreneurs. In addition, other studies on Uganda have explored the role of cost-effective technology in
increasing outreach and reducing the trade-off between outreach and cost. 17 This includes the use of
microfinance institutions, post offices, and other shared platforms through which migrants receiving
remittances can access financial and payment services from different money transfer operators.
5.1.5 Southern Africa
The Mobile Banking in Southern Africa Study. The objective of this regional study was to positively
influence the expansion of access to finance through the rapid but safe take-off of domestic and crossborder branchless banking (Maimbo and others 2010). The key focus of the study is on cross-border
payment services in Angola, Malawi, Mozambique, South Africa, and Zambia. The findings from the
study will be discussed at a policy discussion workshop bringing together a select group of policy
champions from each of the focus countries to discuss appropriate incentives that encourage innovating
bank and non-bank led domestic and international mobile banking solutions.
For additional information on East Africa, see www.africaremittances.org.
For more on Making Finance Work in Africa, see World Bank website, http://go.worldbank.org/WVFPF5CYJ0.
17 For more studies on Uganda, search World Bank website under Access Finance newsletters and Financial and
Private Sector Development (FPSD Uganda).
15
16
41
5.1.6 West Africa
Nigeria. The Making Finance Work for Nigeria project in the Africa Region provided policy advice to
improve the country’s remittance market as part of its implementation support for the country’s financial
sector reform strategy referred to as FSS2020. Due to this report, the Nigerian authorities are aware of the
impact on competition and transfer costs caused by exclusivity clauses in contracts between banks and
money transfer operators. The authorities are further considering an appropriate role for non-bank
networks, such as the postal system, in the delivery of financial and payment services downstream. 18
Mali. Seeking to bridge existing knowledge gaps in rural finance, the Africa Region study covered the
supply of financial services and included case studies of rural finance providers and the legal
environment within which rural financial markets operate. The study also covered the constraints this
represents for improving access to financial and payment systems in rural areas.19
Remittance Service Providers Survey. Through the Africa Migration Project in the Development
Prospects Group, a Remittance Service Providers Survey was implemented in Burkina Faso, Cape Verde,
Ethiopia, Ghana, Kenya, Nigeria, Senegal, Uganda, the United Kingdom, and France to understand the
challenges faced by remittance service providers.
Migration and Remittances Households Surveys. The surveys seek to improve the current methods of
collecting migration and remittances survey data on households. Surveys have been implemented with
the assistance of local research partners in Burkina Faso, Kenya, Nigeria, Senegal, South Africa, and
Uganda.
5.2 Development Partners
The BIS, GTZ, IFAD, IOM, IMF, ILO, and USAID have conducted studies on the impact of remittances on
development and made policy recommendations on maximizing the potential impact of remittances in
Africa.
5.2.1 BIS
General Guidance for National Payment System Development. This CPSS-released report (BIS 2006)
highlights the need to reform payment infrastructure and sets up 5 guidelines for this process. The
process includes supporting the payment system with a sound, predictable, non-discriminatory, and
proportionate legal and regulatory framework; and introducing appropriate access to domestic payments
infrastructure to foster competition in the remittance market.
5.2.2 GTZ
For the Nigeria study, see
http://siteresources.worldbank.org/INTAFRSUMAFTPS/Resources/Making_Finance_Work_for_Nigeria.pdf.
19 For the 2008 Mail Rural Finance Study, see http://go.worldbank.org/FMNBY73OE0
18
42
GTZ has conducted studies supporting the impact on remittances on development and highlighting the
opportunities for government, businesses, and migrants.
Migration and Employment. This discussion paper on migration and employment notes that remittances
provide new insurance and private investment capital opportunities for those who do not migrate
(Dayton-Johnson and others 2008). In especially poor countries, the paper argues that migrants’
remittances reduce risk by enabling households to undertake risky but profitable investment projects
once remittances are received.
Diaspora in Germany: Its Contributions to Development in Ghana. This GTZ study finds that Ghanaian
immigrants contributed to non-profit activities through individuals, churches, and community groups
(Schmelz 2009). These contributions went toward financing health and education projects in rural areas of
Ghana. The GTZ also supports family businesses, investment in real estate, and other businesses started
by Ghanaian migrants living in Germany.
5.2.3 IFAD
The IFAD work on remittances in Africa provides insight on remittance markets and the environment of
remittances across Africa.
Sending Money Home to Africa: Remittance Markets, Enabling Environments and Prospects. The IFAD
(2009a) report highlights the regulatory issues, market competition, and financial access in 50 African
countries, using results of a survey of microfinance institutions. The report finds that low levels of
competition between remittance institutions unduly limits the presence of transfer operators in rural
areas—with Western Union and MoneyGram controlling about 65 percent of all remittance payout
locations. The regulatory framework and exclusivity arrangements of about 80 percent of the countries in
Africa restrict the type of institutions able to offer remittance services since only banks are permitted to
pay remittances. The report notes the importance of microfinance institutions in remittance transfer but
observes they play a limited role in the money transfer market. The report suggests that while post offices
have a strong geographical presence and could play a potentially significant role in transferring
remittances, they have yet to be put to use for remittance purposes.
Financing Facility for Remittances. In partnership with the European Commission, IADB, CGAP, the
Government of Luxembourg, and the United Nations Capital Development Fund, the IFAD has launched
a Financing Facility for Remittances (FFR) with a US$10 million investment to increase competition in the
remittance market, especially in rural areas (IFAD 2009b). The FFR will support the development of
innovative, cost-effective, and easily accessible international or domestic remittance services within
African, Asian, European, Latin American, and Middle Eastern countries.
Enhancing Microfinance and Remittance Services for Ethiopia. In line with reducing the cost of
remittances for remittance senders and recipients through increased competition and innovation, the
IFAD Enhancing Microfinance and Remittance Services for Ethiopia project will provide remittance
services through 3 microfinance institutions in Ethiopia at a cost 35 percent lower than current rates, and
offer financial services in the form of business loans to 25 percent of remittance senders and transnational
loans for home improvement to 65 percent of the recipients involved in the project.
43
Uganda: Card-based Remittance Transfer. This project will use card-based technology to link savings
accounts of nearly 3,000 clients as a means to offer innovative and lower-cost domestic remittance
transfer services to Ugandans. The project will purchase and install 17 point-of-sale machines that will be
linked to the cards.
Somalia Banking Groceries. Somalia lacks banking and financial services to serve its population. Often
rural remittance recipients must travel to city and commercial centers in order to receive their remittance
payments. This adds to the increasing cost of sending and receiving remittances. The IFAD Banking
Groceries project will come up with innovative ways to transfer remittances with ease and speed to shop
owners in 3 villages in the Gedo Region of Somalia.
5.2.4 ILO
Linkages between migration, remittances, and insurance. The ILO has conducted a study on the potential
linkages between migration, remittances, and insurance commissioned by the Micro-insurance
Innovation Facility of the ILO. The new study evaluates the feasibility of using remittances from France to
cover health insurance costs of recipient families in Mali, Senegal, and Comoros. 20
5.2.5 IMF
Evidence from IMF research supports the relationship between remittances and economic growth.
Giuliano and Ruiz-Arranz (2005) use a sample size of 73 developing countries for the period 1975-2002 in
estimating the relationship between remittances, financial development, and growth. They find a strong
positive and significant relationship between remittance flows and a negative interaction between
remittances and financial depth—suggesting that the marginal impact of remittances on growth
decreases with the level of financial development.
Gupta and others (2007), using data from 233 poverty surveys in 76 developing countries, including 24 in
Sub-Saharan Africa, confirm the poverty-reducing effect of remittances. What their research shows is a
10 percent rise in the remittances-to-GDP ratio is associated with a fall of a little more than 1 percent of
people living on less than US$1 a day and the poverty gap (i.e., how far below the poverty line for the
average poor person’s income). The research on Sub-Saharan Africa also shows that remittances
contribute positively to financial development regardless of the size of the country in part by facilitating
the entry of remittance-receiving households into the formal financial market (Gupta and others 2007).
The evidence on the counter-cyclical nature of migrant remittances finds the relationship between
migrant workers’ remittances to movements of GDP in Sub-Saharan African countries (Côte d’Ivoire,
Lesotho, Senegal) to be acyclical—suggesting no correlation between the level of remittances during
higher economic activity (Sayan 2006). In Morocco, however, workers increase remittances during
periods of higher economic activity at home and cut them during downturns and crises. Similar research
by Singh and others (2009) is consistent with the literature on the counter-cyclical behavior of remittances
and finds that remittances are larger for countries that have a bigger Diaspora and smaller for those in
which the Diaspora is located in a wealthier country.
20
Access the ILO study at, http://www.cmimarseille.org/_src/SELM3_MigrationManagement_Matrix.pdf .
44
Recent research forecasting the effect of remittances on a country’s GDP during the financial downturn
predicts little effect in many Sub-Saharan African countries (Barajas and others 2010). This is evident
because most of these African countries do not have large migration ties to Europe and the United States,
where the financial crisis was most severely felt but would have severe effects on countries in North
Africa that have strong ties to Europe.
5.2.6 IOM
Migrant Remittances as a Development Tool: The Case of Somaliland. This report examines the type of
remittance transfers made by Somalis in the Diaspora, their function and distribution of remittances
among different categories of household income groups (Hansen 2004). It observes that remittances
received by urban households trickle down to rural areas in the form of consumption of food crops and
charcoal and other such rural goods and investment in livestock and seasonal crops produced in rural
areas. The study also notes that the efficiency of remittance companies in Somalia has enabled them to
build trust among Somalis even though informal systems still exist openly to serve relatives and friends.
5.2.7 USAID
The role of remittance payments across borders is an important component in regions of Africa where
migration between corridors are high.
West African Financial Flows and Opportunities for People and Small Businesses. This USAIDcommissioned report examined the scope, extent, and challenges of intra-regional, cross-border payments
in West Africa using interviews with individuals, migrants, and traders (USAID 2006). The study
estimates that the aggregate value of financial transactions in West Africa amounts to over US$2 billion
annually, and notes that the region is vastly under-banked, comprised largely of microfinance institutions
and credit unions. This type of service forms a part of the informal market and operates under financial
regulations that make it difficult to fully serve the clients’ needs. The study also finds that although intraregional payments are taking place, they operate within a domestic and regional framework caused by
weak institutions.
Diaspora Networks Alliance. The Diaspora Networks Alliance is a framework set-up to engage
development partners in activities to increase the development impact of remittances (USAID nd). The
Alliance works to encourage traditional money transfer organizations and banks to develop and market
their services to remittance clients and promote linkages with microfinance institutions. The objectives
are to deepen outreach; develop regional and domestic payment systems to meet the needs of migrants
and their families and facilitate international transfers; support pilot programs that link remittances to
financial products (housing loans, health insurance, consumer loans, student loans, education funds,
pension plans, enterprise loans, indigenous rotating saving schemes); explore technological innovations
(such as mobile banking) that could reduce transaction costs; increase security; and provide remittance
clients with a range of convenient services.
References: Chapter 5
45
Adams, Jr., Richard H. 2006. Remittances and Poverty in Ghana. World Bank Policy Research Working
Paper No. 3838. World Bank. Washington, D.C.
Adams, Jr., Richard H., and John Page. 2005. “Do International Migration and Remittances Reduce
Poverty in Developing Countries?” World Development 33: 1645-69. October
Barajas, Adolfo, Ralph Chami, Connel Fullenkamp, and Anjali Garg. 2010. The Global Financial Crisis and
Workers ‘Remittances to Africa: What’s the Damage? IMF Working Paper 10/24.
Barder, Owen. 2006. A Policymakers’ Guide to Dutch Disease. Working Paper 91. Center for Global
Development
Cirasino, Massimo, and Jose Antonio Garcia. 2008. Measuring Payment System Development Survey.
Payment Systems Development Group. Washington, D.C.: World Bank.
Dayton-Johnson, Jeff, Antje Pfeiffer, Kirsten Schüttler, and Johanna Schwinn. 2008. Migration and
Employment Discussion Paper. GTZ.
Giuliano, Paulo, and Marta Ruiz-Arranz. 2005. Remittances, Financial Development, and Growth. IMF
Working Paper 05/234. IMF. Washington, DC.
Gupta, Sanjeev, Catherine Pattillo, and Smita Wagh. 2007. ‚Making Remittances Work for Africa.”
Finance and Development, Volume 44, Number 2. IMF.
Guzm{n, Juan Carlos, Andrew R. Morrison, and Mirja Sjöblom. 2007. “The Impact of Remittances and
Gender on Household Expenditure Patterns: Evidence from Ghana. Gender.” In The International
Migration of Women. Edited by Maurice Schiff, Andrew R. Morrison, and Mirja Sjöblom.
Washington, D.C.: World Bank.
Hansen, Peter. 2004. Migrant Remittances as a Development Tool: The Case of Somaliland. Working Paper
Series No. 3, June 2004. Migration Policy Research. Department of Migration, Policy, Research, and
Communications. IOM.
IFAD (International Fund for Agricultural Development). 2009a. Sending Money Home to Africa: Remittance
Markets, Enabling Environments, and Prospects. Rome, Italy: IFAD.
IFAD. 2009b. Financing Facility for Remittances: Call for Proposals 2009. Rome, Italy: IFAD.
Kulaksiz, Sibel, and Andrea Purdekova. 2006. “A Macroeconomic Perspective”. In Maimbo, Samuel
Munzele (ed). Remittances and Economic Development in Somalia: An Overview. Working Paper Series
No. 38. Social Development Papers, Conflict Prevention and Reconstruction. World Bank.
Washington, D.C.
Lindley, Anna. 2006. “The Influence of Migration, Remittances and Diaspora Donations on Education in
Somali Society”. In Maimbo, Samuel Munzele (ed). Remittances and Economic Development in Somalia:
An Overview. Working Paper Series No. 38. Social Development Papers, Conflict Prevention and
Reconstruction. World Bank. Washington, D.C.
Maimbo, Samuel Munzele (ed). 2006. Remittances and Economic Development in Somalia: An Overview.
Working Paper Series No. 38. Social Development Papers, Conflict Prevention and Reconstruction.
World Bank. Washington, D.C.
Maimbo, Samuel, Tania Saranga, and Nicholas Strychacz. 2010. Facilitating Cross Border Mobile Banking
in South Africa. Africa Trade Policy Notes #1. May 2010. World Bank. Washington, D.C.
46
Mohapatra, Sanket, and Dilip Ratha. 2010. “Forecasting Migrant Remittances During the Global Financial
Crisis.” Migration Letters, Volume 7, No. 2, pp. 203-213. www.migrationletters.com
Mohapatra, Sanket, George Joseph, and Dilip Ratha. 2009. Remittances and Natural Disasters: Ex-post
Response and Contribution to Ex-ante Preparedness. World Bank Policy Research Working Paper 4972.
Global Facility for Disaster Reduction and Recovery Unit and Development Prospects Group.
Migration and Remittances Team. World Bank. Washington, D.C.
Omer, Abdusalam. 2005. A Report on Supporting Systems and Procedures for the Effective Regulation
and Monitoring of Somali Remittance Companies (Hawala). Prepared for UNDP, Somalia.
http://mirror.undp.org/somalia/remittance/ssp-hawala.pdf
Ratha, Dilip, and Sanket Mohapatra. 2009. Revised Outlook for Remittance Flows 2009-2011: Remittances
Expected to Fall by 5 to 8 Percent in 2009. Migration and Development Brief 9. Migration and
Remittance Team, Development Prospects Group. World Bank.
Ratha, Dilip, and Sanket Mohapatra. 2009. Revised Outlook for Remittance Flows 2009-2011: Remittances
Expected to Fall by 5 to 8 Percent in 2009. Migration and Development Brief 9. Migration and
Remittance Team, Development Prospects Group. World Bank.
Ratha, Dilip, Sanket Mohapatra, and Sonia Plaza. 2008. Beyond Aid: New Sources and Innovative Mechanisms
for Financing Development in Sub-Saharan Africa. Policy Research Working Paper 4609. World Bank.
Washington, D.C.
Sayan, Serdar. 2006. Business Cycles and Workers' Remittances: How Do Migrant Workers Respond to Cyclical
Movements of GDP at Home? IMF Working Paper 06/52.
Schmelz, Andrea. 2009. The Ghanaian Diaspora in Germany: Its Contribution to Development in Ghana.
Eschborn, Germany: GTZ.
Singh, Raju Jan, Markus Haacker, and Kyung-woo Lee. 2009. Determinants and Macroeconomic Impact of
Remittances in Sub-Saharan Africa. IMF Working Paper 9/216. Washington, D.C.
USAID (United States Agency for International Development). 2006. West African Financial Flows and
Opportunities for People and Small Businesses. Prepared by CARANA Corporation and Dr.
Manuel Orozco of the Inter-American Dialogue.
USAID. nd. Diaspora Networks Alliance. pdf.usaid.gov/pdf_docs/PDACM860.pdf.
Waldo, Mohamed Abshir. 2006. “Somalia Remittances: Myth and Reality”. In Maimbo, Samuel Munzele
(ed). Remittances and Economic Development in Somalia: An Overview. Working Paper Series No. 38.
Social Development Papers, Conflict Prevention and Reconstruction. World Bank. Washington,
D.C.
World Bank. 2007. “Financial Sector Integration in Two Regions of Sub-Saharan Africa: How Creating
Scale in Financial Markets Can Support Growth and Development”. Prepared by the Africa
Region, World Bank, for the Making Finance Work in Africa. Washington, D.C.
47
6. Development of Content and Technology Platforms of CountryBased Payment and Settlement Systems for Remittances
Advanced technology platforms and payment systems have the potential to reduce the cost of
remittances through innovative products and services; and fast, efficient remittance transfers. This
chapter summarizes the work of the World Bank and development partners in improving payment
systems and developing new technology platforms for remittances.
6.1 World Bank
Measuring Payment System. Recognizing the need to improve payment systems, the World Bank
Measuring Payment System development team conducted a survey on payment systems of all central
banks. The survey results helped to develop tools to monitor development of country payments systems
and compare their payment systems with the operability of other countries (Cirasino and Garcia 2008).
Making Money Transfers Work for Microfinance Institutions: A Technical Guide to Developing and
Delivering Money Transfers. This CGAP-issued report (Isern and others 2008) helped financial service
providers determine whether offering money transfer services was in their interests; and helped
determine what strategy, products, and institutional structure was needed to support a successful money
transfer operation.
Scenarios for Branchless Banking in 2020. This CGAP-published report (Pickens and others 2009)
provides 4 scenarios for government and private sector to identify strategies in branchless banking that
can maximize the spread and depth of branchless banking as a means to improving poor people’s access
to financial services. It also highlights key uncertainties, including the regulatory framework, market
competition, and businesses (existing and new) and consumers that could significantly affect the
outcomes or attractiveness of new channels to providers and consumers.
WIZZIT. The CGAP supports WIZZIT (a division of the South African Bank of Athens) to deliver
banking services to poor people in South Africa’s small towns and rural areas. WIZZIT is a branchless
banking business that enables customers to use mobile phones to access bank accounts and conduct
transactions.21 The payment service for wholesalers serves more than 500 micro-entrepreneurs, known as
―spaza shops‖22 in the township of Motherwell, where 3 out of 5 people are unbanked. A pilot program
was conducted for easy account opening and preferred pricing at Dunns outlets (a leading South African
clothing retailer). If successful, this pilot program will be expanded to 289 stores throughout the country.
6.1.1 East and Central Africa
21
22
More information on WIZZIT at http://technology.cgap.org/category/projects/south-africa-wizzit.
Spaza shops are informal convenience shop businesses in South Africa, usually run from a home.
Burundi. The Africa Region is working with the national authorities in Burundi to strengthen the
financial system by modernizing the financial sector infrastructure (payment systems) and improving
financial sector regulations in ways that create synergies among different service providers such as
commercial banks and the country’s postal service, including interoperability of payment processing
platforms.
Rwanda. As part of Rwanda’s Financial Sector Development Program, the World Bank diagnosed and
recommended solutions for a number of weaknesses in the financial sector, a key component being
recommendations related to strengthening the national payment systems by improving processing
efficiency.
Ethiopia. The World Bank supports efforts of the national authorities to build a more transparent, wellgoverned, well-regulated, and competitive financial sector, including implementing support for an
automated transfer system.
BCEAO Regional Payment Systems Project received support to introduce modern payment instruments,
and clearing and settlement processes in the West African Economic and Monetary Union (UEMOA).
The BCEAO Regional Payment Systems Project broadly met its goals. Results from the project included
an upgrading of the basic payment systems infrastructure.
6.2 Development Partners
The development partners have undertaken studies and initiatives to support the development of
technology platforms for country-based systems.
6.2.1 DFID
SendMoneyHome.org. In 2005, DFID initiated the SendMoneyHome.org platform to provide migrants
with information and advice on fees, exchange rates, and speedier methods for transfer of remittances.
The website provides access to the necessary knowledge to help users make informed choices when
remitting through money transfer operators and banks, as well as information on any suspected
fraudulent activity.
Mobile phone banking (M-banking). The DFID has supported M-banking by providing a one-off grant to
Vodafone through its subsidiary Safaricom to pilot and launch a mobile banking solution in Kenya called
M-PESA (―mobile money‖). The grant helped to bring about a substantial shift in Vodafone’s internal
strategy toward mobile banking. The mobile payments through M-PESA provide a potential solution to
unbanked areas of the country, and efforts are being made to use the system to also distribute social
payments to poor families in remote areas of Kenya.
6.2.2 GTZ
Partnership Making Finance Work for Africa. The GTZ supports the Partnership Making Finance Work
for Africa on behalf of the German Federal Ministry for Economic Cooperation and Development. The
Partnership draws on a wide range of contributors, including African governments and major partners
49
that include AfDB, CGAP, DFID, EIB, Financial Sector Reform and Strengthening Initiative (FIRST),
French Development Agency, Swedish International Development Agency (SIDA), and World Bank,
6.2.3 IFAD
Financing Facility for Remittances. The multi-donor FFR was set up (with US$18 million) to provide
improved economic opportunities for the rural poor through the support and development of innovative,
cost-effective, and easily accessible international and/or domestic remittance services. The FFR links rural
financial institutions with formal intermediaries, money transfer operators, microfinance institutions,
postal networks, and other partners.
6.2.4 Government of Italy
www.mandasoldiacasa.it. The Government of Italy launched the website that provides comparative
information on the costs of sending remittances. The World Bank has identified 12 key minimum
mandatory requirements of a national remittance price database and certifies only the databases that
meet the minimum requirement. This website is the first to have received certification from the World
Bank.
Ghana/Senegal Project. The Government of Italy supports the MIDA Ghana/Senegal Project in
cooperation with IOM. The project aims to encourage innovative mechanisms for remittance transfers
and lower the costs of remittances. In line with the proposed objectives, the project promotes the use of
rechargeable credit cards, a flexible system that is already being utilized in Italy by other migrant
networks, and the dual bank accounts as instruments to reduce the cost of remittances. It also proposes
the use of the savings accumulation product, guarantee fund, and certificates of deposit, along with the
creation of a foundation to pool together migrants' remittances and channel remittances toward
productive use. The project recommends replicating the Ecuador Cooperative Credit Banks Project,
which supports local entrepreneurship in rural areas in Ecuador through the creation of small local
cooperative credit banks to encourage direct Diaspora involvement.
6.2.5 Opportunity International UK
Banki Mmanj, Malawi. Opportunity International UK launched Banki Mmanj, a strategy using mobile
phone banking in Malawi, with grant support from Credit Suisse. Targeting rural communities, Banki
Mmanj uses the country’s huge network of mobile phone users who will be able to use cash-back banking
products that utilize technology to reduce banking transaction costs when using financial services. These
services include savings accounts, small business loans, insurance, and any training available to people
living in poverty. This will enable clients in rural areas without a bank presence to have a cash point
where they can make withdrawals and deposits.
Mobile ATMs, Malawi. Opportunity International UK is also piloting a project in Malawi to bring mobile
banks to rural areas without banking infrastructure. Opportunity International designed a mobile
banking system using 2 bulletproof, all-terrain, 4-wheel-drive vehicles (a 5-ton truck fitted with an ATM
and a 3-ton truck without an ATM to reach farms and other more remote areas). The trucks travel with 2
50
bank employees, and 2 armed Police Mobile Force guards. Using solar power, the trucks use a GPS
tracking system and satellite technology for real-time transactions. The vehicles will cover 26 service
points in 5 districts on a weekly basis. Operating through open windows, the mobile banks will visit
designated market places on market days. For a small fee, which is less than bus fare to the nearest town,
clients will then be able to deposit or access funds using their bank cards.
6.2.6 Other Partners in Mobile Banking
Cell phone companies are developing new and innovative products to capture remittance transfers in
several countries in Africa.
CelPlay by Celtel. This M-banking technology is available in Zambia, DRC, and Tanzania. Customers are
provided with a secure Celpay SIM for any GSM mobile that loads a new menu onto the phone. Funds
are deposited into a Celpay account, using the mobile phone to transfer money from a bank account or, if
the user is unbanked, to deposit cash at a partner bank. Purchases can be made via text by entering the
amount to be paid into the phone and authenticating the transaction with a Personal Identification
Number (PIN). The service provider instantly transfers the money to the merchant’s Celpay-enabled
account. Merchants pay a commission of 3.4 percent of the total transaction amount. At present, there are
only a few Celpay outlets in rural areas.
ZAP M-banking by Zain. This service will allow ZAP users across Kenya, Tanzania, and Uganda to use
their mobile phones to manage their bank accounts, pay bills for goods and services, make remittances to
other mobile users or bank accounts, top up airtime, and send airtime to other Zain customers within the
three countries.
References: Chapter 6
Cirasino, Massimo, and Jose Antonio Garcia. 2008. Measuring Payment System Development Survey.
Payment Systems Development Group. Washington, D.C.: World Bank.
Isern, Jennifer, William Donges, and Jeremy Smith. 2008. Making Money Transfers Work for Microfinance
Institutions: A Technical Guide to Developing and Delivering Money Transfers. Washington, D.C.:
CGAP/World Bank.
Pickens, Mark, David Porteous, and Sarah Rotman. 2009. ‚Scenarios for Branchless Banking in 2020”.
Focus Note 57. Washington, D.C.: CGAP.
51
7. Examples of Country Programs
This chapter discusses examples of work being done by four Governments—Ethiopia, Zambia, Uganda,
and Kenya—to leverage the development impact and increase the flow of remittances. These four
governments have used different instruments to maximize remittance flows. Some of these include the
use of direct initiatives such as Diaspora bonds and bank accounts to target remittances, as well as
indirect instruments, through reforms in the banking and regulatory framework of financial institutions.
Box 9.1 looks beyond Africa for lessons learned on migrant remittances in Mexico.
7.1 Ethiopia — Leveraging Remittances through Diaspora Bonds and Securitization
Large and stable remittance flows have been known to improve the creditworthiness of countries. Banks
and at times national authorities use future remittances in the form of bonds to raise money for financing.
The use of bonds for financing has the potential to be used to finance development projects since they
tend to be a stable source of financing. The World Bank estimates that African countries can raise between
US$5 billion and US$10 billion a year by issuing Diaspora bonds. The State of Israel, Sri Lanka, and India
have successfully raised funds for development by issuing bonds.
In December 2009, the Ethiopian government issued Millennium Bonds targeted at Ethiopians in the
Diaspora to raise funds to invest in the Ethiopian Electric Power Corporation for a project that would
increase power supply to the country. With a minimum purchase of US$500, the bond could be bought
through SWIFT transfer, a Diaspora foreign currency account, or with cash.
Ethiopia has also made it easy for its Diaspora members to open foreign currency accounts in domestic
commercial banks. The minimum balance on these accounts is US$5,000 and the maximum permitted is
US$50,000 (or equivalent in Euros or Pound Sterling). Banks are permitted to accept other currencies
provided they convert them to anyone of the three permitted currencies. Account holders can also make
payments locally in local currency. The bank accounts can be used to serve as collateral or guarantees for
loans or bids.
7.2 Zambia — Improving Payment Systems through Technology
The Bank of Zambia 2006 report of the National Payment Systems Self-Assessment Workshop on the
Observance of the CPSS Core Principles for Systemically Important Payment Systems assessed the
National Payment Systems in Zambia, particularly the real time gross settlement system. The report notes
that significant progress has been made with regards to the observance of the Core Principles,
particularly in integrating the National Clearing and Settlement Systems to credit unions, which was
formerly restricted to commercial banks. With passage of the National Payments Act before Parliament
banks will be able to oversee the payment systems and introduce technology-based payment instruments
to increase competition in the remittance market. The report also notes that the relatively well-developed
telecommunications infrastructure in the country has enabled banks to automate their branch networks
and provide platforms for technology-based payments such as the direct debits and credits clearing and
the real time gross settlement system.
7.3 Uganda — Improving the Regulatory Framework for Payment Systems
Uganda is a strong reformer in the area of mobile payment services and somewhat a model for remittance
markets in Sub-Saharan Africa. The authorities permit non-bank remittance service providers to disburse
remittances but not to contract directly for services from international money transfer operators. There
also exists scope for improvement by focusing on the retail payment system aspects of the market in
order to move beyond mere access to a disbursement (payment) service and improve the potential for
remittances to contribute to financial deepening. Uganda will need to step up its efforts on reforming the
remittance markets by encouraging greater integration of remittance services with the domestic payment
system and opening up the domestically focused remittance services market to competition.
53
Box 9.1. Migrant Remittances to Mexico: Lessons for Africa
In terms of volume, Mexico receives the largest remittances of any country. In 2009, remittance flows to
Mexico were estimated at US$21.2 billion, representing about 45 percent of total remittance flows to
Latin America. Remittances to Mexico are currently the second highest earner of foreign exchange for
the country after oil.
The World Bank’s Migration and Remittances Factbook estimates that there are over 11.5 million
international immigrants from Mexico, representing over 10 percent of its population. The majority of
Mexican migrants is in the United States and represents the largest immigrant population in that
country. Migrants to the United States tend to be at the low end of the income and educational
distribution, and typically work in the restaurant or hotel industry. Remittance recipients also tend to
be from poor households in rural areas of Mexico. Studies show that remittance recipients usually
receive between US$280 andUS$370 per month.
Even with the majority of remittance recipients from poor households in rural areas, the means of
sending remittances make it relatively easy for migrants to remit to Mexico. Many migrants use formal
means of remittances because they are cheap, safe, and fast. Channels of remittances include, banks,
credit unions, post offices, money transfer operators, individual businesses, and chain stores that have
the license to serve as independent operators or as agents for money transfer operators. The cost of
sending US$200 to Mexico through either money transfer operator, or bank account, using the World
Bank’s Remittance Prices Database is US$11.68 and represents one of the least costly corridors.
A large share of remittance collection points in Mexico is at commercial bank branches—showing that
banks play a significant role in the distribution on remittances. Over the past few years, remittances
through the United States – Mexico remittance corridor has been increasing (except in the last 2 years
of the global financial crises) due to the declining costs of sending remittances.
The following points illustrate some reasons for the declining costs of remittances:
Entry of new market competitors. Banking institutions have revolutionized remittances in Mexico.
The remittance market was typically run by Western Union and MoneyGram and used exclusivity
agreements with banks to monopolize the market for remittances. However, once banks began to
move away from these contracts, and they became transfer operators, prices reduced and more
remittance recipients enjoyed reliable transactions.
Impact of technology. New technology has made it faster and easier to send remittances across the
United States – Mexico corridor. The introduction of card-based products, such as ATM machines,
has made it possible for recipients to receive transfers as soon as it is processed.
Bank of Uganda’s regulatory framework takes cognizance of the diverse nature of remittance service
Bilateral cooperation. The United States – Mexico corridor has benefitted tremendously from the
providers and provides licenses under the Foreign Exchange Act 2004 and Foreign Exchange (Forex
bilateral cooperation between the United States and Mexican authorities, which has encouraged
Bureaus and Money Remittance) Regulations 2006 in four classes: International money transfer agency
the use of formal remittance systems. Through bilateral agreements, for example, the U.S. Federal
license (class A); Foreign exchange bureau de change and money remittance license (class B); Direct
Reserve System is working to expand its Federal Reserve Automated Clearing House (FedACH) to
entrants license (class C); and Sub-agency license (class D). This is important in ensuring that markets are
support two-way credit transactions between the United States and Mexico.
contestable.
Source: Hernández-Coss (2005).
54
7.4 Kenya — Leveraging Remittances by Reforming the Mobile Money Transfer System
Kenya has made considerable progress in reforming its mobile payment systems and serves as a model
for remittance markets in Sub-Saharan Africa. The national authorities permit non-bank remittance
service providers to disburse remittances but not to contract directly for services from international
money transfer operators. In the case of Safaricom, a mobile telecommunications operator was given the
permit to directly contract with customers to provide financial services. The move has opened the market
for mobile technology, with the introduction of M-PESA by Safaricom, an electronic payment system,
which is easily accessible through mobile phones. M-PESA reportedly processes more payments
domestically than Western Union.
Since the launch of M-PESA, a new partnership to develop other products has happened between
Safaricom and Kenya-based Equity Bank to launch M-KESHO, a product using M-PESA’s platform and
agent network to provide an expanded set of banking services—interest-bearing accounts, loans, and
insurance.
References: Chapter 7
Hernández-Coss, Raúl. 2005. The U.S.–Mexico Remittance Corridor: Lessons on Shifting from Informal to
Formal Transfer Systems Washington, D.C.: World Bank.
55
Annex 1. Top Emigration Countries of Tertiary Educated, 2000
Percent of total tertiary educated in the country
Source: Docquier, Frederic, Abdesiam Marfouk. 2004. Measuring the International Mobility of Skilled Workers
(1990-2000). Policy Research Working Paper WPS 3381. World Bank. Washington, D.C.
57
Annex 2. Top 10 Remittance Recipients (Sub-Saharan Africa), 2007
US $ billions
Source: Development Prospects Group, World Bank
58
Annex 3. Money Transfer Operators in Sub-Saharan Africa
Source: IFAD 2008
Annex 4. Mobile Payments Map
Annex 5. Venues for Dissemination of Remittance Research and
Studies
Research and studies conducted by the World Bank and other development partners on remittances have
been disseminated and discussed at conferences and seminars.
World Bank
Listed are recent conferences on remittances hosted by the World Bank.

Third International Conference on Migration and Development, Paris School of Economics, Paris,
September 10 -11, 2010. Organized by the World Bank International Migration and Development
Research Program, together with the Research Department of the French Development Agency
and the Paris School of Economics.

Global Payments Week 2010, Amsterdam, The Netherlands, October 19-22, 2010. The biannual
event gathering central banks and securities commissions from all over the world. Organized by
the World Bank.

Regulating Branchless Banking, Kigali, Rwanda. March 30-31, 2009. A CGAP and World Bank
workshop on the regulation of access to financial services using mobile phones, retail agents, and
other innovative technology-based approaches.

Redefining the Landscape of Payment Systems, Cape Town, South Africa. April 7-10, 2009. The
World Bank is intensifying its commitment to promote and disseminate the policy and research
debate on these and other topics within the scope of financial infrastructure. For this purpose, the
World Bank Group organized the third global conference for payment system specialists.

Mobile Money Summit 2009, Barcelona, Spain. June 22-25, 2009. The conference focused on what
is new in the mobile money ecosystem and how the community has evolved in the past year.
Organized by IFC, CGAP, DFID, and Global System for Mobile Communications.

International Conference on Diaspora and Development, July 2009. The Development Economics
Group sponsored the event, focusing on how the Diaspora can be leveraged for trade,
investments, skill and technology transfer.

International Conference on Remittances. Rome, Italy, November 9, 2009. The Conference
represents the output of an intense activity that the World Bank and the G8 have undertaken
during the last year in the framework of the G8 Global Remittances Working Group. Organized
by the World Bank and Italian Ministry of Foreign Affairs.

Mobile Money Summit, Cairo, Egypt. May 14–15, 2008. The two-day conference was designed for
senior executives from financial services institutions, mobile network operators, development
organizations, solutions vendors and regulatory and policy makers. Organized IFC, CGAP, DFID
and Global System for Mobile Communications.

Panel discussion of the role of remittances in development financing, October 2008. Organized on
the occasion of the launch of the publication, Innovative Financing for Development.

Panel discussion of the role of migration and globalization, March 2008. A debate of migration
experts was organized on the occasion of the Factbook launch.

Remittances Public–Private Partnership Meeting, Vienna, Austria. September 12, 2008. The first
meeting of the Remittances Public–Private Partnership took place in the context of the Global
Payments Week 2008, organized by the World Bank. Working sessions were held on legal and
regulatory issues, industry codes of conduct, and information disclosure mechanisms.

Banking on Mobiles: Why, How, for Whom? Washington DC. October 1, 2008. The promise of
mobile banking is well known; harder to find are examples of solid implementation and mass
roll-out beyond payments and transfers. The CGAP-organized meeting examined the business
case and deployment options for smaller banks and microfinance institutions.

Mobile Banking for Poor People: Pioneer Perspectives, Washington D.C., December 11, 2008. A
CGAP-organized roundtable and webinar on how mobile phone banking can deliver a range of
financial services to poor people and change lives for the better.

Reforming Payment and Securities Settlement Systems in the Middle East and North Africa,
Manama, Bahrain, March 15-17, 2005,
Development Partners
Tools and resources were provided by development partners, and at conferences organized to
disseminate data on remittances.

The DFID Remittance Information Library (DRIL) includes links to over 300 articles. It is a tool
to be used by money transfer companies, development organizations, governments and academic
facilities to look for information by subject, author, or title. Many of the texts contain data or
information on specific money transfer markets or on migration. DRIL will continue to be
updated as information becomes available

Money Transfers London Summit, London, UK. November 15-16, 2010. Organized by
International Association of Money Transfer Networks (IAMTN).

IFAD International Remittances Forum (2005, 2007, and 2009) brought together key players to
explore the links between remittances and banking, technology, and microfinance; and to discuss
ways to integrate development agencies’ agendas on remittances.

Money Transfer & Migrant Remittances: In the New Financial Landscape - Where Do the
Opportunities Lie? Barcelona, Spain. June 23-24, 2010. The third annual event organized by the
International Center for Business Information. Among the topics: the latest news on the World
Bank 5x5 objective; how the industry has responded to the financial crisis; and mobile money –
who will be the winners and losers?

Money Transfer Dubai 2010, Dubai, UAE. March 22, 2010. Delegates from money transfer
companies, banks, and regulators took part in a one-day program that addressed the key issues
in the remittance world. Organized by IAMTN.

Remittances and Financial Inclusion Conference, London, UK. February 9, 2010. The UK
Remittances Task Force and the Financial Inclusion Task Force have been collaborating to
consider the risk of financial exclusion among migrant groups and the opportunities to use
remittance services as a gateway to financial inclusion for this group. This conference was cosponsored by HM Treasury, DFID, the UK Remittances Task Force, the Financial Inclusion Task
Force, and the Payments Council.
62

Global Forum on Remittances 2009, Tunis, Tunisia. October 22-23, 2009. As global attention shifts
toward Africa, the IFAD-organized Forum addressed the key issues facing the regional
remittance markets.

Money Transfers London 2008, London, UK. November 17-18, 2008. Participants discussed the
business development, investment opportunities, and service standards in money transfers. The
leaders of the industry shared their views on how the remittances are evolving. Regulators and
governmental agencies from around the world revealed recent and forthcoming changes in the
money transfers and financial services regulatory environment. Organized by International
Association of Money Transfer Networks.

Mobile Money Transfer, Dubai, UAE, November 10-11, 2008. The conference drew on the
experiences of the people who have “got their hands dirty” launching and marketing mobile
money transfer programs to millions of customers. Sponsored by SEMOPS-UAE.

Worker's Remittances, Creating New Markets Opportunities. Rome, Italy. June 2008. Over 100
attendees gathered for the first annual conference on Workers' Remittances organized by the
International Center for Business Information. All the key players in the industry were
represented, including money transfer operators, banks, national and government organizations,
academics, research organizations, and lawyers and regulators. The issues covered ranged from
the scale and potential for business opportunity of workers’ remittances to new delivery channels
for remittance.

Remittances – Creating Value, Johannesburg, South Africa, February 25–26, 2008. This intensive
2-day course provided an insight into the payment system aspects of remittances and was
designed to assist financial institutions that want to improve their understanding of this
important market as well as develop the many business opportunities that present themselves.
Organized by Citadel Advantage.

Remittances, the Macro-economy, and Public Policy, Atlanta, Georgia, February 21–22, 2008. The
conference was intended to provide a forum for discussing innovative research on remittances
and to facilitate the exchange of views among researchers and policymakers. Organized by The
Americas Center at the Federal Reserve Bank of Atlanta.

G8 Meeting on Remittances, Federal Ministry of Finance of Germany, November 28-30, 2007. The
high-level meeting had two objectives: (a) assess the progress of measures to facilitate remittances
agreed at the Sea Island Summit in 2004; and (b) initiate a dialogue on new channels for
transferring funds, instruments to promote remittances, and other potential measures.

International Forum on Remittances 2007, Washington D.C., October 18-19, 2007. The forum
explored the links among remittances and banking, technology, and microfinance and discussed
ways to integrate development agencies’ agendas on remittances. The two-day event included a
series of roundtable discussions and working groups devoted to an in-depth exchange of ideas
and business models for urban and rural remittances worldwide. Organized by IFAD, IADB, and
the Multilateral Investment Fund.

Global Forum on Migration and Development, Brussels, Belgium. July 9-11, 2007. This Forum
served as an informal intergovernmental consultative body to distill possible options for
international co-operation on migration. The Forum looked into way to facilitate remittances,
engage diasporas, and integrate migration into poverty reduction strategies. The World Bank
took part in the first meeting of the Belgium-hosted Forum.
63

Pan African Remittances Conference: Enhancing the Investment and Development Capacity of
Remittances to Africa, London, UK. February 8, 2007. This conference developed products and
strategies and exchanged ideas among financial service providers, central banks, microfinance
institutions, policy makers, and sector-specific companies on the methods of transferring money
to and within Africa. Organized by Africa Recruit.

Effective Oversight of Payments, Clearing and Settlement Systems, Cambridge, UK, August 31September 3, 2010. This 4-day program aimed to equip payment systems experts in central banks
to formulate an oversight framework for ensuring the safety and reliability of the payments and
clearing and settlement systems, and for addressing the issues of competition, accessibility,
efficiency, and fraud prevention. Sponsored by Central Banking.

Prepaid Cards & Mobile Payments 2010 Conference, Denver, Colorado, June 28-30, 2010. This
event examined innovative payment technologies and forecasted the prepaid role in the
evolution, updated regulatory and legal developments, and shared good practice on mobile
payment technologies. Organized by the International Quality and Productivity Center.

5th Annual Underbanked Financial Services Forum. Miami, Florida, June 9-11, 2010. This forum
focused on credit, payments, and deposits.

InfoDev Annual Symposium 2010: Clean, Green and Mobile, Making Technology Work for the
Poor, Washington, DC. June 9, 2010. The Mobile Phone Applications Panel discussion focused on
how mobile services can effectively serve the poorest strata of populations.

9th Regional Payment Systems Workshop, Özdere, İzmir, Turkey, May 26-29, 2010. The
workshop aimed to provide a platform for the central banks of the region to exchange views on
the payment system reform process in their individual countries, on the role of the respective
central banks in managing change in payment systems, and on how developments in the region
link with broader global trends. Organized jointly by the BIS/CPSS and the Central Bank of the
Republic of Turkey.

Mobile Money Summit 2010, Rio de Janeiro, Brazil, May 24-27, 2010. This conference agenda
included the cutting-edge topics and issues affecting the mobile money marketplace: Operator
Heavyweights Embrace Mobile Money; The Case for Banks Investing in Mobile Money;
Emerging Business Models for Mobile Money; and New Success Stories - Untapped Areas of
Growth and Opportunities for Mobile Money.

Tenth Annual Payments Conference, Chicago, Illinois, May 20-21, 2010. The Federal Reserve Bank
of Chicago hosted its tenth Annual Payments Conference. This year's theme was “Payment
Innovations in the Wake of the Financial Crisis”.

Mobile Money Transfer Africa, Nairobi, Kenya. May 4-7, 2010. Africa is recognized as the most
significant hub for mobile money activity. Mobile Money Transfer Africa sharply focused on this
rapidly evolving market.

SWIFT Regional Conference Africa. Johannesburg, South Africa, May 4-6, 2010.

Payments 2010, Seattle, Washington, April 25-28, 2010. Rapidly evolving technological advances
in products and services are creating the need for more oversight. This conference equipped
participants with the tools and information that are vital for all organizations—whether as a
provider or end-user of payment services—to strike the proper balance between innovation and
risk management. Organized by NACHA, the Electronics Payment Association.
64

Mobile Financial Services, London, UK, March 9-10, 2010. An evolution from Mobile Payments
Conference, this event focused on such crucial subjects as the effect of the current climate on the
development and rollout of mobile financial services, the importance of mobile to the banking
and retail sector, and the role of payments in emerging markets. Organized by Informa.

International Payments Summit, London, UK, March 8-11, 2010. Now in its 18th year,
International Payments attracts 500+ senior executives from around the globe, including banks,
corporations, regulatory authorities, new payments providers, technology, and infrastructure and
service providers.

2010 Payments Summit, Salt Lake City, Utah, February 23-25, 2010. This meeting focused on new
trends and projects that are accelerating the widespread acceptance, usage, and application of
contactless and near field communication mobile payments technology for transportation and
general retail payment applications. Organized by Smart Card Alliance.

World Cards & Payments Summit 2010, Dubai, UAE, February 1-3, 2010. This event brought
together over 250 senior executives representing world players in financial cards and retail
payments industry. Discussions, case studies and good practice were highlighted in this threeday world conference.

Prepaid Cards Summit 2009, Rome, Italy, November 12-13, 2009. This event focused on the
dynamic and competitive prepaid market. Leading industry experts on market analysis informed
participants on good practice and new opportunities. Organized by VRL Prepaid Government in
association with MasterCard.

Smart Cards in Government 2009, Washington, DC, October 27-30, 2009. As part of a continuing
partnership, the CTST conference is the official annual meeting of the Smart Card Alliance. Over
120 speakers covered a range of topics, including contactless payment, identity management,
physical and logical access security, government-issued credentialing, mobile payments, near
field communication, and new emerging technologies that will be reshaping the smart card
industry in the future.

MENA Microfinance Forum 2009, Amman, Jordan. October 26-27, 2009. The conference,
organized by Uniglobal Research, discussed questions that still remain unanswered: When and
how will the legal framework be changed? What kind of opportunities in microfinance will be
available? What new products will be developed? How fast will improvements be seen?

Mobile Money Transfer, Dubai, UAE, October 26-27, 2009. The Mobile Money Transfer
conference drew on the experiences of the people who “got their hands dirty” launching and
marketing mobile money transfer programs to millions of customers.

Alliance for Financial Inclusion (AFI) Global Policy Forum 2009, Nairobi, Kenya, September 1416, 2009. More than 100 policymakers from over 50 developing countries met at the first Global
Policy Forum to identify and answer key questions that are essential for making breakthroughs
in financial inclusion. The forum was jointly hosted by the Central Bank of Kenya and Alliance
for Financial Inclusion.

Mobile Banking and Financial Services Africa, Johannesburg, South Africa, July 20-22, 2009. The
conference delivered timely insights into key business and technical security considerations that
all players in the mobile banking industry and payments industry in Africa must address.
Organized by IIR Telecoms & Technology.

SWIFT Regional Conference for Africa, Marrakech, Morocco, May 18-21, 2009.
65

International Payments Summit 2009, London, UK, May 11-14, 2009. Driven by extensive
research with the payments community, the conference covered topics at the top of the payment
systems agenda.

Banking & Payment Technologies West Africa, 2009, Lagos, Nigeria, May 4-6, 2009. The event
engaged with bank customers by inviting them to attend the exhibition and experience the new
services available through the wide range of new payment technologies being offered by banks.

Mobile Payments and Commerce, Brussels, Belgium, March 17-18, 2009. A focus on the recent
developments of mobile payments to sustain commerce and other economic activities.

Global Payment Strategy 2009, Paris, France, February 22-23, 2009. Designed by payments
professionals, for payments professionals, the Global Payments Strategy Conference 2009
provided not only the most current information and differing perspectives but also established a
dialogue with leading industry experts on current and future business lines and opportunities.

Fundamentals of Smart Cards for Payment. November 18, 2008. The second webinar,
"Fundamentals of Smart Cards for Payment”, provided a foundation on the basics of smart card
technology, applications, and standards. The webinar covered contact and contactless versions of
smart cards; applications for payments (such as credit, debit, EMV, mobile, and transit); and
other applications and standards. Organized by the Electronic Transactions Association and the
Smart Card Alliance.

SWIFT Regional Conference for Africa, Durban, South Africa, May 19-22, 2008. A leading forum
for the exchange of ideas and opinions on key issues facing the financial services industry. A
unique showcase for financial technology. The theme for 2008 was “Growing Community Reach
in Africa and Beyond”.

Payments 2008. Nevada, USA, May 18–21, 2008. The event presented the latest research, industry
pilot results, insights, trends, and forecasts delivered by payments system experts representing
financial institution, regulatory, provider, and customer perspectives. Organized by NACHA, the
Electronics Payment Association.
66
Annex 6. MFW4A Remittances Donor Mapping, Master Project Database
MFW4A Secretariat
Remittances Donor Mapping
Extract
Updated as of December 31, 2010
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
Project name
Project
status
Country specific or
regional
WAEMU - UEMOA
AfDB
CAEMC - CEMAC
1
France Government
Action Group on Migrant
Remittances
Active
Comors
AFD
Description & Objectives:
The group was created to implement the recommendations of the 2008 AfDB study
"Migrant Remittances: a Development Challenge", financed by France. In particular, it
focuses on raising awareness on remittances issues, improving regulatory issues and
introducing innovative financial products to facilitate remittances while reducing their
costs and increasing their productive use. Regional workshops were conducted in
Casablanca and Bamako on the 16th and 19th of November, 2009, respectively. The
workshops were attended by a broad range of actors, including relevant regulatory
officials and Central Banks, and discussed regulatory frameworks and innovative
financial products in the area of remittances. The workshops agreed on a set of followup actions to be conducted before the organization of a pan African seminar to be
potentially co-organized with partner institutions active on regulatory and financial
products. The seminar will bring together results from AfDB workshops and follow-up
activities in the Maghreb and the francophone zone and the activities of other actors
and address synergies between these works.
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
Project name
Project
status
Country specific or
regional
AMU-UMA
Convene stakeholders to discuss and facilitate the formalization of migrant remittances
and increase the availability of financial products targeted to senders and recipients of
remittances as a tool to strengthen local financial sectors.
EC
African Institute for
Remittances (AIR)
2
Active
All Africa
WB
EIB
3
France Government
AfDB
4
Consortium
euroméditerranéen des
banques
Flagship Study on Migration
and Remittances (Updated
on the basis of AfDB
understanding, to be
checked with WB)
Active
Active
AMU -UMA
All Africa
Description & Objectives:
The African Remittances Institute (ARI) project (funded by the European Commission
and managed by the World Bank) has been launched. The African Development Bank
and International Organization for Migration are partners and support management and
implementation. This specific project aims at facilitating and supporting the ARI to be
established under the leadership of African Union Commission (AUC). Therefore, the
objective of the ARI project is to facilitate the process leading to the creation of the
Institute as well as capacity building or member state of the African Union, remittance
senders and recipients, private sectors, and other stakeholders. This process will take
more time and the actual structure, scope and location of the Institute has not yet
decided by AUC.
Description & Objectives:
Develop a set of financial services and products specifically designed to address the
needs of migrants from mediterranean countries living in Europe. Attract savings for
channelling into the financing of medium and long-term investments in countries of
origin.
Description & Objectives:
The study designed, implemented and analyzed results from technical surveys in over
50 African countries and abroad with households, central banks and diaspora
communities. Information has been collected on remittances and migration flows in
African countries; formal and informal remittances transfer mechanisms; differences in
uses of remittances; and influence on uses of remittances. Internal workshop to
discuss preliminary results from the new data sets and drafts of different chapters was
held in March, 2010. Improve the understanding of migration and remittances in SubSaharan Africa, including their magnitude, causes, and impacts on poverty reduction,
with a view to generating informed policy recommendations.
WB
68
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
5
WB
Project name
Global Remittances Working
Group
Project
status
Active
Country specific or
regional
All Africa
Description & Objectives:
The GRWG was created in January 2009 under invitation of the G8 countries and it
became in 2010 a multi-year platform aiming at increasing the efficiency of the
remittances market and facilitating the flow of remittances by providing guidance and
policy options to the global community. The WB Financial and Private Sector
Development Vice Presidency Chairs the Group and the group aims at coordinating the
work on remittances at international level.
The GRWG meetings are held biannually in Washington DC back-to-back with the
Annual and Spring Meetings of the WB and IMF. The next meeting of the GRWG will be
held in April 15, 2011.
France
International Research
Conference on Migration
and Development
6
Active
All Africa
Description & Objectives:
The conference brought together some of the world’s top academics and researchers
in the migration field. Speakers presented their recent research findings on the most
important questions in the debate on migration, remittances and development.
WB
Italian Cooperation (MFA)
Ghana
MIDA - Migration for
Development in Africa
7
Active
IOM
Senegal
AfDB
Migration and Development
Trust Fund
8
France Government
Active
All Africa
Description & Objectives:
(MIDA) is a capacity-building programme, which helps to mobilize competencies
acquired by African nationals abroad for the benefit of Africa's development. Based on
its long experience in the Return of Qualified African Nationals (RQAN), IOM has
launched this new programme to strengthen its capacity building efforts in assisting
African countries to benefit from the investment they have made in their nationals. Many
African nationals in the diaspora are applying their qualifications and skills in developed
countries in Europe and North America. Such qualifications and skills should be brought
back into the mainstream of development of the African continent. Through its mobilitybased approach, MIDA aims at helping African nationals to directly contribute to the
development of their countries of origin.
Description & Objectives:
The fund aims at attracting proposals to launch innovative remittances transfer
operations, launch pilots to involve microfinance institutions in remittances, support
funds for the use of migrant remittances for productive investments and SME financing,
support migrants' investment projects on local development and in sectors such as
agribusiness, energy, health and vocational training. The fund also aims at
disseminating information on remittances to migrants, economic operators, recipients,
and remittances services providers.
69
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
Project name
Project
status
Country specific or
regional
Operational guidelines, 3-year strategic plan and first annual program have been
prepared. The first Oversight Committee was held on November 30, 2010. The Call for
Proposals is launched in December 2010.
IFAD
CGAP
EC
IADB
9
IFAD
Multi-donor Financing Facility
for Remittances
Active
All Africa
Description & Objectives:
The Facility was established to promote inclusive financial systems and innovative
strategic partnerships between rural financial institutions and remittance operators
linking non-profit organizations with formal financial intermediaries, money transfer
operators, microfinance institutions, financial cooperatives, non-financial institutions,
postal networks and philanthropic organizations, among others. The Facility aims to
scale up and replicate the lessons learned from the programme across other regions of
the world.
Luxembourg Government
Spain
UNCDF
DfID
10
Switzerland
Remittances Programme for
Ghana
Pipeline
Ghana
Description & Objectives:
The Remittance Program will have 3 main components: 1) A Competitive Grant Facility
to support new remittance products and services 2) A program to address regulatory
and technological constraints that are inhibiting improvements in remittances receipts
through formal channels and delivery in Ghana and 3) Support to improve sender
access through formal remittance channels, which will involve identifying sender-end
constraints and recommending measures to address them. Facilitate the flow of
remittances through formal channels to poor and rural Ghanaians and enhance the
impact of remittances on economic growth and poverty reduction.
WB
AfDB
Rwanda
Remittances Study in
Rwanda and Uganda
11
DFID
Active
Uganda
Description & Objectives:
Surveys were conducted in Rwanda and Uganda to establish remittances flows,
constraints, policy environment and possibilities of reducing transaction costs. Reports
were discussed with stakeholders in the two countries and recommendations agreed.
Technical assistance programs to be developed and implemented in the two countries.
The main objectives will be to assist in reducing transaction costs and improve data
collection. Explore the regulatory environment constraining to flow of remittances and
possible ways of reducing transaction costs.
70
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
DfID
12
Project name
Technology Program on
Branchless Banking - Phase
II
Project
status
Country specific or
regional
Description & Objectives:
Overall purpose of the Technology Program is to use branchless banking to increase
the number of poor people who have convenient access to a broad range of affordable
financial services. Specifically on remittances, the program will pioneer methods and
diagnostic work to demonstrate the feasibility of branchless banking approaches for
cross-border remittances. Promote use of innovative technologies in the area of
remittances.
Active
CGAP
Description & Objectives:
Strenghthen knowledge on remittances to Africa with a focus on roles of Central Banks,
remittances services providers, diasporas, and households.
France Government
13
WB Africa Migration Project
Active
All Africa
WB
Italian Cooperation (MFA)
WMIDA - Migrant Women
for Development in Africa
14
Active
All Africa
IOM
15
16
France
France
Inquiry on Remittances from
France in the West African
Region
Co-development Savings
Account (CED) and Codevelopment Savings Pass
(LEC)
Active
Active
WAEMU -UEMOA
Description & Objectives:
Research on financial behavior - including remitting habits - of migrant women in Italy;
The website compares costs and services (transfer speed and modality) made available
by banks and MTOs in Italy to transfer remittances to 14 migrants' countries of origin,
including Western sub-Saharan countries. It includes elements for the enhancement of
migrants' financial literacy. Support to social and entrepreneurial projects promoted by
migrant women from Western subsaharan Africa residing in Italy for the socio economic
development of their country of origin.
Description & Objectives:
Meetings with private partners, migrants' associations and international partners. In
light of the Aquila 5*5 objective, the Ambassador Pierre Duquesne was mandated by
the three French ministers concerned to lead an inquiry dedicated to remittances from
France (mapping, determining factors, limits to competition, identification of good
practice and regulatory or technological measures that could contribute to enhanced
competition and transparency on the market and cost reduction).
Description & Objectives:
The co-development savings plan (CED and LEC) was created in 2007. It is intended to
encourage migrants settled in France to make productive investments in the countries
of origin. The co-development savings pass and the co-development savings account
are two complementary products. Both are intended to encourage migrants settled in
France to make productive investments in their country of origin.
71
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
17
18
19
20
21
France
France
France
Project name
www.envoidargent.fr
MIDDAS Research Project
Migration and Development
International Conference
France
Study on Techonological
Innovations
DfID
Making Financial Markets
Work for Poor People in
Southern Africa (FinMark
Southern Africa)
Project
status
Pipeline
Active
Active
Country specific or
regional
All Africa
Mauritania
All Africa
Description & Objectives:
Research on migrants, their links with their countries of origin, remittances, migratory
trajectories, etc. Conduct analysis on migrants and families of origin in Senegal,
Guinea, and Mauritania with a focus on remittances.
Description & Objectives:
Third international "Migration and development conference" scheduled on the 10th and
11th of September (Paris School of Economics). Based on a joint AFD-World Bank
academic research network. Foster international research on migration.
Description & Objectives:
Link remittances to additional rural financial services and products, promoting
partnerships between Banks and MFI's to get the final beneficiaries, to experiment new
electronic banking products, to develop and test innovative payment systems in
remittances receiving countries (pre-paid cards) .
Pipeline
Active
Description & Objectives:
The new version of this website has been developed with the stakeholders : the banks,
the transfer agencies and the associations of migrants. Develop a new version of the
website to serve as a platform for communication between all stakeholders in the field
of remittances, to better suit migrants' needs and to improve cost reduction from
France.
SADC -CDAA
Description & Objectives:
FinMark Trust will support the Committee of Central Bank Governors to integrate
payment systems, and inform the SARB/National Treasury policy review process on
remittances. It is targeting a 30% reduction in average cost of sending remittances in 5
key remittance corridors, from South Africa to other SADC countries.
72
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
Project name
Project
status
Country specific or
regional
Description & Objectives:
Financial Inclusion, in cooperation with the UK Treasury, to ensure that migrants use of
remittances services are used as an entry point for wider financial services; Monitoring
compliance with the UK Remittances Customer Charter; Providing a platform for
education on the new Payment Services Directive; Monitoring and disseminating
developments in the area of remittance payments by mobile phone and stored value
cards; providing a forum for Money Transfer Organizations, consumers and other
stakeholders to discuss common issues; other activities, including research, that can
help reduce the cost of sending remittances from the UK to developing countries. UK
market focused: Greater transparency in the market for remittances, more competitive
remittance markets, better informed remittance consumers, greater use of formal
transfer channels, reduced financial exclusion, better information for government and
providers.
DfID
The UK Remittances Task
Force
EIB
Technical Assistance to
Union Tunisienne des
Banques
24
GIZ
Effects of the Financial and
Economic Crisis on
Remittances
Active
All Africa
25
GIZ
Geldtransfair.de
Active
All Africa
Description:
Price comparison website, dissemination of information in migrant communities.
GIZ
Remittances as Part of the
Financial System
All Africa
Description:
Creating an analytical framework and make recommendations on how to promote
remittances from a financial sector development perspective.
27
GIZ
Remittances and Social
Protection
Active
All Africa
Description:
Analysing relevance of remittances for different instruments and areas of social
protection and make recommendations on how to approach the issue through technical
assistance.
28
GIZ
TransferPlus
Active
All Africa
Description:
Practical guideline and tool to analysing and planning remittances projects in
development cooperation.
22
23
26
Active
Active
Active
Tunisia
Description & Objectives:
Increase savings and use of banking services for transfer purposes by Tunisian
migrants. Chanel remittances to investment projects, notably small-scale projects, as
well as infrastructure projects financed by public-private partnerships.
Description:
The study comprises research on the effects of the financial and economic crisis in
eight different countries (Tajikistan, Albania, Georgia, Mali, Philippines, Nepal, Armenia
and Uzbekistan).
73
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
Project name
Project
status
Country specific or
regional
Mali
29
ILO
Micro-insurance supported
by remittances
Active
Senegal
Comoros
30
ILO
Linkages between
migration, remittances and
insurance
Améliorer l’impact des
transferts de fonds des
travailleurs migrants sur le
développement au Sénégal
par l’éducation financière
31
ILO
32
Plateform d'appui au
Secteur Privé et à la
Italian Cooperation (MFA)
valorisation de la diaspora
sénégalaise en Italie
33
Private Sector Development
Italian Cooperation (MFA)
Facility for SME
Active
All Africa
Active
Senegal
Active
Senegal
Active
Ghana
Description & Objectives:
The project is about assessing the feasability of a linkage remittances and health
microinsurance in the 3 countries. It will include quantitative study both in France and in
the countries of origin to determine amount sent by migrant and its usage, as well as
willingness to participate to an insurance mechanism. Surveys in France have been
conducted and the consultant is doing the analysis. Studies in countries of origin are
planned in the first trimester of 2011. Evaluate the feasibility of using remittances from
France to cover health insurance costs of recipient families in Mali, Senegal and
Comoros.
Description & Objectives:
The consultant has been recruited and final report should be provided by end of
September. The study will include a review of existing experience worldwide, including
Africa, and will also include interviews with key experts. I may pass the contact
information of some of you to the research team, but will ask you for approval before
doing so. Paper on the potential linkages between migration, remittances and insurance
commissioned by the Microinsurance Innovation Facility of the ILO .
Description & Objectives:
Cette initiative est engagée dans le cadre du programme « Améliorer les capacités
institutionnelles pour la gouvernance des migrations de main d’œuvre en Afrique du
Nord et de l’Ouest », mis en œuvre par le Bureau Régional de l’OIT pour l’Afrique, en
collaboration avec le programme du BIT pour les Migrations internationales à Genève.
Cette initiative s’inscrit dans la collaboration avec le projet « Bonne Gouvernance des
Migrations de main d’œuvre et son lien avec le développement » et le Programme
Finances solidaires. Cette étude développe un cadre précis pour définir une stratégie
abordant les questions d’élaboration de produits financiers répondant aux besoins des
migrants et de leurs familles, d’éducation financière et de partenariats possibles entre la
diaspora et les communautés d’origine.
L'étude a été finalisée en juillet 2010, et ses conclusions et recommandations
présentées en juillet 2010 aux partenaires sénégalais du projet, afin de définir un plan
d'action pour mise en œuvre consécutive. Suite à cet atelier, un plan d'action a été
défini. Le BIT est en train de mettre en place un programme d'éducation financière pour
les migrants et leurs familles, à la suite de cet atelier.
Description & Objectives:
Développement du secteur privé, microfinance.
Description & Objectives:
Ghanaian entrepreneurs in Ghana and diaspora in Italy.
74
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
34
MinBuZa
Project name
Geldnaarhuis Website
Project
status
Active
Country specific or
regional
All Africa
35
USAID
African Diaspora
Marketplace Competition
Active
All Africa
36
USAID
Comoros Remittances
Project
Active
Comoros
37
38
USAID
USAID
Migrant Remittances
Newsletter
West Africa Cross-Border
Remittances Pilot
Active
Active
All Africa
WAEMU -UEMOA
Description:
Expansion of the website to include more countries and more money transfer providers;
promotional activities with the objective of making the website self-sustainable by the
end of 2009 (by means of private sector financing).
Description & Objectives:
The competition will seek innovative and entrepreneurial project proposals from the
African Diaspora and Diaspora-led organizations, offering grants, technical assistance,
as well as access to finance for the winners. Promote African Diaspora
entrepreneurship and investments in Africa.
Description & Objectives:
Conduct feasibility and scoping study for a small initiative in Comoros to support two
community banking institutions.
Description & Objectives:
Migrant Remittances is a quarterly e-newsletter providing information about news and
trends in migrant remittances, the latest in remittances research, and links to valuable
publications and events. The newsletter is a co-publication of USAID and DFID. It is
aimed at USAID staff, donors, financial service providers, and other interested parties.
Description & Objectives:
USAID/West Africa is supporting the introduction of cross-border, multi-currency
transactions over the mobile phone in the West Africa Region beginning with Ghana,
Nigeria, and Senegal/UEMOA. The project seeks to equip intra-regional traders, intraregional remittance senders, and the unbanked, with legal options to cost effectively
transfer money over the phone across the West African region, where a minimum of
US$10billion crosses the borders in cash annually. The project will identify barriers to
implementation and organize a pilot program for money transfers between Ghana,
Nigeria, and Senegal/UEMOA. The project is currently in the review and evaluation
phase.
75
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
Project name
Project
status
Country specific or
regional
Description & Objectives:
Payments and securities settlement systems are important components in the financial
infrastructure of any country. Their safety and efficiency is instrumental to achieve
higher stability of the whole financial system and to support economic development.
Harmonized settlement arrangements across countries can foster economic and
financial integration. Payments and securities settlement systems differ greatly in Africa
when it comes to their reliability, technological development and efficiency. In the last
decade or so, several countries have engaged in more or less comprehensive reforms
of their national payments systems, although results have differed depending on the
nature of the program, the stage of development, or the sub-region involved.
International remittances represent another important element of the financial market
for the African continent, as they have become an increasingly important resource for
many countries. The market for remittances is characterized, in almost all the African
countries, by inefficiencies, distortions, high prices and scarce transparency and
competition.
39
WB
Coordination of Payment
Systems
Active
All Africa
In this context, the Payment Systems Development Group has worked with the WB
Africa Region and other partners to: 1) raise awareness on payment, remittance and
settlement systems international standards and best practices at both the individual
country and regional level; 2) create a cooperative framework for sustainable
development in the payment system space in Africa.
An important activity has been to deploy international expert teams in selected
countries, comprising WB staff and senior central bankers from G-10 and other African
countries, to undertake a review of the payments, remittance and securities settlement
systems. The missions were prepared and executed in close coordination and
cooperation with local authorities. The methodology used is an adaptation of the
approach followed for the highly successful experiences such as the Western
Hemisphere Payments and Securities Clearance and Settlement Initiative (WHI), the
Arab Payments and Securities Settlement Initiative (API), and the Commonwealth of
Independent States Payments Initiative (CISPI). The expert teams prepared confidential
reports based on international standards and best practices identifying the main
shortfalls in payment and securities settlement systems and the policies, strategies and
actions to enhance their safety and efficiency. The program also benefited from the
active coordination with the Southern African Development Community (SADC)
payment system project, initiated with support from the World Bank in the late Nineties,
and coordinated by the South African Reserve Bank.
76
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
40
WB
Project name
Implementation of the WBBIS General Principles for
International Remittance
Services
Project
status
Active
41
WB
Remittances Prices
Worldwide Database
42
World Bank, Africa
Region (Financial &
Private Sector
Development
Department)
Future of African
Active
Remittances (FAR) Program
43
OECD
Effective Partnerships for
better Migration
Management and
Development
Active
Active
Country specific or
regional
All Africa
All Africa
EAC -CAE
WAEMU -UEMOA
Description & Objectives: The effort is global, but important interventions are being
activated in Africa. This is done leveraging the sub-regional payment system groups of
African central banks (e.g. SADC, Arab Payment System Committee) and the rest of
the infrastructure of the regional initiatives managed by the WB's Payment Systems
Development Group (e.g. the International Advisory Councils of the Arab Payments
Initiative and the SADC initiative). Country assessments have been conducted in
Morocco, Nigeria, Uganda and are in the pipeline for Rwanda, Egypt, and the countries
of the Monetary union of West Africa.
Description & Objectives:
The main objective of the establishment of the African Remittances Database on the
cost of remittances is to increase transparency in the remittances market and to provide
migrants with complete and reliable information on all the components of the remittance
transactions. The database will also provide policy makers, industry players and
researchers with relevant remittance market information and useful tools to identify
critical areas of policy and business interventions and to increase competition and
transparency in the market. Providing complete information on the cost of remittances
will stimulate competition among remittance service providers and ultimately induce a
reduction of the average costs. As a result, remittance senders and recipients would
benefit transparent, efficient, less costly remittance services. The database will cover
approximately 40 corridors to and within the most relevant remittances markets in the
African continent.
Description & Objectives:
The FAR initiative is designed to help transform the remittance market for SSA which,
to date, has lagged far behind the substantial progress made in other regions of the
world over the past decade. The plan of action, with an ambitious timetable for
implementation, combines regulatory reform with direct engagement of the private
sector and other remittance stakeholders. Attention will also be directed at linking up
remittances to MFIs, particularly in rural areas, and promoting mobile banking.
Description & Objectives:
In keeping with the geographic and thematic dimensions of the project, the Effective
Partnerships project has set an objective of producing 8 Working Papers. Two concept
papers on each theme (governance; labor markets) and three papers for each region
(Central America; West Africa): one on the regional governance of migration and two
“case studies”, empirical papers on migration and labor markets. Remittances to Africa
will be studied both in the governance and the labor market perspectives
Results will be presented in two dissemination workshops, one in Central America, the
other one in West Africa, as well as in a final conference to be held in Paris in June
2011.
44
European Union (9th
EDF)
Observatory on African,
Caribbean and Pacific
Active
WAEMU -UEMOA
Description & Objectives:
Key activities include consolidating existing migration data, facilitating exchanges of
77
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
Project name
Project
status
Country specific or
regional
Migration
EAC -CAE
Switzerland (missing cofunding still)
SADC -CDAA
CAEMC -CEMAC
45
IOM, with ACP
Observatory on Migration
technical support
MinBuZa
46
World Bank
47
48
MinBuZa
MinBuZa
Study on remittances flows
to Benin
Workshop on Bilateral
Remittances Corridor
Sudies : Sending money
from the Netherlands
IS-Academy Migration and
Development - Research on
the Economic and Social
Remittances Behavior of the
Highly Skilled Migrants
IS-Academy Migration and
Development - Research on
Financial Remittance in
African Post-Conflict Areas:
A Livelihood Approach
Active
Pipeline
Benin
Morocco
Ethiopia
Active
Burundi
Morocco
Ethiopia
Active
Burundi
expertise and research results among the network members, and to help train, support
and link multi-disciplinary South specialists and experts to collect, process and
disseminate policy-oriented information on human mobility within the ACP. To this end,
an interactive website is being developed with databases for inscription of migration
experts from ACP countries as well as on existing documents and information on intraACP migration. The network of research experts and institutions will be continuously
extended to cover a larger spectrum of countries within the ACP regions. A
methodological guide is being devised to ensure a systematic and harmonized
approach to data collection, processing and analysis on migration information.
Once the Research Action Plan is adopted at the end of October, research projects will
be developed according to the demand identified in the 12 pilot countries. A particular
focus will be the impact of South-South remittances on human development.
Description & Objectives:
Activities will include preparing a survey for 500 households in Benin receiving
remittances with a view to studying the use of migrants' transfers and to improve their
impact on the well-being of recipients. Furthermore, a capacity building workshops is
planned for researchers, research institutions and government officials to identify and
develop policies and initiatives linked to remittances, notably the integration of
remittances in Benin's PRSP. In addition, a wide dissemination of the results will be
promoted via the website to encourage exchanges with emigrants from Benin.
Description & Objectives:
The purpose of the workshop is to follow up on the set of recommendations made in the
studies on remittance corridors between the Netherlands and Morocco, Afghanistan
and Suriname.
Description & Objectives:
The purpose of the IS-Academy Migration and Development is to close the gap
between research and policy. Research is conducted on different topics in the migration
and development field, and one of them is remittances. Researcher is Özge Bilgili, PhD
at Maastricht Graduate School of Governance.
Description & Objectives:
The purpose of the IS-Academy Migration and Development is to close the gap
between research and policy. Research is conducted on different topics in the migration
and development field, and one of them is remittances. Researcher is Sonja Fransen,
PhD at Maastricht Graduate School of Governance.
78
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
49
EC
Project name
REMADE (cofunded by EU,
implemented by Stichting
HIVOS) (€ 1 048 042.53
total cost - EC contribution €
838 433.53)
Project
status
Active
Country specific or
regional
Ghana
Benin
Burkina Faso
Ethiopia
50
EC
Harnessing the potential of
migration for development
by linking MFIs
(Microfinance Institutions)
with immigrant associations.
implemented by Oxfam
Novib cofunded by the EU.
Ghana
Active
Kenya
Mali
Description & Objectives:
Objectives: 1)Strengthening the link between migration and development by fostering
the Diaspora to strengthen the bonds with their communities of origin, make their
remittances more effective and promote circular migration and counter brain-drain by
development of the private sector in Ghana. 2) Improving the climate for economic
development the Ghanaian government is one of the top 10 reformers in 2006/2007,
according to Doing Business 2008 report of the World Bank. With positive reforms for
starting a business, trading across borders, getting credit, enforcing contracts and
registering property, the Ghanaian government will encourage the non residential
Ghanaians to contribute to the development of the private sector in Ghana. 3)
Establishment of healthy Small and Medium Enterprises (SMEs) by returning migrants
through a more effective use of remittances for economic development and adequate
business support structures.
Description & Objectives:
Contributing to improved capacities of immigrant associations with members originating
from Sub- Saharan Africa (SSA) countries (Benin, Burkina Faso, Ethiopia, Ghana,
Kenya, Mali, Nigeria, Senegal, Tanzania, and Uganda) which are based in 10 EU
countries (The Netherlands, UK, France, Germany, Italy, Belgium, Luxembourg, Spain,
Switzerland, and Sweden) to actively support the development of their countries of
origin and to enable 10 MFI's facilitate transfer of migrant remittances in a safer and
cheaper manner.
Nigeria
Senegal
Tanzania
Uganda
51
EC
Promoting Innovative
Migrant Remittances in
Africa, Asia, Eastern Europe
and Middle East (global
Completed
initiative) cofunded by the
EU (4 M€ out of 6,8 M€) and
implemented by IFAD
Description & Objectives:
The objective was to support innovative remittance services that are cost-effective,
easily accessible, and that widen the economic opportunities of the rural poor. This was
achieved through the launch of the Financing Facility for Remittances (FFR) that
initiated a demand-driven, competitive process to select the strongest project proposals.
The FFR aims to stimulate partnerships between credit unions, postal networks, banks,
international money transfer and local financial service providers. The FFR continues
under funding from Spain, Belgium and Luxembourg.
79
Project Overview
Brief description & comments on project's objectives
N°
Donor partners
52
EC
Project name
Leveraging Remittances to
promote Migrant
Entrepreneurship. Cofunded
by EU (total: € 779.687,52
EC contribution €
618.993,92). Implmenting
partners: Stichting Intent,
IntEnt Surinam Foundation,
Ghanaian Investment
Promotion Centre
Project
status
Completed
Country specific or
regional
Ghana
Description & Objectives:
1. Promoting efficient money transfer systems for remittances and productive
investment of remittances 2. Enhancing the role of Diaspora in macro economic
development of the countries of origin, by promoting productive investment and brain
circulation. 3. Improving remittance transfer systems by implementing a financial
system to use remittances from the EU for provision of local loan financing / seed
capital to migrant entrepreneurs in Surinam and Ghana. 4. Supporting local banks in
Ghana and Surinam in the field of remittances and loan provision to migrant
entrepreneurs.
80
Attachment 1. The Nineteenth APEC Ministerial Meeting
Sydney, Australia
5-6 September 2007
Joint Statement
We, the APEC Ministers, 23 met on 5-6 September in Sydney to participate in the19th Asia-Pacific Economic
Cooperation (APEC) Ministerial Meeting.
The meeting was co-chaired by the Hon Alexander Downer MP, Minister for Foreign Affairs of Australia and the
Hon Warren Truss MP, Minister for Trade of Australia. We welcomed the participation in the meeting of the APEC
Business Advisory Council (ABAC) and the APEC Official Observers. 24
Under the theme of “strengthening our community, building a sustainable future”, we reviewed developments in the
region, the achievements we have made this year and the challenges facing our future.
The Asia-Pacific region remains the engine of world growth. Incomes are rising, poverty is declining, employment
is growing, investment is increasing and trade is expanding. Growth in the past year has been solid and is expected
to continue in 2008. However to sustain this momentum, we need to address the challenges that face us in the area
of global trade imbalances, protectionism, urbanisation, demographic changes, environment, energy, food safety,
terrorism, crime, governance, women’s empowerment, pandemics and 21 st century skills. By facilitating economic
growth, intensifying economic and technical cooperation, strengthening our integration and enhancing our sense of
community, we will work actively in APEC to create greater prosperity in the region.
Promoting prosperity through a commitment to trade and economic reform
- Continuing support for the WTO and the multilateral trading system
An open, rules-based, multilateral trading system under the World Trade Organization (WTO), and the successful
conclusion of the Doha Development Agenda (DDA), with an ambitious and balanced outcome, provides the best
means for sustaining economic growth.
We reviewed with WTO Director-General, Pascal Lamy, the outlook for the DDA and in the light of this discussion
recommended that Leaders adopt a stand-alone statement on the negotiations. We instructed our Geneva WTO
representatives to work through the APEC caucus to provide active support for the Director-General and the
negotiating group chairs in their efforts to broker agreement and bring the negotiations to a successful conclusion.
We welcomed progress in negotiations of the Russian Federation’s accession to the WTO and underlined the
importance of efforts to expedite these negotiations.
We endorsed the 2007 Committee on Trade and Investment (CTI) Annual Report to Ministers, which provides an
overview of CTI’s work program in pursuit of advancing the Bogor Goals of free and open trade and investment in
the Asia-Pacific region.
23
Australia; Brunei Darussalam; Canada; Chile; the People's Republic of China; Hong Kong, China; Indonesia; Japan; the
Republic of Korea; Malaysia; Mexico; New Zealand; Papua New Guinea; Peru; the Philippines; Russia; Singapore; Chinese
Taipei; Thailand; the United States of America; and Viet Nam
24 The Pacific Economic Cooperation Council, the Secretariat of the Association of South-East Asian Nations, the Pacific Islands
Forum
81
- Regional Economic Integration
We discussed the impact of regional economic growth and development on the accelerating process of economic
integration. We finalised and submitted to our Leaders a comprehensive report on strengthening regional economic
integration, including on a Free Trade Area of the Asia-Pacific as a long-term prospect. This report outlines a wide
range of practical actions that APEC member economies can take to promote and reinforce the integration taking
place in the region. It builds on our shared commitment to achieving economic growth and prosperity through
concrete actions supported by technical assistance and capacity-building programs.
- Regional Trade Agreements/Free Trade Agreements (RTAs/FTAs)
High-quality and comprehensive RTAs/FTAs can advance economic openness in the region and strengthen regional
economic integration. They can also serve as building blocks for the further development of the multilateral trading
system and in realising APEC’s Bogor Goals. We reaffirmed the importance of the model measures for RTA/FTA
chapters as a capacity-building tool and non-binding reference, and endorsed model measures for three additional
RTA/FTA chapters. Model measures have now been developed for ten RTA/FTA chapters. We aim to complete this
work next year.
In response to business community concerns, we agreed to explore with business the scope for rationalising
RTA/FTA preferential rules of origin and other relevant provisions related to rules of origin. We instructed officials
to report to next year’s meeting of Ministers Responsible for Trade (MRT) on this issue.
- Individual Action Plans (IAPs) and Collective Action Plans (CAPs)
We welcomed the SOM Chair’s 2007 IAP Summary Report: the progress economies are making towards reaching
the Bogor Goals. We also welcomed the seven completed 2007 IAP peer reviews (Australia; China; Hong Kong,
China; Japan; Korea, New Zealand and Chinese Taipei) as well as further refinements to the IAP peer review
process. We endorsed the revised CAPs being implemented by all APEC member economies in pursuit of APEC’s
free trade and investment goals.
- Trade Facilitation
We welcomed APEC’s second Trade Facilitation Action Plan endorsed at the July MRT. This plan sets out a
framework and timetable for achieving a further five per cent reduction in trade transaction costs by 2010. It
focuses on customs procedures, standards and conformance, e-commerce and mobility of business people. We
welcomed its greater focus on collective actions, capacity building and its linkage with APEC’s wider business
facilitation agenda. We agreed to work closely with the Asia-Pacific business community, including ABAC, in its
implementation.
We launched a Data Privacy Pathfinder initiative which will enable stakeholders (officials, regulators, industry and
consumers) to work together to better protect private information in the APEC region and build confidence andtrust
in electronic commerce. The Pathfinder will support business needs, reduce compliance costs, provide consumers
with effective remedies, allow regulators to operate efficiently, and minimise regulatory burdens. Thirteen APEC
members (Australia; Canada; Chile; Hong Kong, China; Japan; Korea; Mexico; New Zealand; Peru; Chinese Taipei;
Thailand; United States and Viet Nam) have agreed to participate and other members are actively considering
joining the initiative.
We agreed to expedite work to support the implementation of international trade “Single Windows” across APEC,
with a view to the eventual interoperability of systems through the use of recognised international instruments and
standards. “Single Windows” allow businesses involved in trade and transport to electronically submit standardised
information and documents at a single entry point to fulfil all import, export and transit related regulatory
82
requirements.
We are pleased that the United States and Mexico have joined the APEC Business Travel Card (ABTC) scheme,
with the United States as a transitional member. There are now nineteen member economies who are participants.
We noted the significant benefit of the ABTC to business and urged those economies not yet part of the scheme to
take measures to join as soon as possible.
We noted the conclusions of the study commissioned for APEC from the World Bank on "Transparency and Trade
Facilitation in the Asia-Pacific: Estimating the Gains from Reform". The study indicates that the collective trade
performance of APEC economies would be boosted by a massive USD$148 billion from greater trade policy
predictability and simplification. We will consider the findings in the further development of APEC's trade
facilitation and transparency agenda.
We welcomed continuing efforts to expand collaboration in dealing with issues of electronic security, to build
confidence in the use of electronic networks, and to support policy and regulatory reforms that facilitate competition
and the expanded reach of networks.
- Intellectual Property Rights and the Digital Economy
We continue our efforts to strengthen protection and enforcement of intellectual property rights (IPR) in the region;
an endeavour that fosters the development of knowledge-based economies, expands investment opportunities, and
promotes economic growth. We also acknowledged the importance of a comprehensive and balanced intellectual
property system, as well as an environment that encourages creation and innovation and provides the tools for
successful management and exploitation of IPR.
We welcomed the progress APEC has achieved this year on the IPR front, including the launch of the Cooperation
Initiative on Patent Acquisition Procedures, the development of the Best Practices Paper on Innovative Techniques
for IPR Border Enforcement, and the creation of the IPR Guidelines on Capacity Building. We welcomed APEC’s
attention to satellite and cable signal theft and called for APEC, in accordance with member economies' respective
international obligations and legal systems, to explore ways to effectively address this problem, which harms
copyright owners and the broadcasting and cable industries. We also agreed to continued efforts by APEC
economies to combat the sale of counterfeit and pirated goods at markets involved in this activity and to address the
challenge this represents to IPR protection around the world. We urged continuing implementation of the APEC
Anti-Counterfeiting and Piracy Initiative and the six subsequent IPR Guidelines and agreed to undertake further
work to strengthen IPR protection and enforcement.
We agreed to continue work on trade and the digital economy as a means to encourage competition, promote
efficiency, and spur innovation. We encouraged further participation in the Pathfinder on Technology Choice
Principles. We reiterated the importance of the Information Technology Agreement (ITA) in promoting trade, jobs
and investment in the IT sector and encouraged closer cooperation to ensure that duty-free treatment on all ITAcovered products is maintained.
- Investment
We discussed the critical importance that domestic and foreign investment can play in promoting further economic
growth and development and noted the conclusions from the recent meeting of APEC Finance Ministers on ways to
strengthen investment in the region.
We welcomed the analytical and survey work undertaken in APEC and the policy dialogue conducted in
collaboration with ABAC and international organisations this year to identify the barriers in the region that have the
greatest impact on investment. We instructed officials to prepare an Investment Facilitation Action Plan for 2008-
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2010 for consideration at the 2008 MRT meeting. In order to further the Bogor Goals and deepen regional
economic integration, the plan will provide greater coherence to APEC’s investment work, promote better
understanding of the elements of a sound investment policy regime and address identified capacity building needs.
The plan will recognise the importance of further public-private sector dialogue.
- Anti-Corruption and Transparency
We attach high priority to fighting corruption. Corruption poses a threat to economic growth by undermining the
rule of law, distorting markets and deterring investment. We endorsed a model Code of Conduct for Business, a
model Code of Conduct Principles for Public Officials and complementary Anti-Corruption Principles for the
Private and Public Sectors. We encouraged all economies to implement these codes and welcomed agreement by
Australia, Chile and Viet Nam to pilot the Code of Conduct for Business in their small and medium enterprise
(SME) sectors. We also urged those member economies yet to ratify the United Nations Convention against
Corruption to quickly do so, where appropriate.
We endorsed the actions for Fighting Corruption through Improved International Legal Cooperation, which
reaffirms our strong commitment to prosecute acts of corruption and to strengthening cooperation on extradition,
mutual legal assistance and the recovery and return of proceeds of corruption.
We welcomed the report on APEC economies’ implementation of the APEC Transparency Standards and pledged to
close those remaining gaps in implementation, including through targeted capacity building activities and other
initiatives, where appropriate.
- Improving the Business Environment and Structural Reform
We discussed the importance of structural reform in realising the full benefits of trade and investment liberalisation
and improving the business climate in the region.
We endorsed a detailed and ambitious forward work program covering each of the five themes identified in the
Leaders’ Agenda to Implement Structural Reform - regulatory reform, competition policy, corporate governance,
public sector governance and strengthening economic and legal infrastructure. We noted that this work program
strongly complements the call by APEC Finance Ministers for continued structural reform in order to improve the
investment climate in the region, promote regional economic integration and underpin sustainable economic growth.
We further agreed that structural reform measures should be tailored to the circumstances of each economy. We
welcomed the offer by Australia to convene a meeting on structural reform at ministerial-level in 2008.
We endorsed the 2007 APEC Economic Policy Report and welcomed its focus on public sector governance and on
using institutions to support structural reform. We agreed that APEC can help strengthen existing institutions that
promote and implement structural reform and should develop a capacity to support member economy efforts to
implement reform and thereby improve competitiveness. We called for further work on this issue in 2008, including
in co-operation with relevant research networks in the region.
The SME sector is an important driver of growth for all of our economies and we reiterated the importance of
further work to promote SME competitiveness and private sector development. In this regard, we welcomed the
Private Sector Development Agenda launched this year by the SME Working Group to assist the development of the
SME sector. The Agenda promotes better regulatory and business practices by using the World Bank’s Ease of
Doing Business indicators as a guide to best practice. We welcomed the involvement of other APEC fora to
accelerate this important work.
- Economic and Technical Cooperation (ECOTECH) and Capacity Building
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Economic and technical cooperation remains a vital pillar of APEC. We endorsed the 2007 APEC Senior Officials'
Report on Economic and Technical Cooperation, highlighting the priorities and achievements of the Working
Groups and Taskforces. We noted outcomes from a broad range of economic and technical capacity building
initiatives across APEC that will help realise our goal of bridging development gaps among economies. We
reiterated the importance of continued capacity building work to APEC’s agenda, including in the areas of
resources development.
We commended work to revitalise the SOM Steering Committee on ECOTECH (SCE) policy agenda and
encouraged its continued strategic guidance to APEC’s economic and technical capacity building activities. We
acknowledged ongoing efforts to strengthen the coordination between APEC fora and to streamline operating
processes as part of the broader program of APEC reform. In this context, we endorsed the new Guidelines for Lead
Shepherds/Chairs of APEC Working Groups and SOM Taskforces, and the Guidelines for the establishment of new
APEC fora.
We welcomed the implementation of the 2006 Review of APEC Fora which will ensure greater efficiency in the use
of scarce resources. We endorsed the establishment of a Health Working Group and a Mining Task Force and the
incorporation of the Working Group on Trade Promotion into the SME Working Group and the Social Safety Net
Capacity Building Network into the Human Resources Development Working Group. We recognised the
importance of the ongoing program of independent assessments to ensure APEC fora are strategic and effective. We
encouraged further fora review and streamlining by the SCE.
We endorsed the efforts by officials to develop greater collaboration, as appropriate, with international organisations
on research and policy analysis. We encouraged fora to further engage with ABAC on their workplans and
mandates, where appropriate.
We welcomed the voluntary financial contribution of member economies to facilitate APEC’s capacity building
efforts. In this regard, we welcomed new contributions from the United States to the Trade and Investment
Liberalisation Fund (TILF) and APEC Support Fund (ASF) in 2007 of US$2.3 million, a commitment from
Australia to the ASF of A$4.5 million, a commitment by Russia to the ASF of US$500,000 and the ongoing TILF
contribution by Japan, US$36 million since 1997.
We recognised that the digital capability of APEC member economies is crucial in advancing APEC’s work and the
equitable development of the region. We welcomed the contribution made by the APEC Digital Opportunity Centre
in this regard and encouraged member economies to further cooperate in relevant capacity building activities.
We recognised that healthy ocean and coastal environments play a crucial role in the prosperity of the region. In this
regard, we welcomed the work undertaken this year on the implementation of the sustainable development
framework, the Bali Plan of Action, to address marine pollution, illegal fishing, overcapacity and adaptation to
climate change. We looked forward to future work that will help to conserve marine and coastal resources,
including the safeguarding of coral reefs.
We welcomed the deepening of our work on human resources development, recognising that the APEC workforce
should be equipped with 21st century skills so that it can adapt more quickly to a more open and competitive
marketplace.
Enhancing Human Security in the Asia-Pacific
We reviewed progress in APEC’s ongoing work on human security, noting with deep regret the tragic loss of human
life from recent natural disasters and acts of terrorism. Threats from terrorism, natural disasters, contamination of
the food supply and pandemics, such as avian influenza, have the potential to undermine our efforts to sustain
economic growth, raise living standards and reduce poverty in the region. We agreed on the importance of dealing
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with trans-boundary threats in a comprehensive risk management framework. We agreed that APEC’s human
security agenda should remain closely attuned to the needs of business.
- Counter Terrorism and Secure Trade
We agreed that recurring terrorist activities in the region and elsewhere demonstrates that terrorism remains a
persistent, evolving and long-term threat to our prosperity and the security of our people. Terrorism and the
proliferation of weapons of mass destruction continue to challenge APEC’s vision of free, open and prosperous
economies and we reaffirmed our commitments to meet these challenges. Business has a significant interest in
measures to mitigate these risks.
We welcomed the outcomes of the 5th APEC Secure Trade in the APEC Region (STAR V) Conference. The STAR
initiative underscores the close cooperation which is required with the private sector in order to achieve the
complementary objectives of trade facilitation and security. STAR V highlighted the benefits businesses would
derive from exploring the scope for improving the interoperability of supply chain security measures and improved
information sharing between the public and private sectors in the region. Public-Private Partnerships were an
important theme in counter-terrorism discussions.
We endorsed the voluntary APEC Food Defence Principles on prevention, preparedness, response, recovery and
effective communication. These Principles will make an important contribution to international counter terrorism
efforts to protect the food supply from deliberate contamination. We will continue our efforts to mitigate the
terrorist threat to the food supply. We welcomed the successful completion of a capacity-building program to
counter biological and chemical terrorism and underlined the continuing importance of vigilance in this area.
We welcomed APEC Transport Ministers’ agreement to further capacity building to improve security in the region’s
airports, ports and land transport networks and for co-operative work to promote consistency of security measures
and to contain costs. We encouraged continuing efforts to improve communication among APEC economies in the
event of an emergency and welcomed the test of the Aviation Points of Contact Network. We acknowledged that
securing our trade lanes is important for our continued prosperity and encouraged further work in this area. We
welcomed progress towards the establishment of the APEC Port Services Network with the proposed opening of an
office in Beijing.
We noted progress in the APEC Regional Movement Alert System by participating members, which can detect lost,
stolen and counterfeit passports and prevent improper use of travel documents and encouraged member economies
to consider participation when ready. We welcomed progress in the voluntary implementation of the APEC
Framework for Secure Trade, leading to improved cargo security through cooperation between customs officials,
and also progress made to launch and implement an initiative on the Protection of Critical Energy Infrastructure.
We identified rail and mass transit security as an area for further capacity building in the APEC region.
We recognised that the disruption of trade through terrorist attack could have serious economic consequences. A
study commissioned by Singapore has estimated the impact on APEC economies of the ripple effects of trade
disruption arising from a major terrorist attack on the global supply chain to be in the order of US$137 billion in lost
GDP and US$159 billion in reduced trade. To address this threat, we endorsed an APEC Trade Recovery Program
(TRP) to help ensure that trade recovers as quickly as possible after a terrorist attack. We encourage member
economies to explore TRP pilots on a voluntary basis. We welcomed strengthened cooperation in the area of
counter-terrorism financing and affirmed our continuing commitment to fighting money laundering, terrorist
financing, and other illicit financing. We will work closely with the Financial Action Task Force (FATF) to further
this goal.
We commended reform of APEC Counter Terrorism Action Plans and the annual identification of capacity building
opportunities to better focus APEC’s cooperative efforts.
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- Food and other Product Safety
We recognised the need to deepen our cooperation, improve on current standards and practices and strengthen
scientific risk-based approaches to food safety and other products to facilitate trade and ensure the health and safety
of our populations. In this regard, we welcomed agreement this year on the establishment of the APEC Food Safety
Cooperation Forum, co-chaired by China and Australia. This initiative will assist our work to harmonise food safety
regulations with international standards, to improve health and food safety outcomes and to establish more effective
communication networks. We agreed to develop a more robust and strategic approach to strengthening, prioritising
and coordinating regional food safety, especially in regard to increasing capacity building activities. We instructed
officials to explore ways to expand this work to include other products.
- Emergency Preparedness
Strengthening emergency preparedness is an abiding priority for APEC and promoting the economic benefits of
investing in risk reduction is an important means to achieve this.
We agreed on the importance of strengthening our capacity to build community resilience and preparedness for
emergencies and natural disasters. In this regard, we welcomed new initiatives to further cooperation between our
senior emergency and disaster management officials, business and international partners to ensure we are able to
respond in a timely and effective manner. We agreed on the importance of further building public-private
partnerships in this area.
- Health
We discussed the importance of robust preparedness plans to mitigate the social and economic impact of a possible
influenza pandemic. We reaffirmed our support for the World Health Organisation process of fully implementing
the revised International Health Regulations (2005) to prevent, protect against, control and provide a public health
response to the international spread of disease. We agreed to continue to support the World Health Organisation
Global Influenza Surveillance Network (GISN), including through the timely sharing of influenza specimens and
promoting transparent, fair and equitable access to vaccines and other benefits derived from the GISN.
We endorsed the APEC Functioning Economies in Times of Pandemic Guidelines. The guidelines, to be updated
from time to time, will help improve regional capacity for appropriate emergency management and response
planning. We recognised the significant progress achieved in implementing the APEC Action Plan on the
Prevention and Response to Avian and Influenza pandemics, and called for continued cross-sectoral work and
private sector engagement to further enhance regional preparedness. We welcomed development of the APEC
Pandemic Flu Planning Guide for SMEs as a useful preparatory tool for business. Continuing to build capacity to
prevent and respond to avian influenza and other emerging trans-boundary diseases, including at source in animals,
will promote health security.
We re-affirmed our commitment to enhance cooperation within APEC and move towards the goal of universal
access to HIV/AIDS prevention, treatment, care and support by 2010. We endorsed the Guidelines for Creating an
Enabling Environment for Employers to Implement Effective Workplace Practices for People Living with
HIV/AIDS.
- Energy Security and Sustainability
Climate change, energy security and clean development are of vital interest to APEC economies and will be a key
theme for APEC Leaders when they meet in Sydney later this week.
We welcomed the initiatives proposed by APEC Energy Ministers to address the challenges of rapidly growing
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energy demand while minimising environmental effects. Key initiatives include: to progress the development of
fossil energy technologies, particularly carbon capture and storage; to establish an APEC Energy Trade and
Investment Study and Roundtable to identify barriers to energy trade and investment, and to develop a plan of action
to help address these barriers; and to review the uptake and currency of APEC Best Practice Principles on:
Accelerating Investment in Natural Gas Supplies, Infrastructure and Trading Networks in the APEC Region;
Facilitating the Development of LNG Trade; Financing Energy Projects; and Natural Gas Trade.
We welcomed initiatives that encourage individual economies to set goals and formulate action plans for improving
energy efficiency, including the development of a voluntary APEC Energy Peer Review Mechanism, strengthened
sharing of information on energy efficiency policies and measures to promote energy efficient transport.
We agreed on the important role of market-based solutions in mobilising economy-wide efforts to address energy
security and achieve sustained reductions in greenhouse gas emissions. We welcomed further work by APEC
member economies to share experiences on the range of economic policy instruments for promoting energy
efficiency and greenhouse gas reduction.
We recognised the importance of achieving oil security, including through improving data sharing. We encouraged
efforts towards a diversified mix of energy sources to meet long-term development goals in the region. These
include the use of natural gas, biofuels from sustainably farmed crops and residues, renewable energy and nuclear
energy for interested economies. We welcomed the findings of the APEC Biofuels Task Force that biofuels from
several crops are cost-competitive at current oil prices, that biofuels can lower greenhouse gas emissions, and that
biofuels can displace a sizeable share of oil use over time.
We welcomed the promotion of broader energy cooperation, including with the International Energy Agency, which
can enhance energy data collection and sharing of knowledge on energy issues. We further noted that Energy
Ministers would receive advice on recommendations arising from meetings of regional nuclear safeguards experts.
We instructed officials to continue their work on environmental goods and services and explore ways to reduce trade
barriers in this area. We agreed that market opening in the WTO would advance our climate and energy security
goals.
Ensuring APEC is dynamic and responsive to developments in the Asia-Pacific
Further to the reform package adopted by APEC Leaders in 2006, we agreed on additional measures to strengthen
APEC’s institutional base to ensure its effectiveness and responsiveness to its stakeholders, including a 30 per cent
increase in membership contributions from 2009 to help strengthen the Secretariat. This represents the first increase
in the APEC budget since 1998. We affirmed our commitment to APEC reform and underscored that member
economies’ commitment to increasing membership contributions is linked to the continuation of processes to
streamline and professionalise APEC’s operations.
We recognised efforts to streamline and bolster APEC’s operational capacity, including the appointment of a Chief
Operating Officer in 2007, and measures to enhance project management skills and improve related processes.
We have agreed that the time has come to consider the appointment of an Executive Director for a fixed-term and
instruct officials to develop proposed conditions, responsibilities and accountability mechanisms etc for our
consideration in 2008.
We also agreed to examine ways to reduce the cost to host economies, including through holding more meetings at
the APEC Secretariat in Singapore.
We encouraged closer cooperation between APEC and the Association of South East Asian Nations to advance
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common goals, particularly in the area of capacity building.
We agreed to establish a Policy Support Unit attached to the APEC Secretariat. The unit, to be funded by voluntary
contributions, will provide analytical capacity, policy support and assist in coordinating related capacity building for
APEC’s trade, investment and economic reform agenda and related ECOTECH activities. A governance board will
oversee the Policy Support Unit and its work program will be submitted to Senior Officials for endorsement.
We welcomed the refreshed APEC logo, which represents a unifying symbol of APEC and encouraged its use by
APEC fora and host economies.
We welcomed the closer engagement between ABAC, Ministers and officials this year to progress work across the
APEC agenda, including on support for the Doha negotiations, trade facilitation, regional economic integration,
deepening of capital markets, structural reform and our human security agenda. We reaffirmed our commitment to
APEC’s goal of gender integration and increased involvement of women in APEC. We remain committed to
enhancing women’s economic empowerment across the region by enabling women exporters and entrepreneurs to
access the benefits of the global trading system and welcome the continued and constructive input this year of the
Women Leaders’ Network to our work.
We commended the APEC industry dialogues' efforts to improve the business environment in our region. We
welcomed work to facilitate customs procedures for low risk shippers and to enhance IPR awareness in the auto
sector. We commended the work on standardised labelling of chemical products and efforts to reduce adverse trade
impacts of EU chemical regulations. We also encouraged the development of best practice guidelines for chemical
regulations. We supported on going work in life sciences to promote research, innovation, and regulatory reform
and harmonisation, and to stem the flow of counterfeit medical products. We called for a study on the benefits of
investment in health innovations.
We noted the outcomes of the APEC 2007 Sectoral Ministers Meetings. We endorsed the 2007 SOM Report on
APEC’s work program including the recommendations contained therein, noted the 2007 Annual Report of the
APEC Secretariat Executive Director and approved the 2008 APEC Budget. We welcomed preparations for APEC
2008 in Peru and noted that preparations are underway for APEC 2009 in Singapore and APEC 2010 in Japan. We
welcomed the announcement by Russia that it will host APEC in 2012. We looked forward to the possible
announcement of the APEC host for 2011 in the coming days.
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