Rob Katz

On Remittances as a Platform (II)

Bal JoshiGuest poster Bal K. Joshi is the co-founder and managing director of Thamel Dot Com, Kathmandu, Nepal. He is also a partner in Thamel International.

By Bal K. Joshi
William Kramer’s comments
are well taken. His words certainly reflect our belief, that “…economic empowerment is all about choice.” However, I would like to add that economic empowerment also includes personal control. Treating remittances as a platform–giving diaspora the choice of directly converting those funds into products and services back in their homeland–allows them to make well informed decisions on the use of their hard-earned dollars. This is not about “top-down” or “North-South” control; it is about value-chain control. The only choice with traditional money transfer services is to remit cash, and the only control is trust and a prayer.

It is important to point out that the transformation in our thinking about remittances and development has been driven from the “bottom-up”; influenced by the stake-holders in the remittance value chain. There are two primary beneficiaries of remittances: beneficiary #1 is the third party (friends or families) receiving the funds (or equivalent); beneficiary #2 is the ?remitter? or the diaspora. Both beneficiaries have needs that have to be supported by the remittance platform. It’s a known fact that most of the remittances sent home are used for daily consumption by beneficiary #1. This use of the remittances also meets the needs of beneficiary #2 by providing their desired support for their family. We also agree that the primary developmental impact of this daily consumption is the spending of the money (directly or indirectly) with merchants in the local economy. However, on the ground in Nepal, we see two realities: the massive misuse of remittances by recipients (beneficiary #1); and a strong diaspora (beneficiary #2) interest to invest in SME enterprises.Diaspora control over the use of remittances in the homeland directly addresses the problem of the misuse of funds. I think there is a misunderstanding about the nature of this control. This is addressing the alignment of needs of beneficiary #1 and beneficiary #2 in the value chain. I could tell you many sad stories of cash-to-cash remittances being stolen or diverted to personal, rather then family, uses. In some cases, whole savings funds–together with the spouse in Nepal ?have disappeared. This problem is not limited to Nepal. Remittance research is filled with stakeholder comments about the misuse of cash remittances and the desire for sender-control. “Productizing” remittances helps with this value-chain alignment.
The second strong needs we are see is the desire of the diaspora to invest in their homeland. By developing a remittance platform that caters to these interests of the diaspora (beneficiary #2) we will see the macro-economic impact of these investments; just like in China or in India.

Our goal at Thamel Dot Com and Thamel International is to empower the BOP stakeholders in the remittance value chain through economic choice and empowerment. People are free to direct and use their remittances as they wish, within the built-in controls given the stakeholders. People are also free to determine why they use these controls – which has more to due with pragmatism and prudence than morality. We believe that our success successful in Nepal is because we work at the grass-roots level and are not engaged in top-down or North-South dynamics.