Homeward bound: Remittances can be the difference between opportunity and calamity

15.06.2018 - June 16 is the International Day of Family Remittances, a day for reflecting on how postal operators can improve the lives of millions of women, children and men.

Photo: IFAD

A massive US$429 billion was sent home to developing countries in 2016; a figure three times greater than the official development assistance provided that year. This shows the importance of remittances to the lives of millions globally.

Studies on remittances also show that a 10 per cent increase in per capita remittances can reduce the number of people living in poverty by 3.5 per cent. Such figures are evidence that the money sent is helping people escape poverty’s gravitational pull, while offering them greater opportunities for a better life.

Remittances are so crucial for promoting development that the 2030 Agenda for Sustainable Development has specifically recognized their importance and calls for reductions in the cost of sending money home. Goal 10 on reducing inequality includes a target seeking to: “reduce to less than 3 per cent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 per cent.”

Reductions in costs are vital in Africa where the lack of infrastructure, dangers in travel and monopolies can drive up the prices. Postal operators are being viewed as a fast acting antidote to these desperate challenges. “With their broad networks reaching deep into rural and impoverished areas, post offices can offer cost effective remittances that are part of the overall push to deepen financial inclusion in countries,” said the Deputy Director General of the Universal Postal Union Pascal Clivaz.

Just as significantly, the world’s postal operators were founded on a universal service obligation—the concept of providing a network of networks for delivering letters and parcels to everyone on this planet. With Posts already delivering a public service, there is a real opportunity for them to harness existing operations to ensure that families everywhere can access financial services.  

If postal operators are to achieve this goal, however, they have to provide a broad range of digital financial services. The Universal Postal Union (UPU) recognizes the importance of this challenge.

Speaking in Nairobi on 11 June, at the 25 Annual Meeting of Assemblies of the East African Communications Organizations, the Director General of UPU Bishar A. Hussein called on postal operators to diversify their services and to leverage growing electronic transactions to strengthen their role in the supply chain. “Diversification is the only sure way for the postal organization to continue performing well in the increasingly competitive market,” he said.

Read UPU Deputy Director General Pascal Clivaz's statement on the International Day of Family Remittances.

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  1. Dirk at 19.01.2016
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