Asian Development Bank Report Looks at Impact of Digital Technologies on Remittances
By Priyankar Bhunia
According to the report, around 75% of global remittances projected in 2017 ($443 billion out of $593 billion) came from developing countries, particularly in the East Asia and Pacific and South Asia regions. The World Bank estimates that the number will continue to grow by 3.5% to $459 billion by 2018.
The report notes that the remittances have a significant development impact. They increase household income which can be spent for social services such as education and health. In addition, they can contribute to financial services expansion and drive growth of inclusive finance.
But these benefits are hampered by high costs which impact the efficient flow of remittances. Though the costs are declining, they remain at 14%-20% for all developing regions. The worldwide average cost of bank transfer is 11%, a slight decline from its 2008 level of 14.6%. The average costs for IMTOs (international money transfer operators) are lower at around 6%, with post offices’ being 7%.
Remittance costs in Asia have gone down to 8%, but are still above the global average (7.4%) and the targets set by the United Nations’ Sustainable Development Goals (3% by 2030). A 5% decline in remittance costs could generate $15 billion in savings. Information and communication technologies could play a key role in this area.
Photo courtesy of AMISOM Public Information.