How can we maximise the impact of remittances by migrants?

Remittances sent by migrant communities can make a valuable contribution to the sustainable economic development of their countries of origin, according to a study by IOM funded by our FPS. A few targeted boosts – awareness-raising, technical support, and so on – can further maximise this impact. A strikingly positive effect of migration!

Various diaspora communities with roots in countries such as the DR Congo, Burundi, and Morocco have settled or grown up here in Belgium. But did you know that these diaspora groups – in addition to making substantial contributions to our own economy – also send part of their earnings back to their families in their countries of origin? And that these remittances hold enormous potential for the development of those countries?

685 billion dollars

In 2024, global money transfers amounted to 685 billion dollars, while the total amount of official development assistance (ODA) from OECD countries reached only 212.1 billion dollars. And that figure includes only transfers made through official channels such as financial institutions. Direct personal transfers – cash or in-kind goods – are not included.

Remittances often provide a little extra to families in the countries of origin which should not be underestimated. That can be used to pay medical bills, contribute to school expenses, compensate for poor harvests, or fund renovations to the family home.

Nevertheless, and the project financed by Belgium was developed with this aim in mind, the impact of these remittances could be further optimised if they were also intended for investment and entrepreneurship. Not only the money from remittances can be very useful for this, but also the know-how of the diaspora.

High transfer fees

Moreover, high transfer fees are often an obstacle undermining their impact. SDG10 – one of the Sustainable Development Goals – aims for transaction costs to fall below 3% by 2030, but they are usually much higher. This is particularly true when sending cash through banks or other financial institutions.

Sending remittances through mobile operators is generally cheaper. However, it is less accessible for certain groups within diaspora communities, such as older people. There is also a dependence on the recipient and the mobile financial system in the country of origin.

O-REMIT

Recently, the remittance landscape in Belgium was mapped out in detail for the first time. The Belgian office of the International Organization for Migration (IOM) carried out the so-called O-REMIT project, funded by our FPS through development cooperation resources and the partnership with IOM. Two detailed reports, infographics, and an interactive dashboard provide an overview of the data, trends, and drivers, along with a comparative analysis of transaction costs.

1. Market analysis of remittances

In 2022, for example, a staggering 7.31 billion dollars in remittances were sent from Belgium. In terms of remittance flows to developing countries, Morocco received the most—495 million dollars—followed by Romania and Türkiye.

For the 21 corridors examined, the average transaction costs in our country amount to 4.31%, still well above the 3% target set by SDG10. As part of the project, a dialogue was initiated with various players in the Belgian money transfer sector, such as Wise, PayPal and Taptap Send. They expressed their willingness to work towards more transparent international money transfers, which should lead to increased competition and lower costs.

2. Raising awareness among diaspora communities and recipients

The study also included a large-scale survey among members of the diaspora in Belgium. This made it possible to map out the motivations and behaviour of people who send money.

O-REMIT also organised five workshops in Belgium on digital and financial inclusion. Members of the diaspora learned how to identify hidden transfer costs, make more cost-effective choices—such as using mobile apps for formal money transfers—and how to draw up a sustainable household budget.

In three partner countries – Morocco, DR Congo, and Senegal – three workshops were organised for recipients of money transfers. The aim was to inform them about various options for the most cost-effective transactions, savings opportunities, and ways to use money transfers.

3. Green investments in countries of origin

Members of the diaspora received training on investing. Afterwards, they were put in touch with green small and medium-sized enterprises in the three partner countries mentioned above.

Making better use of potential

O-REMIT laid a solid foundation for a more effective and better-informed approach to money transfers. The project explored ways to make better use of the vast potential of remittances. At the same time, it increased transparency and awareness among people who send money. It also created more opportunities for diaspora communities to contribute to the sustainable economic development of their countries of origin.

With a few targeted boosts, such as further awareness-raising and technical support, the impact of remittances can be maximised even more. A strikingly positive effect of migration!