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Massimo Cirasino
Coordinator for Technical Areas 3-4, GRWG
Practice Manager, Finance and Markets Global Practice
XVI Global Remittances Working Group Meeting
Washington, DC
April 16, 2015
The Global Effort in the Remittances Arena
Updates from the World Bank
Key messages
• Entering a new phase towards remittance cost reduction with renewed
commitments and innovative interventions (2015-2020)
• Supporting Post 2015 agenda
• Towards Universal Financial Access 2020
• Global average of remittance cost continues to decline; RPW has picked
indicators of emerging challenges
• Challenges are emerge at a larger scale. Coordinated responses with key
stakeholders in order to address them with balanced solutions
• Results from ongoing Greenback 2.0 and expansion of Greenback 2.0 in
other geographic areas
2
Global efforts led by the
World Bank matched with
interventions at the
country level are bringing
down the cost of
remittance services for an
estimated cost savings
of over US$ 62.5 billion
Remittance Prices Worldwide
3
Remittance Prices Worldwide - Global Trends
In Q1 2015 the Global Average has declined reaching 7.72%, down from 7.90% last quarter and remaining below 8% for the third consecutive quarter
The International Money Transfer Operator (MTO) Index has reached its lowest average at 8.03%
Global Average and International MTO Index
4
The Global Weighted Average has declined again in Q1 2015 after having suffered from an increased in the previous quarter.
In Q1 2015 the Global Weighted Average cost of sending USD 200 was registered at 5.94% - up from the all-time low of 5.71% recorded in Q4 2014 – but still below 6%
Remittance Prices Worldwide - Global Trends
Global Average and Global Weighted Average
5.94%5
Remittance Prices Worldwide: Original 8 Countries –5x5 Objective
Global Average 7.72% - G8 Average 7.19%
The average cost of sendingremittances from G8 countriesdeclined further, reaching a newlifetime low of 7.19%, remainingbelow 8% for the fifth consecutivequarter
Six G8 countries experienced a declinein the average total cost since Q4 2014.Russia and Japan were the onlycountries to experience an increase inthe last quarter
Japan (13.43%) remains the mostexpensive sending country in the G8
France and Germany showed thelargest decreases during the last quarter
Russia remains the cheapest G8sending country and the only one withan average total cost below 5%
6
Remittance Prices WorldwideRemittance Sending Countries (Q1 2015)
7
Remittance Prices by RSP type
The cost of sending remittances throughBanks continued to decline in the lastyear; from 12.53% in Q1 2014 to 11.42% inQ1 2015
The cost of transferring through PostOffices declined by 0.24 pp in the lastyear; from 5.93% in Q1 2014 to 5.69% inQ1 2015
The cost of sending money through MTOsdecreased by 0.33 pp from 6.69% in Q12014 to 6.36% in Q1 2015
The current costs of sending remittancesthrough MTO are the second lowest in thehistory of RPW
8
Remittance Prices Worldwide Remittance Corridors
More than ¾ of the 226 corridors evaluated (76.1%) are below 10%, compared to just over half (53.7%) in 2009, and approximately ¼ of the corridors evaluated (24.3%) are already below the 5% target
117 corridors, or 51.8%, have average total costs that are between 5% and 10%
Five years ago, almost 5% of corridors had an average cost over 20%; today, only 1% do. In Q1 2009, 16% of corridors had an average cost higher than 15%; today, only 5% do
9
remittanceprices.worldbank.org 10
Entering into a new phase (2015 – 2020)
11
2009 – 2014: 5x5: Awareness & global efforts 2015 – 2020: SDG &
UFA2020
Achieving important commitments through remittances
12
• Operationalizing remittances and financial inclusion
• The G20 – DWG and GPFI
• CPMI-WB Task Force on PAFI
• WBG’s commitment to Universal Financial Access 2020
• Remittances to leverage transaction accounts
• Operations in countries – Financial Inclusion Support Framework
• Continuing to explore and innovate approaches
• Innovative approaches to Greenback 2.0
• A new remittance program in East Europe and Central Asia
supported by State Secretariat for Economic Affairs (SECO)
Updates on Greenback 2.0
13
• Pick Remit is getting ready for a launch
• Innovative tool for increasing transparency
• Reports are being published
• 1st Greenback Working Paper: Greenback 2.0 Working Paper on
remittances and economic crisis
• Reports from London and Montreuil will soon be published
• New locations are joining Greenback 2.0
• Canada
• Haiti
• Eastern Europe and Central Asia (Balkans)
• East Asia
Addressing Emerging Issues
14
• De-Risking
• Implementation of a survey to identify drivers and impact of the
phenomenon of de-risking in the remittances market (the G20)
• Coordinated dialogue with FATF, national regulators and
international bodies like the IMF, the G20 and the Commonwealth
Secretariat, to support an organic approach and balanced solutions
• Monitoring ‘de-risking’ impacts through RPW: 18 MTOs were
removed from RPW due to account closures, affecting 7 sending
countries and 11 receiving countries
• GRWG’s special purpose note back in 2013: Barriers to Access to
Payment Systems and Proposed Solutions
The World Bank’s role in Supporting Cost Reduction Objectives
Global
Challenges
and
Solutions
through
Innovative
Approaches
Leadership
Innovation
Knowledge
GRWG G20
Supporting Partners such as CPMI, UN, BTCA, FISF
Remittance Prices Worldwide
GP and GP guidance reports
Knowledge dissemination: Policy briefs,
Price comparison database methodology and
certification
PAFI
Outreach/Conferences: GFRD 2015 (June
16-19 in Milan), FI Week (September in
Istanbul), ASEAN conference (November in KL)
Project Greenback
Project Greenback 2.0
Pick Remit
Comparative Cost Analysis Framework
15
The World Bank’s role in Supporting Cost Reduction Objectives
Regional
Challenges
and
Solutions
SADC
ASEAN
PAPRICEMLA
AIR
Balkans
CEMLA/IDB Postal
Fin
Service
SAPI
Global forums on
remittances Asia 2013
In partnerships with bi/multilateral donors, IOs, regional fora,
governments and central banks.
LACRP
16
Regional Conference
on MSBs 2014
Global forums on
remittances and
Development 2015
ASEAN Conference
on Remittances, FI,
Payments (2015)
Global Forum on Remittances and Development 2015
June 16-19, 2015
Milan, Italy
17
Celebrating the first International Day of Family Remittances on June 16,
2015
Migration and Remittances: Recent
Developments and Outlook
Dilip Ratha
16th
GRWG, Washington D.C.
April 16, 2015
Stylized facts on migration
International migrant stock over 250 million in
2015
South-South migration (37%), larger than
South-North migration (35%)
Domestic migrant stock estimated to be 750
million
South-South migration is larger
than South-North migration
Note: South = Developing countries
Source: Migration and Remittances Factbook 2015, UN Population Division, and national censuses
There were more than 247 million migrants worldwide in 2013.
South-South, 37%
South-North, 35%
North-South, 5%
North-North, 23%
Migration (% share)
16th GRWG 16th GRWG
South-South remittances:
34% of global remittances flows
Note: South = Developing countries
Source: Migration and Remittances Factbook 2015, UN Population Division, and national censuses
South-South, 34%
South-North, 4%
North-South, 38%
North-North, 24%
Remittances (% share)
Remittances
$440 Billion
Remittances
$135 Billion
Aid
Remittances to developing countries
reached $436 billion in 2014
Source: Development Prospects Group, World Bank
0
100
200
300
400
500
600
700
800FDI
ODA
Pvt debt &
port. equity
Remittances
($ billion)
Remittance growth is declining in all
regions but negative in ECA in 2015 (%)
Source: Development Prospect Group, the World Bank
7.6
-6.3
5.8
7.7
4.5
2.22.8
-12.7
2.31.1
3.7
0.9
EAP ECA LAC MNA SAR SSA
2014 2015
Exorbitant remittances costs
8% 12% 90%
Global average Africa Venezuela
20%
Within Africa
Reducing remittance costs ($30 bn)
Diaspora savings via diaspora bonds ($50 bn)
Reducing recruitment fees paid by low-
skilled migrant workers ($20 bn)
Diaspora philanthropy ($10 bn)
Using future-flows as collateral
($4-$25 bn for Africa alone)
$100 billion could be mobilized
Innovative Financing Potential
for Sub-Saharan Africa
($15 bn per year)
Reducing remittance costs ($4 bn)
Diaspora bonds ($5 bn)
Diaspora philanthropy ($1 bn)
Using future-flows as collateral
($4-$25 bn)
Enhance sovereign credit rating
Facilitate micro-saving and
insurance
Remittance can further help:
