Remitting good relations

The International Fund for Agricultural Development is helping the UPU to increase money-transfer services to the rural poor.


Photo: IFAD

UPU: How many people considered poor and very poor could be helped by increased access to basic financial services and where do they live?  

Kanoyo Nwanze: Our Rural Poverty Report 2011 shows that the majority of the developing world's 1.4 billion extremely poor people live in rural areas.

For us, it is a natural link to harness the developmental potential of financial services to help not only those who actually use these services but also their families and home communities.  

How can access to such services help people lift themselves out of poverty?

Many poor, rural people receive remittances - or money sent home - from relatives working abroad. The money helps families pay for the food, clothing and shelter that are necessary to daily life.

If families have access to financial services, once these basic needs are secured, remittances can be saved and/or invested. The key to maximising the impact of remittances is saving the money in a deposit account, not under the mattress.

In this way, the funds can be lent to others in the community, while remittance recipients earn interest and build a credit history that can lead to other financial services.  

Why are remittances an important part of financial services?  

For millions of families, remittances can be the key to accessing a broader range of financial services. But, in the first place, the money migrants send home provides a lifeline out of poverty for those left behind.

In nearly 40 countries, remittances make up more than 10 per cent of gross domestic product or GDP - in some countries it is even more.

Given their sheer volume, remittances have the potential to stimulate local economies and improve life at home so that migration becomes a choice instead of a necessity.  

Why is IFAD interested in working with the UPU to increase access to remittances?

IFAD has a long experience with financial services in rural areas, which is where about one-third of the remittances go and where they play an especially important role in raising incomes and reducing poverty.

But due to the lack of infrastructure, the costs of receiving remittances can be extremely high for poor, rural people.

The UPU's global network, which is present in urban and rural communities alike in virtually every country of the world, has the infrastructure required to expand remittance services to rural areas.  

The first UPU-IFAD project on remittances is in French-speaking western Africa. How can people there benefit?

Thanks to our collaboration, 355 rural post offices in Benin, Burkina Faso, Mali, Mauritania, Niger and Senegal are now connected to the UPU's worldwide electronic payment network.

As a result, people in the rural areas of these countries no longer need to travel long distances to transfer or receive money.

Also, transfer times have been reduced from two weeks to a maximum of two days and the costs lowered significantly.

To what extent could a mid-to long- term collaboration between the postal sector and IFAD lead to actually lifting the poor and very poor out of poverty?  

It could not only help to lift the poor out of poverty but also give them the tools to become self-sufficient.

Working together with the postal sector, we hope to continuously maximise the benefits of remittances for senders, recipients and their communities. We hope to expand basic services beyond remittance payments to deposits and on to more advanced financial services.

And we hope to expand the reach of these services to every corner of the globe. Luckily the post offices are already there!  


 

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