What are remittances?
Remittances are entering a foreign land where you may not speak the language and where the food is unfamiliar.
Remittances are leaving everything you love behind to give a better future to your family.
Rambutan fruit looks strange at first, but under the alien shell is a delicate, sweet fruit.
Remittances are love.
<aside> 💡 A remittance is a transfer of money, often by a foreign worker to an individual in their home country. Money sent home by migrants competes with international aid as one of the largest financial inflows to developing countries. Workers' remittances are a significant part of international capital flows, especially with regard to labor-exporting countries. Wikipedia
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In 2018, global remittances were up to $689 billion according to World Bank. The global average remittance fee was just above 7% in 2018.
For those from low income nations, banks and money transfer services are all that is available for those sending money back to their home countries. Because of the lack of affordable options, people have turned to informal channels to remit money.
Mosendo is dedicated to understanding the people and their stories behind these statistics. We have done interviews all over the world, and we will share a few of them here with you.
Wong Lurn in Thailand
We interviewed Wong Lurn, a student worker who sends money home from Thailand to Myanmar.
Wong Lurn told us about the creative way that he sends money home, and none of it hits any formalized remittance service.
Wong Lurn knows someone personally who owns a business in Myanmar. Naturally, this business receives revenues in the local currency, the Myanmar Kyat. To send money to mom, Wong Lurn will tell his friend in Myanmar that he wants to send money home. He will then transfer money from his Thai bank account to his friend’s Thai bank account. This particular business owner has a bank in Thailand and also prefers to store his savings in Thai Baht.
The business owner will then take some of their Kyat revenues, put it on one of the daily trucks that goes into the rural areas of Myanmar, and make sure the money is delivered to mom.
Rudo from Zimbabwe
Rudo an international student from Zimbabwe studying in Chicago, USA. She receives money from her mother who is in Zimbabwe through her American checking account, which usually subtracts a domestic fee of about $15, in addition to another fee sending money to a foreign account. Due to the economic turmoil that Zimbabwe is facing, her mother also has a bank account in the UK.
Many Zimbabweans choose to have offshore accounts through which they can store their wealth in an economy more stable than Zimbabwe. Zimbabwe’s government has tightened up exchanging foreign money in Zimbabwe, which affects how she receives money from her mother. To add onto this restriction, the US dollar has been banned from circulation in Zimbabwe after the economy was dollarized in an effort to stabilize the Zimbabwean economy.
Remittances are playing an increasingly large role in the lives of many people. According to the World Bank, the total remittance market is comprised of $550B in total flows, 80% of which are within emerging economies. Because of the macroeconomic forces of globalization and migration, remittances have been growing 10% on average worldwide, which is faster than our world population growth.
$550,000,000,000 - Total world remittances 80% - in emerging economies 10% - yearly growth in remittances
Despite these large numbers, there still exists an unrecorded remittance flow to and from developing countries through formal and informal channels. Experts at the World Bank and other UN agencies state that the figure is significantly larger, possibly even double the estimated figure in some regions.