Channeling the Remittance Flood
Wednesday, December 28, 2005
In 2005, migrant workers in the U.S. sent $52 billion back to Latin America and the Caribbean. Now governments are working to leverage that money to promote economic development.
The importance of the inflows cannot be exaggerated. Remittances to El Salvador account for 18% of gross domestic product and lately have exceeded the value of the country’s exports. Throughout Latin America, the remittances reach poor rural areas that get little development assistance. The money flows provide such basic necessities as food, clothing, and schooling.
Governments and multilateral organizations such as the Inter-American Development Bank are trying to expand the impact of remittances by encouraging recipients to save money and build credit histories, so they can get mortgages and small-business loans.
Today, fewer than 10% of remittance recipients have bank accounts, largely because traditional banks haven’t been interested in small clients. That will change as more remittances are channeled into credit unions and microfinance organizations.
Continue reading Channeling the Remittance Flood by Geri Smith