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

Maximising the developmental impact of remittances – Private Sector Services

on

  • 15,438 views

 

Statistics

Views

Total Views
15,438
Views on SlideShare
15,427
Embed Views
11

Actions

Likes
0
Downloads
87
Comments
0

1 Embed 11

http://www.slideshare.net 11

Accessibility

Upload Details

Uploaded via as Microsoft PowerPoint

Usage Rights

© All Rights Reserved

Report content

Flagged as inappropriate Flag as inappropriate
Flag as inappropriate

Select your reason for flagging this presentation as inappropriate.

Cancel
  • Full Name Full Name Comment goes here.
    Are you sure you want to
    Your message goes here
    Processing…
Post Comment
Edit your comment

Maximising the developmental impact of remittances – Private Sector Services Maximising the developmental impact of remittances – Private Sector Services Presentation Transcript

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