UN urges harnessing of remittances to broaden economies in poorest countriesListen /
A large proportion of funds sent back home by migrant workers from Least Developed Countries is being taken up by administrative costs, according to a report by the United Nations Conference on Trade and Development (UNCTAD).
The report notes that the cost of sending money to Africa from abroad is three times higher than the global average.
UNCTAD says in 2010, remittances to Sub- Saharan Africa could have generated an additional US$ 6 billion, had the administrative costs matched the global average.
UNCTAD says the near monopoly held by a few companies offering international money transfer services keeps the costs high.
UNCTAD's Secretary General Supachai Panitchpakdi says there was need for the world's 48 least developed countries to improve their banking and financial services so as to channel more funds from the Diaspora into productive economic activities.
In 2011, LDCs received over US$ 27 billion in remittances from their nationals working abroad, the majority of which was in private transfers directly to families for vital needs such as food and housing.
"The recommendation is to have more financial institutions involved, including the participation of Micro-finance institutions, Credit Unions and Post Offices; particularly Post Offices seem to be having a wider larger network stretching into the rural areas so it would be helpful for the workers who have their remittances transferred back to their own families. While at the same time the report tries to establish the fact that remittances could be important because it can help to supplement income remittances can be harnessed for poverty reduction, for investment into industrial sectors in the LDCs".
UNCTAD forecasts that remittances will continue to grow over the medium term, despite the global financial crisis.
Patrick Maigua, United Nations Radio, Geneva.