Your SlideShare is downloading. ×
0
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Maximising the developmental impact of remittances – Private Sector Services
Upcoming SlideShare
Loading in...5
×

Thanks for flagging this SlideShare!

Oops! An error has occurred.

×
Saving this for later? Get the SlideShare app to save on your phone or tablet. Read anywhere, anytime – even offline.
Text the download link to your phone
Standard text messaging rates apply

Maximising the developmental impact of remittances – Private Sector Services

14,378

Published on

Published in: Economy & Finance, Business
0 Comments
1 Like
Statistics
Notes
  • Be the first to comment

No Downloads
Views
Total Views
14,378
On Slideshare
0
From Embeds
0
Number of Embeds
1
Actions
Shares
0
Downloads
100
Comments
0
Likes
1
Embeds 0
No embeds

Report content
Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
No notes for slide

Transcript

  • 1. Maximising the developmental impact of remittances – Private Sector Services Vincent E. OKELE, President, African Axis (Belgium ) Global Forum on Remittances Tunis, 22 – 23 October 2009
  • 2. Agenda <ul><li>Definitions </li></ul><ul><li>Rationale </li></ul><ul><li>The challenge </li></ul><ul><li>Addressing the challenge </li></ul><ul><li>Private sector services </li></ul><ul><li>Example: The DiasporaLink Initiative </li></ul>
  • 3. Definitions <ul><li>DIASPORA INFLOW: Monetary transfers made by the diaspora into their country of origin. As private transfers or as funds invested, deposited or donated. </li></ul><ul><li>REMITTANCES: Monies sent from individuals or households to other individuals or households residing in their country of origin. </li></ul><ul><li>DIASPORA INVESTMENTS: in a start-up, in an existing enterprise or in a business being privatised (Community Sector and Private sector investments) </li></ul><ul><li>FORMAL: bank transfers or money transfers via intermediaries (Western Union) </li></ul><ul><li>INFORMAL : carrying money (self-friends-relatives) or informal services (retail shop, currency dealer). No documentation. </li></ul>
  • 4. Financial Development Economic development & Growth Investments Rationale: Diaspora inflow and development Economic Gowth & Development Poverty Reduction Remittances Entrepreneur- ship Diaspora Investments
  • 5. Rationale: Diaspora inflow and development <ul><li>REMITTANCES </li></ul><ul><li>Help reduce the level of poverty and have a greater influence on its severity (in rural areas) </li></ul><ul><li>Are associated with improved schooling outcomes for children (by helping to relax household constraints) and better access to health services for recipients </li></ul><ul><li>Promote entrepreneurship as the extra source of income could be put in new income generating activities </li></ul><ul><li>Help promote economic growth in less financially developed countries by positively impacting financial development </li></ul>
  • 6. Diaspora inflow into the region: The Challenge 1. The SSA region attracts relatively low volume of remittances through the formal channels Recorded remittances in developing countries: comparative review Source: World Bank At approx. US$ 3.2 billion this represented less than 5% of total remittances to developing countries (US$240 billion) <ul><li>Top 3: China, India, Mexico </li></ul><ul><li>Only Nigeria in the top 25 - Bengladesh, India & Pakistan </li></ul>1
  • 7. Diaspora inflow into the region: The Challenge The SSA region channels a limited proportion of remittance inflow into private sector investment The SSA region attracts less diaspora private sector investment <ul><li>Less than 10% of received remittances are channeled to income and employment generating activities </li></ul><ul><li>CELTEL (Sudan), Databank (Ghana), Teylium (Senegal), Geometric Power Limited (Nigeria) etc.. </li></ul><ul><li>Compared to the large number of technology firms by the Indian and Chinese diaspora </li></ul>2 3
  • 8. Diaspora inflow into the region: The Challenge Increase % of R channelled to Savings & income generating activities Increase Volume of Diaspora Investment (Community & Private) Increase Volume of R through formal channels Diaspora Inflow 1 2 3
  • 9. Addressing the Challenge
  • 10. Action required at the Origin and Host Country levels as well as the level of Multilateral Institutions and the Diaspora community Diaspora inflow to the region: Addressing the Challenge
  • 11. Addressing the challenge: Origin country level <ul><li>Increase volume of official inflow of remittances & channelling into productive sector </li></ul><ul><ul><li>Framework allowing for introduction of innovative financial instruments by domestic financial institutions to capture remittances </li></ul></ul><ul><ul><ul><li>Address the underlying structural weaknesses of the financial system. Ex: Establishment of Deposit insurance (guarantee) scheme </li></ul></ul></ul><ul><ul><ul><li>Repatriable foreign exchange accounts with premium interest rates (and maybe premium FX rates) </li></ul></ul></ul><ul><ul><ul><li>Diaspora bonds (debt instrument issued to raise financing from the diaspora - long term in nature) </li></ul></ul></ul><ul><ul><li>Provide banks and MFIs with refinancing credit lines enabling them to open a lending window to specially target the diaspora </li></ul></ul><ul><ul><li>Establish programs to improve recipient financial literacy </li></ul></ul><ul><ul><ul><li>Information on financial instruments – financial services documentation distributed at the same time </li></ul></ul></ul><ul><ul><li>Encourage competition by allowing market entry of non-bank financial institutions into the market (MFIs, Credit Unions, savings & loan) </li></ul></ul><ul><ul><li>Remittances securitization </li></ul></ul><ul><ul><ul><li>Borrow on international capital market against future remittaces (can potentially raise US$ 17 billion) </li></ul></ul></ul>
  • 12. Addressing the challenge: Origin country level <ul><li>Facilitate diaspora-led investments </li></ul><ul><ul><li>Establishing specific tax/sectoral/export/tariff incentives </li></ul></ul><ul><ul><ul><li>Preferential tax rates (5yr corporate tax amnesty for startups) </li></ul></ul></ul><ul><ul><ul><li>Concessional rates of duty on imported capital goods </li></ul></ul></ul><ul><ul><ul><li>Creation of a one-window clearance system for diaspora investments. </li></ul></ul></ul><ul><ul><ul><li>Preferential access to capital goods and raw materials import </li></ul></ul></ul><ul><ul><li>Provide business advisory services </li></ul></ul><ul><ul><ul><li>information on available investment opportunities, saving schemes, financial support, business start-up procedures </li></ul></ul></ul><ul><ul><li>Use MFIs to directly support diaspora-led investments </li></ul></ul><ul><ul><ul><li>Grant MFIs the license to take deposits and grant loans </li></ul></ul></ul>
  • 13. Addressing the challenge: Host country level <ul><li>Engage with diaspora groups (HTAs) </li></ul><ul><ul><li>Informal relationships and social capital should be preserved and supported </li></ul></ul><ul><ul><li>Co-development initiatives encouraged </li></ul></ul><ul><ul><li>Strengthen formally constituted institutions </li></ul></ul><ul><li>Work with origin countries on technical, regulatory and oversight matters to ensure transparency in the remittances market. </li></ul><ul><li>Facilitate increased access to the financial system by migrants </li></ul><ul><li>Establish technical and financial assistance programs providing support to diaspora entrepreneurs (Ex: Co-development initiatives in France) </li></ul><ul><li>Involve the diaspora in economic missions to home countries </li></ul><ul><li>Make provisions for short term work placements </li></ul>
  • 14. Addressing the challenge : Multilateral institutions – Policy issues <ul><li>Role played by migrants should be recognised and reinforced </li></ul><ul><li>ADI should become an integral part of global, regional and national strategies for poverty reduction </li></ul><ul><li>Measures to encourage the transfer and investment of remittances should be combined with strategic policies that are conducive to good governance and economic growth </li></ul><ul><li>Work with origin/host country public authorities to address diaspora investment with more consistent strategies, policies and legislations including: </li></ul><ul><ul><li>nationality, commercial and financial law, tax law, international family and family property relations, international legal cooperation and litigation </li></ul></ul>
  • 15. Addressing the challenge : Multilateral institutions – Initiatives/Mechanisms <ul><li>Community sector investments </li></ul><ul><ul><li>Linking up with and supporting diaspora group initiatives </li></ul></ul><ul><ul><li>Encourage diaspora groups to become involved in international-funded local development projects </li></ul></ul><ul><li>Private Sector Investments </li></ul><ul><ul><li>Initiate and support schemes designed to support diaspora-led private sector investments - DMADE (world bank), ADM (USAID) </li></ul></ul><ul><ul><li>Facilitate the involvement of diasporas in existing initiatives and financing program </li></ul></ul><ul><ul><li>Support origin countries’ investment climate improvement efforts </li></ul></ul><ul><ul><li>Support initiatives designed to leveraging remittances for contribution to the origin countries’ economies </li></ul></ul><ul><ul><li>Support initiatives that foster competition on the Remittances market </li></ul></ul><ul><ul><ul><li>Ex: Provide complete data related to international money transfer, including points of service, partners, fees, foreign exchange information and delivery time (DFID, AFD, etc..) </li></ul></ul></ul>
  • 16. Addressing the challenge : Diaspora Community <ul><li>Origin country level </li></ul><ul><ul><li>Engage with the authorities at local, national and regional levels </li></ul></ul><ul><ul><li>Contribute to promoting good governance and in improving the enabling environment for private sector development </li></ul></ul><ul><li>Host country level </li></ul><ul><ul><li>Actively engage with host country business promotion institutions </li></ul></ul><ul><ul><li>Foster trading links with origin countries. </li></ul></ul><ul><ul><li>Make contributions that will foster a positive image of Africa in host country. </li></ul></ul>
  • 17. Private Sector Services
  • 18. Action required at the Origin and Host Country levels as well as the level of Multilateral Institutions and the Diaspora community + Private Sector Private Sector Services: Addressing the Challenge Private Sector (RSPs, MTOs, MNOs Banks, NB financial Institutions)
  • 19. Private Sector Services: Required actions <ul><li>Analyze client base to gain better understanding of socioeconomic profiles of remittance senders and recipients </li></ul><ul><li>Offer value-added financial services to existing and potential clients </li></ul><ul><li>Deploy appropriate technologies and methodologies to bring unbanked recipients into the financial mainstream </li></ul><ul><li>Build partnerships to increase visibility and marketing of remittances </li></ul><ul><li>Improve financial literacy of existing clients, communicating actively to determine appropriate financial services </li></ul><ul><li>Expand on role of intermediation and consolidation of remittance flows </li></ul>
  • 20. Private Sector Services: Instruments for leveraging remittances <ul><li>Remittances Services Providers (MTOs + MNOs) </li></ul><ul><ul><li>Internet-based remittance platforms </li></ul></ul><ul><ul><li>Mobile Money transfer : Zap, MPESA, WIZZIT, Mobile Money, Celpay (outreach to local community) </li></ul></ul><ul><li>Financial services providers (Banks, MFIs, Credit Unions, Savings & Loans) </li></ul><ul><ul><li>Senders : savings, pension, investment, education financing, insurance, mortgage </li></ul></ul><ul><ul><li>certificates of deposit, equity and debt funds, mortgage bonds </li></ul></ul><ul><ul><li>Receivers : health insurance, education benefits, small business loans or consumer finance, bill payment </li></ul></ul>
  • 21. Private Sector Services: Instruments for leveraging remittances - Examples Zenith Bank Nigeria Zenith Diaspora Account <ul><li>combination of current and savings and loan accounts </li></ul><ul><li>Connected foreign currency accounts in USD, Euro and GBP </li></ul><ul><li>Negotiable interest rate balances accounts </li></ul>Nigeria Diaspora-focused Accounts & other services <ul><li>Diaspora Target account (savings accts – can be used as a collateral for loans) </li></ul><ul><li>Diaspora Investment Account (savings and fixed deposit) </li></ul><ul><li>PHB Easy Remit (remit funds from UK, Canada and USA) </li></ul>Ghana Homecoming Account <ul><li>hybrid account which invests in various mutual funds and financial instruments in Ghana and other regulated markets in Africa. </li></ul><ul><li>Sankofa account (1yr), Gye Nyame account (2yrs) and EpacK (3yrs) </li></ul>Credit Foncier du Cameroon Cameroon Diaspora-focused Housing loans <ul><li>Programme to attract Cameroon diaspora investment in real estate </li></ul>Uganda, Kenya & Tanzania Zap (Mobile Money transfer) <ul><li>Customers can receive funds from any bank account in the world into their mobile handset as well as send funds directly to their accounts </li></ul>
  • 22. The DiasporaLink Initiative
  • 23. The DiasporaLink Initiative: Objectives <ul><li>Provide a low-cost, secure and regulatory compliant remittances transfer service </li></ul><ul><li>Involve the diaspora community & MFIs as key players in the remittances transfer market </li></ul><ul><li>Provide an integrated set of services to encourage and support diaspora-led investments </li></ul><ul><ul><li>Information and documentation (investment opportunities, sources of finance, national regulations & incentives, etc..) </li></ul></ul><ul><ul><li>Technical assistance - development of bankable project proposals, facilitating of access to finance </li></ul></ul><ul><li>Make available financing facility that would benefit the diaspora entrepreneur (Fund) </li></ul><ul><ul><li>Provide financing support to existing and green-field diaspora-initiated businesses </li></ul></ul>
  • 24. The DiasporaLink Initiative: Services Diaspora Investment Facility Diaspora Investment Fund Remittances- Linked Financial Products Seed capital for DIF <ul><li>Internet-based P2P remittance service </li></ul><ul><li>Operating on the VISA platform </li></ul>R-linked savings account <ul><li>Information: Investment opportunities sources of finance </li></ul><ul><li>TA to project owners </li></ul>
  • 25. The DiasporaLink Initiative: Partnerships Diaspora Investment Facility Diaspora Investment Fund Remittances- Linked Financial Products Remit. Services Provider (DiasporaLink AB) Diaspora Organisations (UK, Germany, Sweden, Belgium) Private Sector (Banks, MFIs, Credit Unions, MNOs) Multilateral finance institution Private Sector
  • 26. The DiasporaLink Initiative: Benefits Economic Development
  • 27. Contacts 116, Avenue du Prince Héritier 1200, Brussels, Belgium Tel: +3222533008 [email_address] www.africanaxis.org www.diasporalink.eu www.diasporalink.net

×