tag:theconversation.com,2011:/us/topics/remittances-14818/articlesRemittances – The Conversation2024-03-11T12:23:54Ztag:theconversation.com,2011:article/2232592024-03-11T12:23:54Z2024-03-11T12:23:54ZHow ‘hometown associations’ help immigrants support their communities in the US and back in their homelands<figure><img src="https://images.theconversation.com/files/580317/original/file-20240307-26-6881fx.jpg?ixlib=rb-1.1.0&rect=84%2C53%2C5028%2C3119&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Many Mexican immigrants stay connected to communities in their country of origin.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/photo/merged-flags-of-usa-and-mexico-painted-on-concrete-royalty-free-image/640127588?adppopup=true">ronniechua/iStock via Getty Images Plus</a></span></figcaption></figure><p>“<a href="https://www.jstor.org/stable/24357864">Hometown associations</a>,” also known as migrant clubs, are nonprofits formed by immigrants who are originally from the same place in their country of origin. They serve as <a href="https://doi.org/10.1080/10841806.2024.2313386">channels through which immigrants make charitable gifts</a> that help people settle in their new country while also aiding communities back in their homelands. Many <a href="https://www.rutgersuniversitypress.org/mexican-hometown-associations-in-chicagoacan/9780813564920/">were created in the 1990s</a>.</p>
<p>Mexican hometown associations are the most widely established. </p>
<p>But <a href="https://doi.org/10.1111/j.1471-0374.2006.00130.x">Turkish</a>, <a href="https://ideas.repec.org/p/pri/cmgdev/wp11-03aagarwala-india-report-march-2011.pdf.html">Indian</a>, <a href="https://doi.org/10.1080/13691830500178147">Filipino, Guatemalan, Salvadoran</a>, <a href="https://www.barnesandnoble.com/w/the-global-ethiopian-diaspora-shimelis-bonsa-gulema/1144167013">Ethiopian</a>, <a href="https://doi.org/10.1080/1369183X.2013.871492">Bolivian</a>, <a href="https://doi.org/10.1515/9781782387350-005">Colombian and Dominican</a> immigrants, among others, have created them too. </p>
<h2>Why hometown associations matter</h2>
<p>I’m a <a href="https://scholar.google.com/citations?user=a8EwKzoAAAAJ&hl=en&oi=ao">scholar of philanthropy</a> who has recently studied the Mexican hometown associations that support causes on <a href="https://doi.org/10.1080/10841806.2024.2313386">both sides of the U.S. southern border</a>.</p>
<p>In particular, I researched the associations that make up the <a href="https://www.facebook.com/FederacionZacatecanaEnIllinois/?locale=es_LA">Federación de Clubes Unidos Zacatecanos en Illinois</a>. </p>
<p>This federation, formed by immigrants from towns in the Mexican state of Zacatecas who moved to Illinois, includes 15 active associations. Each has between 20 and 500 members.</p>
<p>Since 1995, these nonprofits have helped newly arrived Mexican immigrants in the communities where they now live and residents of their original Zacatecan hometowns. For example, they help Mexican American students in Illinois pay for college, as well as chip in to cover some higher-ed costs for Mexican students back in Zacatecas.</p>
<p>The associations also contribute to projects that benefit their communities back in Zacatecas. Examples include paving roads, establishing athletic fields, installing electricity, increasing access to clean water and building everything from churches to health clinics. </p>
<p>The groups raise money by holding member breakfasts, mariachi concerts, raffles and other events in Chicago and elsewhere in Illinois. <a href="https://www.facebook.com/FederacionZacatecanaEnIllinois/videos/rifa-fcuzi/248498930146336/?locale=es_LA">Their fundraisers can generate</a> anywhere from a couple of thousand dollars to tens of thousands annually. </p>
<p>Many of these groups have <a href="https://doi.org/10.1002/psp.1958">informal origins</a>. Some got their start when immigrants were gathering for other reasons, such as <a href="https://go.gale.com/ps/i.do?p=AONE&u=anon%7Ec73a92bc&id=GALE%7CA282581052&v=2.1&it=r&sid=googleScholar&asid=86ff5d91">taking part in local soccer and baseball games</a>. Today, most hometown associations remain led by volunteers. </p>
<p>Even with volunteer leadership, in the Mexican case, these associations have adopted more formal approaches to their operations over the years. They gather in local community centers, which they often own. </p>
<h2>Collective remittances</h2>
<p>Hometown associations are an example of what’s known as <a href="https://doi.org/10.1111/j.0012-155X.2004.00380.x">collective remittances</a>, the technical term for immigrants pooling money earned abroad and sending it back to their homelands.</p>
<p>All told, immigrants around the world <a href="https://www.migrationdataportal.org/themes/remittances">send about US$860 billion</a> back to their homelands every year through remittances. This money flows directly to family and friends, helping them pay for housing, food and other expenses.</p>
<p>This estimate leaves out collective philanthropy, including the money that hometown associations send back to their homelands. I’ve never found a reliable estimate of the scale of hometown associations’ charitable contributions. Even the number of associations across immigrant groups is not fully determined, making estimates of their collective donations hard to calculate. </p>
<p>But what I have observed is how the members of hometown associations team up to serve their communities in ways that don’t involve only money. They voluntarily devote their time, labor and knowledge to help their countries of origin for the public good.</p><img src="https://counter.theconversation.com/content/223259/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Susan Appe's research was supported by the U.S. Fulbright Program and The U.S.-Mexico Commission for Educational Exchange (COMEXUS).</span></em></p>Mexican groups are the most common, but immigrants from Turkey, Bolivia and many more countries have formed their own.Susan Appe, Associate Professor of Public Administration and Policy, University at Albany, State University of New YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1989772023-02-07T13:35:41Z2023-02-07T13:35:41ZOn the first-ever India Giving Day, the highest-earning ethnic group in the US gets a chance to step up and help their homeland<figure><img src="https://images.theconversation.com/files/507970/original/file-20230202-14351-1p6zzq.jpg?ixlib=rb-1.1.0&rect=107%2C71%2C5883%2C3502&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Microsoft CEO and Chairman Satya Nadella is one of the most prominent Indian Americans. </span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/satya-nadela-speaks-on-stage-at-the-a-conversation-with-news-photo/1186121279?adppopup=true">Brad Barket/Getty Images for Fast Company</a></span></figcaption></figure><p>Members of the Indian diaspora living in the U.S. are being urged to step up and channel money back to the homeland during a 24-hour charitable drive.</p>
<p>On March 2, 2023, the first <a href="https://www.indiagivingday.org/">India Giving Day</a> will take place. The plan is to encourage U.S.-based donors, especially the nation’s <a href="https://www.migrationpolicy.org/article/indian-immigrants-united-states">2.7 million Indian immigrants</a> and the roughly <a href="https://carnegieendowment.org/2021/06/09/social-realities-of-indian-americans-results-from-2020-indian-american-attitudes-survey-pub-84667">1.3 million U.S.-born Americans of Indian origin</a>, to give to Indian causes in unison. </p>
<p>As a <a href="https://scholar.google.com/citations?user=a8EwKzoAAAAJ&hl=en">scholar interested in the role that charitable donations</a> play in international development, I expect this fundraising drive to raise millions of dollars for India-supporting nonprofits. </p>
<p>The campaign’s organizers will raise money to fund projects that will improve education, health care and gender equality and meet other important needs in a country with <a href="https://hdr.undp.org/system/files/documents/hdp-document/2022mpireportenpdf.pdf">228.9 million</a> people living in poverty, according to the 2022 <a href="https://ophi.org.uk/multidimensional-poverty-index/">Global Multidimensional Poverty Index</a> – more than anywhere else in the world.</p>
<h2>A nonprofit alliance</h2>
<p>The <a href="https://www.indiaphilanthropyalliance.org/">India Philanthropy Alliance</a>, a coalition of 14 U.S. nonprofits that fund development and humanitarian projects in India, is coordinating the event. Its members already raise a total of almost <a href="https://www.indiaphilanthropyalliance.org/">US$60 million annually</a> in the U.S. Their goal is to amass more funding collectively by holding an annual single-day push.</p>
<p>Although the alliance will welcome donations from anywhere and anyone, its main focus is to encourage Indian Americans and Indian immigrants who live in the U.S. to support its members, such as <a href="https://www.cryamerica.org/">CRY America</a>, a children’s rights nonprofit, and <a href="https://www.smsfoundation.org/about-us/">Sehgal Foundation</a>, an organization promoting rural development in India. </p>
<p><a href="https://www.prnewswire.com/news-releases/india-philanthropy-alliance-begins-countdown-for-the-first-ever-india-giving-day-celebrating-contributions-by-americans-to-india-301721192.html">Giving days</a>, 24-hour campaigns to raise awareness and donations for specific organizations and causes, have become more common in the U.S. over the past 15 years. There are many for <a href="https://info.givegab.com/giving-days/">schools, hospitals and many other kinds of organizations</a> but <a href="https://www.givingtuesday.org/">Giving Tuesday</a> is the most popular. Held on the first Tuesday after Thanksgiving, it <a href="https://www.cbsnews.com/news/givingtuesday-record-donations-holidays-2022/">raised over $3 billion</a> for a wide array of causes in 2022. </p>
<p>All told, Indian Americans give an <a href="https://timesofindia.indiatimes.com/nri/indian-americans-donate-1-bn-a-year-one-third-of-their-giving-potential-survey/articleshow/65033075.cms">estimated $1 billion annually</a> to charity. </p>
<p>There is the <a href="https://timesofindia.indiatimes.com/nri/indian-americans-donate-1-bn-a-year-one-third-of-their-giving-potential-survey/articleshow/65033075.cms">potential for even higher sums</a> being raised from the many very rich Indian Americans – a long list that includes actress Mindy Kaling, Alphabet CEO Sundar Pichai, economist Amartya Sen, Microsoft CEO and Chairman Satya Nadella – and the entire Indian American community.</p>
<p>That’s because <a href="https://www.pewresearch.org/fact-tank/2021/04/29/key-facts-about-asian-americans/">Indian Americans</a> are the nation’s <a href="https://www.livemint.com/news/india/indians-are-highest-earning-ethnic-group-in-usa-harsh-goenka-explains-why-11673748104413.html">highest-earning ethnic group</a>, and yet <a href="https://indiaspora.org/indian-american-community-engagement-survey/">they give away a smaller share of their income</a> than the U.S. average.</p>
<p>The alliance aims to see Indian American giving <a href="https://timesofindia.indiatimes.com/blogs/voices/future-of-indian-american-philanthropy-trends/">triple to $3 billion</a>, with some of that total funding development and humanitarian projects in India. <a href="https://www.alliancemagazine.org/feature/whither-indian-diaspora-philanthropy/">India’s government</a> has also been vocal about wanting Indian Americans to contribute more toward India’s development. </p>
<h2>Giving to the homeland</h2>
<p>India Giving Day is an example of <a href="https://www.alliancemagazine.org/feature/complexities-diaspora-giving/">diaspora philanthropy</a> – giving back to one’s homeland, often by pooling resources with others who share the same heritage. This giving can be in the form of money, or time spent volunteering for a cause. It has also been called <a href="https://doi.org/10.1080/21632324.2015.1053305">homeland philanthropy, migrant philanthropy</a> and <a href="https://doi.org/10.1177/0095399719890311">refugee philanthropy</a>. </p>
<p>A common way that immigrants and people whose parents or grandparents immigrated to the U.S. <a href="https://www.imf.org/external/pubs/ft/fandd/basics/76-remittances.htm">send money back to their homelands is through remittances</a> – dispatching money across international lines to family and friends to help them get by. Total remittances globally <a href="https://www.worldbank.org/en/news/press-release/2022/11/30/remittances-grow-5-percent-2022">grew 5% in 2022 to $626 billion</a>. The flows to India increased much more sharply, <a href="http://timesofindia.indiatimes.com/articleshow/96025878.cms?utm_source=contentofinterest&utm_medium=text&utm_campaign=cppst.">shooting up 12% to $100 billion</a>.</p>
<p><a href="https://www.alliancemagazine.org/feature/whats-difference-philanthropy-remittances/">Diaspora philanthropy</a> can be characterized as <a href="https://www.jstor.org/stable/23322103">collective remittances</a> for development and humanitarian projects. Diaspora communities are motivated to collectively give because of their <a href="https://doi.org/10.1007/s11266-016-9755-7">shared identity and sense of responsibility</a> to their countries of origin. </p>
<p>There is currently no way to <a href="https://hdl.handle.net/1805/24144">estimate diaspora philanthropy’s scale</a>. One reason for that is that funding is channeled through countless intermediaries, from <a href="https://www.taylorfrancis.com/chapters/oa-edit/10.4324/9781003241003-10/beyond-north%E2%80%93south-dyad-susan-appe?context=ubx&refId=e5ee5cb1-ba61-4855-9a44-99a024d32864">diaspora-led organizations</a> and <a href="https://doi.org/10.1111/j.0012-155X.2004.00380.x">hometown associations</a> to <a href="https://hdl.handle.net/1805/23421">universities</a>. </p>
<p>While India is of <a href="https://www.economist.com/briefing/2022/05/14/india-is-likely-to-be-the-worlds-fastest-growing-big-economy-this-year">one of the world’s fastest-growing economies</a>, it also has daunting needs when it comes to addressing poverty in its lowest-income regions.</p>
<p>For that reason, I believe any drive to encourage the flow of charitable dollars to India is to be welcomed. The cash raised through the India Giving Day campaign will help fund an array of projects, such as nutritional programs for children and expectant mothers, educational centers for child laborers and efforts to supply sewing machines for women’s cooperatives.</p><img src="https://counter.theconversation.com/content/198977/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Susan Appe does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Indian American donors will have an opportunity to collectively fund improvements in education, health care and gender equality in India on March 2, 2023.Susan Appe, Associate Professor of Public Administration and Policy, University at Albany, State University of New YorkLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1557962021-03-08T18:57:47Z2021-03-08T18:57:47ZBanking co-ops run by Black women have a longtime legacy of helping people<figure><img src="https://images.theconversation.com/files/387558/original/file-20210303-23-bxdnfz.jpg?ixlib=rb-1.1.0&rect=8%2C305%2C5982%2C3682&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">It's time to acknowledge the varied forms of co-operativism, mutual aid, self-help groups and ROSCAs that are important to the vitality of civic life.</span> <span class="attribution"><span class="source">(Shutterstock)</span></span></figcaption></figure><p>Ajo, Osusu, Sandooq, Chit or Arisan? These are cultural names for systems of mutual aid and collectivity — known by academics as <a href="https://www.investopedia.com/terms/r/rotating-credit-and-savings-association.asp">rotating savings and credit associations</a>, or ROSCAs for short.</p>
<p>ROSCAs are hidden forms of co-operatives that Black and <a href="https://www.bbc.com/news/world-us-canada-54035099">racialized people</a> practise all over the world, <a href="https://doi.org/10.1080/07360932.2015.1114005">including in Canada and United States</a>.</p>
<p>For the past 14 years, I’ve been studying and writing on development, financial exclusion and co-operative economies specifically for the African diaspora. Before becoming an academic, I worked as a practitioner in the field of international development for most of a decade. I was influenced by an international non-governmental organization (NGO) near Philadelphia called <a href="https://www.oicinternational.org/">OIC International</a>. The NGO was led by African Americans and founded by the late <a href="https://thephiladelphiacitizen.org/leon-sullivan-biography/">Rev. Leon Sullivan, a civil rights activist</a>.</p>
<p>What I learned from African Americans was how to do business equitably, including how to co-opt aid and be mindful of the biased allocations of money.</p>
<h2>What are ROSCAs?</h2>
<p>ROSCAS are at the very core of what we know as the solidarity social economy — the citizens sector. They are self-managed voluntary co-ops used around the world, and they’re embedded in civil society. ROSCAs are usually described in a local vernacular — Somali Ayuuto, Jamaican Partner, Indian Chit, Haitian Sol, Chinese Hui, Equub for Eritreans and Ethiopians and Tandas for people in Latin America. And the list goes on. </p>
<p>ROSCAs aren’t new to me. My great-grandmother, Maude Gittens, was a street food vendor who lived in Sangre Grande, Trinidad. But she was also a well-known Susu “Banker Lady.” Susu is a local name for a ROSCA. It’s the same name used in Ghana, West Africa — in fact, is an original source for these co-ops. And Susu can be found among the diaspora outside of Africa and the Caribbean, so in your towns and cities. </p>
<figure>
<iframe width="440" height="260" src="https://www.youtube.com/embed/fXMYRtLTYP0?wmode=transparent&start=0" frameborder="0" allowfullscreen=""></iframe>
<figcaption><span class="caption">The story of the Banker Ladies.</span></figcaption>
</figure>
<p>When people emigrate, they organize ROSCAs from around the world. It’s a way to help each other financially. The women who manage these co-ops are also concerned about social supports and kindness, wanting to give people a place to belong. </p>
<p>ROSCAs are usually made up of people who share the same socio-economic class and who are alienated from goods and services. ROSCA members decide how their co-ops will be structured. Members contribute a “hand” — a fixed sum — on a weekly or monthly basis to a pool, and that lump sum of money is collected and then shared with a member. </p>
<p>The women who organize ROSCAs call themselves the Banker Ladies — and they adhere to the same principles as other co-operatives. </p>
<h2>Co-operation and self-help</h2>
<p>My work on solidarity economies is correcting the erasure of the contributions of people of African descent. I teach my students about co-operatives, non-profits, social enterprises and mutual aid so they can go into the world and make business inclusive. I am proud to say that I see many of them disrupting conventional business practices.</p>
<p><a href="https://www.caroline-shenaz-hossein.com/">My research is smashing the binaries of South/North and left/right</a>. It pushes all of us to think about feminist futures and the theory of <a href="https://www.communityeconomies.org/about/community-economies-research-and-practice">community economies</a>. <a href="http://www.communityeconomies.org/people/jk-gibson-graham">Feminist scholars J.K. Gibson-Graham</a> and CERN — the <a href="https://www.communityeconomies.org/">community economies research network</a> — reject the fixation on the capitalist firm as the unit of analysis for how to conduct business because most of life’s interactions are submerged like an iceberg, hidden away. Community economies have always been around. So much of our self-provisioning on this planet is beneath the surface. </p>
<p>As a Black feminist scholar, I am steeped in this idea of community and solidarity economies and co-operatives, along with intersectionality, because it is the one sure way to counter racial capitalism. If the COVID-19 pandemic has taught any of us anything, it should be that the future of giving requires a new design. One that is thoughtful, more efficient and mindful of the knowledge and the expertise beyond white experts. </p>
<h2>Politicizing co-operation</h2>
<p>This is why my <a href="https://doi.org/10.1177%2F0034644619865266">Black Social Economy theory is useful</a>. It argues that to counter inequities, historically oppressed people of African descent must politicize co-operation to combat exclusion. </p>
<p>The Banker Ladies are living proof that there is a resistance quietly taking place. Thousands of Black and racialized women lead co-ops and remake co-operative economies despite the everyday traumas they endure. </p>
<p>For years, I have been interviewing hundreds of Banker Ladies in six countries. These women actually represent thousands more women, because each Banker Lady represents the members of her group, and these can range eight to 80 members. I met a Cameroonian Janjui in Toronto who had more than 1,000 members. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/banking-while-black-the-business-of-exclusion-94892">Banking while Black: The business of exclusion</a>
</strong>
</em>
</p>
<hr>
<p>These Banker Ladies organize co-ops, refusing to sit idly by waiting on handouts. They contribute as co-operators to make our world a better place. Banker Ladies who organize ROSCAs are rooted in mutual aid and they hold the keys to underdevelopment. </p>
<p>This is in part because they are consciously redefining what they do. They use group consensus and mutual aid to help those who are discriminated against, or those who feel like they don’t belong anywhere. Their work enhances civic life.</p>
<h2>Underground Railroad</h2>
<p>The African tradition of ROSCAs — rooted in Ujamaa, Kombit, Ubuntu and mutual aid — has helped so many people for more than 100 years and yet remains obscured, unknown. <a href="https://www.shareable.net/rosca-savings-groups-multiply-maintain-as-covid-19-rages-on/">The Underground Railroad, in fact, was a co-operative</a> in which real risks were taken to free people. When the refugees made it to Canada, they drew on <a href="https://www.theglobeandmail.com/business/commentary/article-black-canadians-use-alternative-banks-to-manage-systemic-racism-its/">True Bands, a ROSCA system</a>. </p>
<p>Black women today are still pooling together their after-tax income to gift each other funds to start a new business, pay tuition fees for their children or buy a used car. ROSCAs are rooted in friendship and mutual aid. Whether people with African American roots or newcomers, these ROSCA members embrace co-operative values. </p>
<p>Now that COVID-19 has revived the “<a href="https://www.versobooks.com/books/3713-mutual-aid">rebirth of mutual aid</a>,” stories of neighbours helping each other are the most cherished ones we tell each other through the lockdowns. It’s time to acknowledge the varied forms of co-operativism, mutual aid, self-help groups and ROSCAs, and to recognize that they are important to the vitality of civic life. But none of these forms of economic co-operation are new to Black and racialized people. They are a way of life. </p>
<p>The pandemic has also illuminated systemic inequities and anti-Black racism. We now understand why Black people, especially women, would seek refuge in the solidarity economy and set up their own money-pooling co-op systems out of sight. </p>
<p>The Banker Ladies address <a href="https://www.investopedia.com/terms/u/underbanked.asp">under-banking</a> and ensure there is some cohesion in our society. They repair the harms of anti-Black racism. ROSCAs teach all of us that solidarity matters. They teach us not to rely solely on a charitable model. We need to invest in Black women co-operators who understand trust and reciprocity, which are fundamental to building equitable economies. </p>
<p><em>This article is based on the lecture prepared for the Big Thinking on the Hill organized by the <a href="https://www.ideas-idees.ca/">Federation for the Humanities and Social Science</a> held on March 9, 2021</em></p><img src="https://counter.theconversation.com/content/155796/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Caroline Shenaz Hossein receives funding from Early Researcher Award, province of Ontario.</span></em></p>Thousands of racialized women around the world run mutual aid co-ops to help each other and develop their communities.Caroline Shenaz Hossein, Associate Professor of Business & Society, York University, CanadaLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1493602020-11-20T02:37:56Z2020-11-20T02:37:56ZIndonesian families struggle as pandemic cuts $1.5bn from the money migrant workers send home<p>Around <a href="https://openknowledge.worldbank.org/bitstream/handle/10986/32529/Why-do-Indonesian-Men-and-Women-Choose-Undocumented-Migration-Exploring-Gender-Differences-in-Labor-Migration-Patterns.pdf?sequence=1&isAllowed=y">9 million</a> Indonesians – more than the entire population of <a href="https://www.bfs.admin.ch/bfs/de/home.html">Switzerland</a> – work abroad. Last year, they sent over <a href="http://documents1.worldbank.org/curated/en/989721587512418006/pdf/COVID-19-Crisis-Through-a-Migration-Lens.pdf">US$11.7 billion</a> back to Indonesia in the form of remittances. </p>
<p>However, the COVID-19 pandemic have caused losses to their families who depend on these remittances. </p>
<p>In 2020, the World Bank expects remittance flows to the region to <a href="http://documents1.worldbank.org/curated/en/989721587512418006/pdf/COVID-19-Crisis-Through-a-Migration-Lens.pdf">decline</a> by 13% due to the pandemic. That equates to about US$1.5 billion in remittances to Indonesia. Prior to the pandemic, remittances to Indonesia were already declining. </p>
<p>We investigated the impact of the pandemic on the families of migrant workers. We found most have lost income and have limited access to pandemic-related health care.</p>
<h2>Limited access to health care</h2>
<p>We surveyed 605 households (with 1,926 family members) in Sukowilangun village in Malang, <a href="https://databoks.katadata.co.id/datapublish/2019/07/30/jawa-timur-kirim-pekerja-migran-terbanyak-ke-luar-negeri">East Java</a>, the province with the highest number of migrant workers. </p>
<p>This was part of a research project funded by the United Kingdom Research and Innovation (UKRI) Grant.</p>
<p>Like many residents of rural areas of the archipelago, our respondents generally have sufficient access to housing and utilities, even though they are classified as poor in terms of income.</p>
<p>The majority (53%) of family members who claimed to have symptoms similar to COVID-19 said they did not get tested even though they had health insurance. </p>
<p>As many as 61% of families reported being members of BPJS, Indonesia’s national health insurance. Under the BPJS scheme, members pay a monthly premium of Rp 42,000 (about US$3) per person or Rp 200,000 (a little over $14) per family of four.</p>
<iframe title="[ Insert title here ]" aria-label="chart" id="datawrapper-chart-K2wnP" src="https://datawrapper.dwcdn.net/K2wnP/1/" scrolling="no" frameborder="0" style="border: none;" width="100%" height="435"></iframe>
<p>Only 6% of families with symptoms were tested. </p>
<p>The low testing of families of migrant workers corresponds to the state of pandemic health care throughout Indonesia.</p>
<p>During the pandemic, the proportion of the total Indonesian population who are infected and experiencing symptoms of COVID-19 is very low. More than 70% are categorised as <a href="https://en.tempo.co/read/1359257/task-force-70-of-indonesia-covid-19-infections-are-asymptomatic">asymptomatic carriers</a>. </p>
<p>The government only gives health-care referrals and free testing to those who suffer from the symptoms for more than a week or <a href="https://tirto.id/tes-corona-covid-19-harus-gratis-sebagai-bukti-pemerintah-hadir-eGdk">based on a medical doctor’s request</a>. The rate of testing is only around <a href="https://www.worldometers.info/coronavirus/?utm_campaign=homeAdvegas1?">18,600 per 1 million population</a>. </p>
<p>Government testing, tracing and treatment during the pandemic are not carried out extensively in rural areas. </p>
<hr>
<p>
<em>
<strong>
Baca juga:
<a href="https://theconversation.com/delaying-a-covid-19-vaccination-program-may-cost-indonesia-us-44-billion-147446">Delaying a COVID-19 vaccination program may cost Indonesia US$44 billion</a>
</strong>
</em>
</p>
<hr>
<h2>Loss of income and jobs</h2>
<p>Our respondents reported significant decreases in income in all types of work but especially those who work in the domestic sector such as farm labourers, shop assistants, daily wage workers in the informal sector, and those doing odd jobs. Many of them have lost their jobs. </p>
<p>Large-scale restrictions imposed by the government to prevent virus transmission caused these income and job losses.</p>
<p>Respondents working in the manufacturing, trade and services sectors also experienced decreases in income and are at risk of losing jobs. </p>
<p>Those with their own plot of farming land are the least impacted by the pandemic. Only 3% of them said they were affected by a decrease in income and loss of work.</p>
<iframe title="" aria-label="Grouped Bars" id="datawrapper-chart-1bx1S" src="https://datawrapper.dwcdn.net/1bx1S/1/" scrolling="no" frameborder="0" style="border: none;" width="100%" height="287"></iframe>
<p>Respondents reported a decrease in remittances during the pandemic. Some received no more money, some received half the usual amount, and some a little less than usual.</p>
<p>Families use remittances from relatives working abroad mostly for consumption, to pay for daily food, children’s education and health treatment for the elderly. </p>
<p>Few invest remittance money to buy a plot of land to farm as they do not see this as a profitable investment. </p>
<p>They consider farming to be less profitable than opening a small business or other productive activities that have a faster economic turnover. Examples include buying a car for transporting goods, opening a motorbike repair shop, and other small businesses.</p>
<hr>
<p>
<em>
<strong>
Baca juga:
<a href="https://theconversation.com/how-fintech-can-help-indonesias-small-and-medium-enterprises-survive-the-covid-19-pandemic-148528">How fintech can help Indonesia's small and medium enterprises survive the COVID-19 pandemic</a>
</strong>
</em>
</p>
<hr>
<h2>Concern about migrant workers’ well-being</h2>
<p>While facing difficulties at home, these families are also worried about their migrant worker relatives.</p>
<iframe title="" aria-label="chart" id="datawrapper-chart-iyu9i" src="https://datawrapper.dwcdn.net/iyu9i/1/" scrolling="no" frameborder="0" style="border: none;" width="100%" height="525"></iframe>
<p>Many (41%) of them said they feared the workers could not return home because international borders were closed. </p>
<p>Some also expressed concern about security amid uncertainty about the process for those who want to return home or the situation in the workers’ host countries.</p>
<p>They also worry about virus infection and their relatives losing their jobs.</p>
<p>Hong Kong and Singapore are top destinations for Indonesian female migrants working in the domestic sector, especially as maids. Others work in the same field in Taiwan, United Arab Emirates and Saudi Arabia. </p>
<p>Migrants in the domestic sector have a higher risk of being affected by the pandemic, especially in Singapore and Hong Kong.</p>
<p>Singapore, once lauded for an exemplary response to the virus, faced problems when the virus reached its many <a href="https://theconversation.com/this-is-why-singapores-coronavirus-cases-are-growing-a-look-inside-the-dismal-living-conditions-of-migrant-workers-136959">marginalised foreign workers</a>.</p>
<p>We see there is a problem where the information available to the migrants is inadequate, such as information on what they need to do to safely return home. This poor communication causes confusion, which is ultimately conveyed to the families back home.</p>
<p>Migrant families expect the government to provide information and communicate important steps in emergency situations to the migrant workers.</p>
<hr>
<p>
<em>
<strong>
Baca juga:
<a href="https://theconversation.com/indonesia-is-set-to-become-the-hub-for-chinese-vaccines-in-southeast-asia-how-does-the-country-benefit-148534">Indonesia is set to become the hub for Chinese vaccines in Southeast Asia. How does the country benefit?</a>
</strong>
</em>
</p>
<hr>
<h2>What the government needs to do</h2>
<p>Families at home worry about the safety and protection of their relatives who are working abroad. </p>
<p>The Indonesian government and countries where Indonesians work need to improve the protection and legal certainty for migrant workers, help with travel arrangements and provide a network of crisis management centres during a pandemic.</p>
<p>The government should also help families back home manage remittances to become more financially resilient.</p>
<p>Many families spend remittances for consumption purposes and to open businesses that have low sustainability. Our research found migrant families who work in the agricultural sector have better resilience during a pandemic.</p>
<p>The government, in this case the Indonesian Ministry for Villages, Disadvantaged Regions and Transmigration, has an important role in ensuring migrant families make optimal use of remittances to boost income from agriculture, such as investing in lucrative local agricultural commodities.</p><img src="https://counter.theconversation.com/content/149360/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>M Faishal Aminuddin receives funding from United Kingdom of Research and Innovation (UKRI) via University of Portsmouth</span></em></p><p class="fine-print"><em><span>Saseendran Pallikadavath receives funding from UK Reserch Councils via the University of Portsmouth</span></em></p><p class="fine-print"><em><span>Dr. Sujarwoto dan Keppi Sukesi tidak bekerja, menjadi konsultan, memiliki saham, atau menerima dana dari perusahaan atau organisasi mana pun yang akan mengambil untung dari artikel ini, dan telah mengungkapkan bahwa ia tidak memiliki afiliasi selain yang telah disebut di atas.</span></em></p>Migrant workers’ families suffer from limited access to pandemic-related health care and loss of income.M Faishal Aminuddin, Assistant Professor, Department of Political Science, Universitas BrawijayaSaseendran Pallikadavath, Professor of Demography and Global Health, University of PortsmouthLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1483872020-10-21T12:22:52Z2020-10-21T12:22:52ZImmigrants are still sending lots of money home despite the coronavirus job losses – for now<figure><img src="https://images.theconversation.com/files/364542/original/file-20201020-17-1tydsf1.jpg?ixlib=rb-1.1.0&rect=334%2C27%2C5703%2C3983&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A woman counts money outside a U.S. remittance collection agency in San Isidro, El Salvador.</span> <span class="attribution"><a class="source" href="https://www.gettyimages.com/detail/news-photo/woman-counts-money-outside-a-u-s-remittance-collection-news-photo/1219675522">Marvin Recinos/AFP via Getty Images</a></span></figcaption></figure><p>Banks and aid agencies <a href="https://www.reuters.com/article/us-health-coronavirus-emerging-remittanc/global-remittances-could-fall-by-100-billion-in-2020-says-citi-idUSKBN2382WY">have been warning</a> of a <a href="https://theconversation.com/coronavirus-pandemic-could-hit-the-billions-migrant-workers-send-home-in-cash-135602">pandemic-related plunge</a> in the amount of money sent by migrants to family back home who rely on the income. In a typical year, more than <a href="https://www.un.org/en/development/desa/population/migration/publications/migrationreport/docs/InternationalMigration2019_Report.pdf">270 million migrants</a> living and working abroad send these cash transfers, known as remittances, to their home countries.</p>
<p>Yet so far, <a href="https://blogs.imf.org/2020/04/14/the-great-lockdown-worst-economic-downturn-since-the-great-depression/">despite the lockdowns</a> that <a href="https://www.bbc.com/news/business-53574953">have devastated wealthier economies</a> and caused <a href="https://news.un.org/en/story/2020/06/1067432">massive unemployment</a>, remittances have generally held up this year. In some cases they’ve even been higher than usual, based on our review of the latest available data and press releases for top remittance recipient countries. <a href="https://theconversation.com/mexican-workers-in-us-are-sending-record-money-home-despite-coronavirus-related-economic-shutdowns-138704">Remittances to Mexico</a>, for example, <a href="https://www.banxico.org.mx/SieInternet/consultarDirectorioInternetAction.do?sector=1&accion=consultarCuadroAnalitico&idCuadro=CA11&locale=en">surged 9.4%</a> in the first eight months of the year. Pakistan is also experiencing a <a href="http://www.xinhuanet.com/english/2020-09/14/c_139367493.htm">record increase</a>, while cash transfers to such countries as <a href="https://m.sggpnews.org.vn/business/covid19-hits-remittances-to-vietnam-88145.html">Vietnam</a> and the <a href="https://cnnphilippines.com/business/2020/9/15/Filipino-remittances-July-pandemic.html?fbclid=IwAR0ipZKoBiwOz2feGDMubocBJmRAAy3gpn9KOAAilByPIj74lQihS7JHQzg">Philippines</a> have held steady. </p>
<p>There a few likely reasons for the positive news for these and other countries – but there’s also reason to worry. </p>
<h2>The importance of remittances</h2>
<p><a href="https://www.knomad.org/sites/default/files/2019-04/Migrationanddevelopmentbrief31.pdf">Remittances normally flow</a> from rich countries like the U.S., the United Arab Emirates and Germany to lower- and middle-income countries.</p>
<p>In 2019, migrants sent a record <a href="https://www.knomad.org/sites/default/files/2020-06/R8_Migration%26Remittances_brief32.pdf">US$554 billion</a> home. This is <a href="https://www.knomad.org/sites/default/files/2020-06/R8_Migration%26Remittances_brief32.pdf">more than the sum of all investments</a> made by foreign companies in such developing countries and over triple the amount of <a href="https://www.oecd.org/dac/financing-sustainable-development/development-finance-data/ODA-2019-detailed-summary.pdf">aid governments provide</a>. </p>
<p><iframe id="3Vx8c" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/3Vx8c/3/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>Remittances are also <a href="https://www.imf.org/external/pubs/ft/fandd/basics/pdf/ratha-remittances.pdf">more dependable than either international aid or investment</a>. During bad times, remittances tend to increase, while foreign investments usually fall. And beyond directly supporting the intended recipient, they <a href="https://www.cgdev.org/blog/migrant-remittances-will-plummet-here-what-means-global-development">are essential</a> for helping poorer nations fight poverty and improve health care and education. </p>
<p>Our research with Michael Clemens on <a href="https://www.mitpressjournals.org/doi/10.1162/REST_a_00657?mobileUi=0&">Filipino workers in South Korea</a>, for example, found that overseas work increased investment in their children’s education and health care by several hundred percent. In such South Asian countries as Nepal, Pakistan and Bangladesh, remittances <a href="http://documents1.worldbank.org/curated/en/903161585816440273/pdf/Towards-Safer-and-More-Productive-Migration-for-South-Asia.pdf">have helped reduce poverty</a>.</p>
<p>In some countries, remittances are a substantial part of the national economy, in some cases <a href="https://www.knomad.org/sites/default/files/2020-06/R8_Migration%26Remittances_brief32.pdf">making up as much as 30%</a> of GDP.</p>
<p>This is why forecasts of a sharp drop in remittances due to the coronavirus pandemic and lockdowns were so alarming. In April, the World Bank projected a <a href="http://documents1.worldbank.org/curated/en/989721587512418006/pdf/COVID-19-Crisis-Through-a-Migration-Lens.pdf">20% decline in remittances</a> to low- and middle-income countries. This would have amounted to more than $100 billion in lost income, equivalent to <a href="https://www.oecd.org/dac/financing-sustainable-development/development-finance-data/ODA-2019-detailed-summary.pdf">two-thirds of all foreign aid</a> distributed by governments in 2019. </p>
<p><iframe id="fhXPK" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/fhXPK/5/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<h2>Remittances stay strong</h2>
<p>Many countries did experience an initial hit to remittances in the spring, but summer cash transfers mostly made up for it. And some countries have experienced rising remittances throughout the pandemic. </p>
<p>Mexico, which took in over <a href="https://www.knomad.org/sites/default/files/2020-06/R8_Migration%26Remittances_brief32.pdf">$38 billion</a> last year, <a href="https://www.reuters.com/article/us-mexico-economy-remittances/remittances-to-mexico-hit-third-highest-level-on-record-in-july-idUSKBN25S5D1">received the most remittances in a single month ever in March</a>, with cash transfers continuing to surge through the summer. Egypt <a href="https://www.egypttoday.com/Article/3/92234/Egyptian-expats%E2%80%99-remittances-witness-steady-increase">is seeing a nearly 8% jump</a> this year.</p>
<p>In the Philippines, where remittances make up <a href="https://www.knomad.org/sites/default/files/2020-06/R8_Migration%26Remittances_brief32.pdf">10% of GDP</a>, money transfers decreased in the spring but <a href="https://cnnphilippines.com/business/2020/9/15/Filipino-remittances-July-pandemic.html">mostly recovered later in the year</a>. The story was similar in <a href="https://sggpnews.org.vn/business/covid19-hits-remittances-to-vietnam-88145.html">Vietnam</a>, <a href="https://bdnews24.com/economy/2020/10/08/bangladeshs-forex-reserves-top-40bn-on-remittance-inflow">Bangladesh</a>, <a href="https://www.washingtonpost.com/world/the_americas/coronavirus-remittance-mexico-guatemala-salvador-honduras/2020/08/05/5a1bcdbe-d5be-11ea-930e-d88518c57dcc_story.html">El Salvador and Honduras</a>. </p>
<h2>Some likely causes</h2>
<p>So what explains these rising or steady remittance flows? While there’s no definitive answer because of a lack of data, there are a few possibilities. </p>
<p>Despite the onset of severe recessions, many migrant workers have been able to keep earning income. For one thing, they <a href="https://atalayar.com/en/content/covid-19-and-remittances-why-are-latin-american-transfers-increasing">tend to be employed in essential businesses</a> such as agriculture and construction that have not suffered as much during the pandemic. In Europe, in certain essential sectors, <a href="https://www.brookings.edu/blog/future-development/2020/05/22/less-gratitude-please-how-covid-19-reveals-the-need-for-migration-reform/">migrant workers account for a third of all workers</a>. </p>
<p>And governments in some countries such as <a href="https://www.opensocietyfoundations.org/voices/q-and-a-progress-for-migrant-workers-in-italy">Italy</a> and <a href="https://www.euronews.com/2020/03/29/coronavirus-portugal-grants-temporary-citizenship-rights-to-migrants">Portugal</a> <a href="https://www.odi.org/migrant-key-workers-covid-19/">have implemented reforms</a> that are making it easier for undocumented workers to access services or even offering temporary citizenship to some. <a href="https://accueil-integration-refugies.fr/2020/04/14/les-refugies-peuvent-contribuer-au-service-public-de-sante/">France</a>, <a href="https://www.elnacional.com/mundo/espana-abre-la-puerta-a-mas-de-2-000-medicos-venezolanos-para-la-lucha-contra-el-coronavirus/">Spain</a> and <a href="https://www.forbes.com/sites/freylindsay/2020/03/26/germanys-agriculture-minister-wants-asylum-seekers-to-help-with-coronavirus-labor-shortages/#73f1d6a85e18">Germany</a>, meanwhile, are opening up sectors of their economy to migrants and asylum seekers that were previously closed to them.</p>
<p>All of this makes it easier for migrant workers to keep earning and sending money home to their families, who may be struggling a lot more than their relatives in their wealthy host countries. </p>
<p><a href="https://www.nber.org/papers/w15419">Research has found</a> that migrant workers often send more remittances home when their countries of origin are experiencing economic hardship. This altruism is the <a href="https://www.penguinrandomhouse.com/books/313176/a-good-provider-is-one-who-leaves-by-jason-deparle/">reason many workers choose to migrate abroad</a> in the first place. Jesus Perlera, a worker from El Salvador who has not stopped sending remittances to his mother despite his own economic challenges, <a href="https://www.nytimes.com/2020/09/24/us/coronavirus-immigrants-remittances.html">told The New York Times</a>: “If I don’t support her, how will she eat?”</p>
<p>Another factor likely driving remittances is government stimulus spending. While a lot of pandemic aid isn’t available to undocumented immigrants in the U.S., California, for one, let them access the <a href="https://en.as.com/en/2020/05/08/other_sports/1588972345_433751.html">$1,200 economic impact checks</a> sent out as part of the coronavirus relief bill. Goldman Sachs <a href="https://www.reuters.com/article/us-mexico-economy-remittances/remittances-to-mexico-hit-third-highest-level-on-record-in-july-idUSKBN25S5D1">credited this coronavirus spending</a> for the strong remittances to Mexico, while the World Bank <a href="http://documents1.worldbank.org/curated/en/428451587390154689/pdf/Potential-Responses-to-the-COVID-19-Outbreak-in-Support-of-Migrant-Workers-June-19-2020.pdf">cited social protection programs</a> such as unemployment and in-kind transfers for shoring up migrant workers around the world. </p>
<p>For migrants who are having more difficulty finding work, the <a href="https://www.washingtonpost.com/graphics/2020/world/coronavirus-migration-trends-gulf-states-india/">decision to move back home</a> may also spur a flurry of remittance activity as they send their savings ahead of their own departures. </p>
<p>[<em>You’re smart and curious about the world. So are The Conversation’s authors and editors.</em> <a href="https://theconversation.com/us/newsletters/weekly-highlights-61?utm_source=TCUS&utm_medium=inline-link&utm_campaign=newsletter-text&utm_content=weeklysmart">You can get our highlights each weekend</a>.]</p>
<p>It’s also possible some of the apparent increase in remittances, <a href="https://tribune.com.pk/article/97174/the-curious-case-of-pakistans-spiralling-remittances">as in Pakistan</a>, is artificial. Traditionally, large amounts of remittances have been sent through informal means, such as cash sent or carried by migrants when they visit home. The pandemic has forced <a href="https://www.centerforfinancialinclusion.org/remittances-and-financial-inclusion-sending-money-home-in-the-covid-era">more people</a> to make <a href="https://www.pymnts.com/news/cross-border-commerce/cross-border-payments/2020/pandemic-drives-growth-in-global-digital-remittances">digital transfers</a>, which are a lot easier to track but don’t necessarily indicate an increase in remittances. </p>
<h2>A crash may still come</h2>
<p>While the fact that remittances have held up is good news for developing countries and their populations, which <a href="https://www.wsj.com/articles/covid-19-pandemic-ravages-worlds-largest-developing-economies-11599171833">have been hit especially hard by the pandemic</a>, there are worrying signs that we may yet see the predicted crash. </p>
<p>The return of migrants to their home countries means they’re no longer able to earn extra money that they can send back to their families. Some 78,000 migrant workers from Bangladesh, for example, have <a href="https://www.thedailystar.net/business/news/remittance-keeps-rising-despite-pandemic-headwinds-1954477">already returned home</a> since April because of the pandemic. And the <a href="https://kmhub.iom.int/sites/default/files/publicaciones/surveyeffects_of_covid-19_june_2020_final.pdf">International Organization for Migration interviewed</a> migrants from Mexico and Central America in June and found that 41% had stopped sending remittances, while over 80% of those still sending money had reduced the amounts.</p>
<p>Even as some countries lift restrictions on migrant workers, others are adding new ones or denying visas. The Organization for Economic Cooperation and Development <a href="http://www.oecd.org/migration/covid-19-crisis-puts-migration-and-progress-on-integration-at-risk.htm">issued a report</a> on Oct. 19 indicating that the number of visas and residence permits countries issued in the first half of the year fell by 46% from 2019. </p>
<p>Given how much so many people depend on remittances, we believe aid agencies and governments should monitor the data carefully and do what they can to protect this fragile lifeline.</p><img src="https://counter.theconversation.com/content/148387/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Laura Caron consults for the World Bank.</span></em></p><p class="fine-print"><em><span>Erwin R. Tiongson consults for the World Bank.
Some of his previous migration research was funded by 3ie (<a href="https://www.3ieimpact.org/">https://www.3ieimpact.org/</a>). The Bill & Melinda Gates Foundation, UKaid through the Department for International Development and the William and Flora Hewlett Foundation are the main funders of 3ie and the World Bank is among its supporters.</span></em></p>Remittances to countries like Mexico, Pakistan and Vietnam are keeping pace with 2019’s record levels or in some cases rising, despite spring forecasts of a 20% decline.Laura Caron, PhD student in Economics, Columbia UniversityErwin R. Tiongson, Professor of the Practice and Deputy Director, Global Human Development, Georgetown UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1384552020-05-20T14:30:20Z2020-05-20T14:30:20ZMany refugees living in Nairobi struggle to survive because of COVID-19<figure><img src="https://images.theconversation.com/files/335725/original/file-20200518-83371-zpiep4.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A woman walks past a police armed vehicle in Eastleigh - Nairobi's "little Mogadishu"</span> <span class="attribution"><span class="source">Photo by Billy Mutai/SOPA Images/LightRocket via Getty Images</span></span></figcaption></figure><p>The economic impact of COVID-19 is <a href="https://www.undp.org/content/undp/en/home/coronavirus/socio-economic-impact-of-covid-19.html">being felt</a> across the world. This also applies to refugees. </p>
<p>For about eight years a team of researchers in the <a href="https://www.rsc.ox.ac.uk/research/refugee-economies-programme">Refugee Economies Programme at the Oxford Refugee Studies Centre</a> has been carrying out studies in East Africa. We work closely with refugees as our research assistants. </p>
<p>Since the global pandemic began, we have been speaking with these research assistants to understand better the impact that COVID-19 is having on refugees living in Nairobi, Kenya’s capital. The assistants – primarily from Congolese and Somali refugee communities – are people who are well-networked with fellow refugees. They include community leaders, staff members of aid organisations, pastors and representatives of community-based organisations. </p>
<p>All of the assistants reported primarily on the acute economic challenges that the crisis has caused for Nairobi’s refugees.</p>
<p>Nairobi hosts about <a href="https://www.unhcr.org/ke/wp-content/uploads/sites/2/2020/05/Kenya-Infographics-30-April-2020-1.pdf">81,000 refugees</a>. Despite Kenya’s encampment policy which prohibits refugees from
leaving camps, Nairobi has been a home for refugees for many years. By moving to the city, refugees largely give up their access to humanitarian assistance. However, they choose to live in Nairobi to gain better access to economic opportunities and social services, such as education and health.</p>
<p>In order to work in the formal sector, refugees must obtain a work permit. But these are rarely issued. This means refugees are largely excluded from formal labour markets and are heavily reliant on informal urban economies. </p>
<p>To curb the spread of COVID-19, Kenya has implemented a dusk to dawn <a href="https://newsaf.cgtn.com/news/2020-05-16/President-Kenyatta-extends-Kenya-s-nationwide-curfew-partial-lockdown-Qy0MWxF2yQ/index.html">curfew</a> and <a href="https://www.voanews.com/covid-19-pandemic/kenya-begins-21-day-partial-lockdown-amid-rise-coronavirus-infections">lockdowns</a> which restrict people’s movements in and out of certain counties, and parts of Nairobi. These severely constrain mobility. As a result many urban refugees are unable to pursue their livelihoods in the same ways as before. </p>
<p>They have few savings and depend on the day-to-day cash they generate from street vending. They now face a struggle to buy food every day. And they have the added challenge of being excluded from other channels of support. </p>
<h2>Refugee livelihoods</h2>
<p>Hawking, though prohibited by the Nairobi City Council, is the <a href="https://www.rsc.ox.ac.uk/publications/refugee-economies-in-kenya">most common</a> way they earn a living. A considerable number of Congolese refugees sell bitenge (African textiles) or mobile phone credit on the busy streets of Nairobi. They often venture out of the capital to other cities to explore less competitive markets. </p>
<p>Somali refugees typically sell clothing, tea and snacks in Eastleigh – Nairobi’s so-called <a href="https://books.google.co.ke/books/about/Little_Mogadishu.html?id=vJf0oAEACAAJ&redir_esc=y">“little Mogadishu”</a> – because of the large number of Somalis who live and do business here.</p>
<p>Alongside informal businesses, mutual assistance between refugees <a href="https://www.rsc.ox.ac.uk/publications/refugee-economies-in-kenya">is crucial</a> for survival. When they run out of cash or food, they visit friends, neighbours, churches or mosques to get help. Some fortunate refugees also benefit from remittances sent by friends or relatives living abroad. As these examples show, for self-settled refugees in Nairobi, both mobility and various networks are key for their day-to-day survival.</p>
<p>Over the last several weeks, I have been communicating with our research assistants through phone, Skype, emails or WhatsApp to gather information. </p>
<p>From these reports we have learnt that hawkers in particular are suffering from movement restrictions and far fewer customers. Many hawkers used to take advantage of the evening hours – between 5pm and 8pm – when city council patrols would disappear. But the curfew starts at 7pm and most people on the streets now vanish at around 5pm to 6pm. </p>
<p>In addition, remittance pipelines appear to be dwindling. According to our <a href="https://www.rsc.ox.ac.uk/publications/refugee-economies-in-kenya">research</a> in 2017, 43% of Somali refugees received remittances. The annual median amount of remittances sent was Ksh252,000 (about US$2,500). But one Somali research assistant reported that Hawala – a money transfer system – has become “empty”. Although some remittance recipients are still getting regular support from abroad, many others have lost financial support as the pandemic-induced economic crisis also hits their remitters abroad. </p>
<p>Finally, our research assistants note that collective economic activities have also been disturbed by the COVID-19 lockdown. For instance, Somali refugee business people often organise <em>ayuto</em> – credit groups that would regularly put money together for mutual financial assistance. Now, due to business closures and restricted movements, many of these communal finance mechanisms aren’t working.</p>
<p>Our refugee research assistants also reported that although the Kenyan government has started to assist some vulnerable Kenyan families with food and a small cash stipend via Mpesa – the mobile money network in Kenya – refugees are excluded from government support by their legal status. One assistant reported that a group of refugees who enquired were explicitly told by government officials: “UNHCR (United Nations High Commissioner for Refugees) is responsible for refugees, so go to UNHCR.”</p>
<h2>Coping</h2>
<p>To cope, refugees rely on solidarity. Among Somali refugees, those who are less affected are trying to help vulnerable community members. In the Congolese community, pastors collect food and cash donations and redistribute them to the most vulnerable refugees with the help of community-based organisations. Pastors are also providing counselling.</p>
<p>But all the research assistants we spoke to are concerned about how long they can sustain these informal support mechanisms. Ad hoc refugee-led initiatives are almost entirely reliant on benevolent donations from refugees themselves. </p>
<p>After the health risks of COVID-19 are finally mitigated, the question of how to best assist refugees’ economic recovery should be a primary concern for refugee-assisting agencies. Needs-based aid, such as giving food and non-food items, is definitely necessary and important. But reconstruction of livelihood strategies after COVID-19 needs a long-term vision and different approaches.</p><img src="https://counter.theconversation.com/content/138455/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The Refugee Economies Programme has been funded by IKEA Foundation. </span></em></p>Nairobi’s refugees have few savings and depend on the day-to-day cash they generate from street vending.Naohiko Omata, Associate professor, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1356022020-04-17T14:35:44Z2020-04-17T14:35:44ZCoronavirus pandemic could hit the billions migrant workers send home in cash<p>As the coronavirus pandemic hits jobs and wages in many sectors of the global economy that depend on migrants, a slowdown in the amount of money these workers send back home to their families looks increasingly likely. These international remittances will be crucial in transmitting the unfolding economic crisis in richer countries to poorer countries. They will fundamentally shape how, and the pace at which, the world recovers from coronavirus. </p>
<p>Remittances shelter a large number of poor and vulnerable households, underpinning the survival strategies of over 1 billion people. In 2019, an estimated 200 million people in the global migrant workforce sent home US$715 billion (£571 billion). Of this, it’s estimated <a href="https://migrationdataportal.org/themes/remittances">US$551 billion</a> supported up to 800 million households living in low- and middle-income countries. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/328364/original/file-20200416-192715-dpzgyh.png?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/328364/original/file-20200416-192715-dpzgyh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/328364/original/file-20200416-192715-dpzgyh.png?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=406&fit=crop&dpr=1 600w, https://images.theconversation.com/files/328364/original/file-20200416-192715-dpzgyh.png?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=406&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/328364/original/file-20200416-192715-dpzgyh.png?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=406&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/328364/original/file-20200416-192715-dpzgyh.png?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=511&fit=crop&dpr=1 754w, https://images.theconversation.com/files/328364/original/file-20200416-192715-dpzgyh.png?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=511&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/328364/original/file-20200416-192715-dpzgyh.png?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=511&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://blogs.worldbank.org/peoplemove/data-release-remittances-low-and-middle-income-countries-track-reach-551-billion-2019">World Bank-KNOMAD</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>The majority of remittances are small sums of money, spent by recipients on everyday subsistence needs including food, education and health. The World Bank <a href="https://blogs.worldbank.org/opendata/money-sent-home-workers-now-largest-source-external-financing-low-and-middle-income">projects</a> that within five years, remittances will outstrip overseas aid and foreign direct investment combined, reflecting the extent to which global financial flows have been reshaped by migration. </p>
<p>But the social distancing and lockdown measures used to contain the spread of coronavirus have led to a global economic slump, with the International Monetary Fund predicting the global <a href="https://www.imf.org/en/Publications/WEO/Issues/2020/04/14/weo-april-2020">economy will contract by 3% in 2020</a>. Three issues make this looming crisis particularly salient for the migrant workers who generate remittances. </p>
<h2>Migrant workers at risk</h2>
<p>First, as the Institute for Public Policy Research think tank illustrated in a recent <a href="https://www.ippr.org/blog/migrant-workers-and-coronavirus">briefing</a>, migrant workers tend to work in sectors that are particularly vulnerable at times of an economic downturn and have <a href="https://www.independent.co.uk/news/health/coronavirus-uk-migrant-workers-overseas-human-rights-covid-19-a9426086.html">less employee protections</a>. They are also more likely to be self-employed.</p>
<p>Second, the access migrant workers have to public funds is – with some exceptions – specifically restricted as a condition of their visas. So it’s uncertain whether they will be able to access the already limited government interventions to mitigate the effects of the pandemic. For example, the South African government’s initiative to help small- and medium-sized businesses is only available for those with <a href="https://www.cnbcafrica.com/news/2020/03/25/these-are-the-relief-measures-being-offered-to-south-africas-small-businesses-during-lockdown/">South African citizenship</a>.</p>
<p>Third, and as a result of this, migrant workers adopt <a href="https://onlinelibrary.wiley.com/doi/abs/10.1002/jid.1793">a series of strategies or tactics</a> to cope. They often continue to work in compromised circumstances, such as in jobs with lower wages, poor working conditions and, in the current crisis, exposure to infection. They also restrict their spending – and contemplate a return back home. </p>
<p>In the UK, some migrants are hyper-visible NHS doctors and nurses. Their labour has been somewhat belatedly acknowledged by <a href="https://www.theguardian.com/world/2020/apr/02/matt-hancock-sets-target-of-100000-coronavirus-tests-a-day">the government</a>, and their importance to the health service demonstrated by the Home Office’s decision to extend all visas of health workers coming up for renewal by <a href="https://www.itv.com/news/2020-03-31/visas-extended-for-migrant-doctors-nurses-and-paramedics-fighting-virus-in-uk/">a year</a>. </p>
<p>But many more migrants are hidden and largely unsung heroes who continue to work in so-called semi-skilled or unskilled jobs in sectors such as food manufacturing and delivery, social care and cleaning. High rates of infection among <a href="https://blogs.prio.org/2020/04/migrants-and-covid-19-in-norway-five-reflections-on-skewed-impacts/">Somali migrants in Norway</a>, for example, are partly attributable to their concentration in these “close-contact” professions where home working is not an option.</p>
<h2>The 2008 financial crisis</h2>
<p>The 2008 financial crash and recession provide some indications of how this crisis in migrant work may affect remittance flows. Between 2008 and 2009, remittance flows declined by <a href="https://www.migrationpolicy.org/article/remittances-rebound-after-recession">5.5% globally</a>. Some parts of the world saw even more marked declines. Transfers to Latin America and the Caribbean, most originating from the US, <a href="https://www.oecd.org/migration/48423814.pdf">decreased by 12%</a>. Migrants remitted smaller amounts, more infrequently, or in extreme cases, stopped altogether as they were laid off and faced uncertain future employment prospects. </p>
<p>Early predictions of the impact of coronavirus on remittances detail significant declines. One study by the Inter-American Dialogue estimated there would be a <a href="https://www.thedialogue.org/wp-content/uploads/2020/03/Migration-remittances-and-the-impact-of-the-pandemic-3.pdf">7% decline</a> in remittances from the US, which will fall from by US$76 billion to US$70 billion, with receiving households from Mexico and Central America being most affected. According to <a href="https://externalcontent.blob.core.windows.net/pdfs/20200401_Remittances_Crisis_Covid19.pdf">another study by BBVA Research</a>, remittances to Mexico could fall by 17%.</p>
<p>With the <a href="https://www.ft.com/content/d6188e94-e6c6-11e9-9743-db5a370481bc">global economy slowing down</a> even before coronavirus, and the pandemic affecting different parts of the world over different timelines, long-term recovery prospects are unclear. The particular vulnerability of poor countries is apparent with the World Bank pledging <a href="https://www.thejakartapost.com/news/2020/04/03/world-bank-to-roll-out-160b-emergency-aid-over-15-months.html">US$160 billion</a> over the next 15 months to aid both immediate health priorities and longer term economic recovery. </p>
<p>It remains unclear whether that US$160 billion is <a href="https://unctad.org/en/pages/newsdetails.aspx?OriginalVersionID=2315">adequate</a> and will reach vulnerable households, particularly given the negative impact the World Bank and IMF’s historic structural adjustment programmes, in which strict spending conditions were attached to aid, had <a href="https://www.sciencedirect.com/science/article/abs/pii/S0277953616306876?via%3Dihub">on the healthcare systems</a> of many developing countries. </p>
<p>In contrast, remittances – often known as aid that reaches its destination – constitute a significant safety net for vulnerable households. Our own <a href="https://pure.royalholloway.ac.uk/portal/en/publications/contesting-new-development-frontiers-the-uneven-financial-incorporation-of-remittance-flows-and-households-in-senegal-and-ghana(bcc4c65c-8718-4cb2-8a29-7819376b258e).html">research</a> shows that remittances don’t just reach immediate household members but are also distributed among extended family and friends. They also support local economies through family payments to shopkeepers and construction workers. In regions such as the Horn of Africa, where 40% of households are heavily dependent upon remittances, any disruption in flows sent by the <a href="https://blogs.lse.ac.uk/crp/2020/04/07/remittances-affect-the-somali-covid-19-response/">Somali diaspora</a> will further exacerbate food insecurity. </p>
<p>How richer nations respond to the current crisis will have significant economic ramifications for countries dependent on remittances. Richer nations must adopt <a href="https://www.theguardian.com/commentisfree/2020/mar/30/hostile-environment-covonavirus-crisis-britain-migrants">inclusive economic policies</a> which both protect the livelihoods of migrants and reduce the socio-economic impacts of the pandemic. Their jobs are linked to the survival of millions of others.</p><img src="https://counter.theconversation.com/content/135602/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Kavita Datta receives funding from UKRI (ESRC and AHRC). </span></em></p><p class="fine-print"><em><span>Vincent Guermond does not work for, consult, own shares in or receive funding from any company or organisation that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The way richer nations respond to the coronavirus crash will have significant economic ramifications for countries dependent on remittances.Vincent Guermond, Research Associate in Geography, Royal Holloway University of LondonKavita Datta, Professor in Development Geography, Queen Mary University of LondonLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1277002019-11-26T03:42:10Z2019-11-26T03:42:10ZWestpac’s panicked response to its money-laundering scandal looks ill-considered<p>Westpac’s board has <a href="https://www.asx.com.au/asxpdf/20191126/pdf/44by46ysjf6w06.pdf">jettisoned its chief executive, Brian Hartzer</a>, just hours after he reportedly told his team mainstream Australia was not overly concerned about the bank’s <a href="https://www.austrac.gov.au/about-us/media-release/civil-penalty-orders-against-westpac">23 million alleged breaches</a> of anti-money-laundering laws, including handling transactions potentially involving child sex abuse.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/303604/original/file-20191125-84262-191li1p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/303604/original/file-20191125-84262-191li1p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/303604/original/file-20191125-84262-191li1p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=971&fit=crop&dpr=1 600w, https://images.theconversation.com/files/303604/original/file-20191125-84262-191li1p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=971&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/303604/original/file-20191125-84262-191li1p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=971&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/303604/original/file-20191125-84262-191li1p.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1220&fit=crop&dpr=1 754w, https://images.theconversation.com/files/303604/original/file-20191125-84262-191li1p.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1220&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/303604/original/file-20191125-84262-191li1p.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1220&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://www.asx.com.au/asxpdf/20191126/pdf/44by46ysjf6w06.pdf">Westpac's announcement to the Australian Securities Exchange.</a></span>
</figcaption>
</figure>
<p>Harzter will receive a year’s salary in lieu of notice, worth A$2.68 million. Had he stayed on, he would have been eligible for share rights worth $20 million.</p>
<p>Westpac’s chairman, Lindsay Maxted, will bring forward his own retirement to the first half of 2020.</p>
<p>But far more customers have already been thrown overboard.</p>
<p>The <a href="https://www.westpac.com.au/content/dam/public/wbc/documents/pdf/aw/media_release_response_plan.pdf">emergency response</a> Westpac rushed out a few days ago abandoned thousands throughout the Pacific and other regions.</p>
<p>Westpac announced its “immediate fixes” included immediately shutting down “LitePay”, its low-cost system for customers to transfer money from one country to another.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/303313/original/file-20191124-74588-15ry74a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/303313/original/file-20191124-74588-15ry74a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/303313/original/file-20191124-74588-15ry74a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/303313/original/file-20191124-74588-15ry74a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/303313/original/file-20191124-74588-15ry74a.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/303313/original/file-20191124-74588-15ry74a.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/303313/original/file-20191124-74588-15ry74a.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption"></span>
<span class="attribution"><a class="source" href="https://cdn.theconversation.com/static_files/files/791/FINAL_Media_Release_-_Response_Plan.pdf?1574568052">Extract from Westpac's weekend response.</a></span>
</figcaption>
</figure>
<p>Customers used LitePay to send “remittances” to family members outside Australia. </p>
<p>The bank’s response statement implicitly acknowledged the importance of these remittances. It noted LitePay was launched as part of a broader initiative with Australia’s Department of Foreign Affairs “to improve the livelihoods of men and women in the Pacific”.</p>
<p>Shutting down LitePay, without providing customers viable alternatives, is likely to do the opposite.</p>
<h2>Westpac has abandoned customers who need it</h2>
<p>The United Nations <a href="https://www.un.org/development/desa/en/news/population/remittances-matter.html">recognises</a> remittances as vital in helping millions out of poverty. It estimates about one in nine people around the world rely on remittances from family members working abroad. </p>
<p>Remittances are particularly important throughout the Pacific, from the Philippines to a small island nation like Tonga, where the money adults working abroad send home <a href="https://data.worldbank.org/indicator/BX.TRF.PWKR.DT.GD.ZS">accounts</a> for more than 40% of their GDP. </p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/if-australia-cares-about-pacific-nations-we-should-also-invest-in-their-care-givers-102780">If Australia cares about Pacific nations, we should also invest in their care givers</a>
</strong>
</em>
</p>
<hr>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/303607/original/file-20191125-84217-t3iy8u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/303607/original/file-20191125-84217-t3iy8u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/303607/original/file-20191125-84217-t3iy8u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=970&fit=crop&dpr=1 600w, https://images.theconversation.com/files/303607/original/file-20191125-84217-t3iy8u.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=970&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/303607/original/file-20191125-84217-t3iy8u.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=970&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/303607/original/file-20191125-84217-t3iy8u.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=1219&fit=crop&dpr=1 754w, https://images.theconversation.com/files/303607/original/file-20191125-84217-t3iy8u.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=1219&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/303607/original/file-20191125-84217-t3iy8u.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=1219&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">A Western Union branch facade in Cebu City, Philippines.</span>
<span class="attribution"><span class="source">Shuttersock</span></span>
</figcaption>
</figure>
<p>Remittances can be sent via companies like Western Union and Moneygram, but these are relatively expensive and generally focused on urban customers. In Australia members of expatriate communities with connections to their home countries established lower-cost remittance services. These small businesses facilitated the transfer of small amounts – <a href="https://www.un.org/development/desa/en/news/population/remittances-matter.html">generally</a> less than A$500 a month – at an affordable price. They did so using accounts with banks like Westpac.</p>
<p>From 2011, remitters were required to register with the anti-money-laundering agency, AUSTRAC, and comply with anti-money-laundering laws. Compliance obligations include identifying customers and verifying their identities, generally known as “know your customer” or “KYC” measures.</p>
<p>Then, in 2013, Australian banks joined a global trend to “de-bank” small remitters, due to money-laundering and terrorist-financing risks. Over the next few years the accounts of more than <a href="http://www.austlii.edu.au/au/journals/UQLawJl/2017/6.pdf">700 small Australian remitters</a>, many of which were AUSTRAC-registered, were closed.</p>
<h2>Compliance obligations</h2>
<p>Westpac was the last of Australia’s big four banks to withdraw from servicing remitters. In November 2014 then chief executive <a href="https://www.smh.com.au/business/banking-and-finance/westpac-closes-door-on-money-transfer-operators-as-terror-laws-bite-20141118-11p75z.html">Gail Kelly said</a>:</p>
<blockquote>
<p>The regulatory requirements for anti-money laundering are you need to know your customer and, in the case of remitters, you need to know your customer’s customers. That’s quite a responsibility. You do millions of these transactions and if one goes wrong and is connected with terrorism financing, that’s a real problem.</p>
</blockquote>
<p>The need to “know your customer’s customers” was not, however, a clear regulatory obligation. In 2015 the global standard-setter for controls on money laundering and terrorist financing, the Financial Action Task Force (FATF),
<a href="http://www.fatf-gafi.org/documents/news/private-sector-forum-march-2015.html">stated</a> it did not require this. </p>
<p>The task force had also stated since 2014 that risks relating to remittances should be assessed on a <a href="http://www.fatf-gafi.org/publications/fatfgeneral/documents/rba-and-de-risking.html">case-by-case basis</a>. The low risk of criminals or terrorism financiers sending money through remittance providers from Australia to Pacific island countries has since been confirmed by <a href="https://www.austrac.gov.au/about-us/media-release/joint-media-release-keeping-pacific-remittances-affordable-and-safe-crime">a 2017 report</a> by AUSTRAC and the Department of Foreign Affairs and Trade.</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/with-increased-anti-money-laundering-measures-banks-are-shutting-out-women-46869">With increased anti-money laundering measures, banks are shutting out women</a>
</strong>
</em>
</p>
<hr>
<p>Whatever the potential risk small remitters pose, the fact of de-banking created real risks. As <a href="https://theconversation.com/real-lives-real-risk-threats-to-small-money-remitters-hit-african-families-48315">research by myself and Supriya Singh</a> into the effect on African communities found:</p>
<blockquote>
<p>Some worry that if the money stops their parents will starve. Young people will join terrorist groups or decide to flee hunger by joining the boats. One Eritrean community leader said his cousin fled to the Mediterranean shores and died in the attempt to reach Europe.</p>
</blockquote>
<p>De-banking remitter accounts lessened the compliance obligations of Westpac and others. But it had the ironic effect of reducing the transparency of remittance flows for law enforcement. In many cases payments continued to flow using <a href="http://classic.austlii.edu.au/au/journals/UQLawJl/2017/6.html">unregulated channels and even cash</a>, giving rise to crime risks to users and to Australia.</p>
<h2>Leaving customers high and dry</h2>
<p>It is a further irony that having de-banked small remittances services due to compliance concerns, Westpac ran afoul of anti-money-laundering obligations with LitePay, which it <a href="https://www.reuters.com/article/westpac-remittances-idUSL3N1831BB">launched in 2016</a>.</p>
<p>AUSTRAC’s charges against Westpac outline 12 cases involving repeated suspicious payments to the Philippines using LitePay. The money transfers matched known child-exploitation transaction patterns. Westpac failed to identify and report these prior to 2018 because it lacked appropriate detection measures for those transaction patterns. </p>
<p>But AUSTRAC says Westpac fixed the problems with LitePay in June 2018. Instead, AUSTRAC alleges, it is in its non-LitePay channels where the bank has still not implemented such measures. It is therefore in those channels that it continued to fail “<a href="https://www.austrac.gov.au/sites/default/files/2019-11/Statement%20of%20Claim_Filed.pdf">to identify activity indicative of child exploitation risks</a>”.</p>
<p>So why shut down LitePay? Why leave high and dry all its honest customers and the families who depend on remittances?</p>
<hr>
<p>
<em>
<strong>
Read more:
<a href="https://theconversation.com/how-states-rocked-by-conflict-could-harness-funds-from-their-diasporas-111270">How states rocked by conflict could harness funds from their diasporas</a>
</strong>
</em>
</p>
<hr>
<p>Westpac has options. It could improve its control measures further. It could launch a <a href="http://classic.austlii.edu.au/au/journals/UQLawJl/2017/6.html">collaborative</a>, risk-based program aimed at re-banking small registered community-based remitters, starting with those servicing low-risk regions in the Pacific. </p>
<p>These remitters know their communities and users well. Together with Westpac’s improved systems, they could deliver an even safer system.</p>
<p>Jettisoning LitePay looks like a classic case of throwing out the baby with the bathwater – and doing so with scant regard for Westpac’s corporate social responsibilities. </p>
<hr>
<p><em>Editor’s note: Subsequent to the publication of this article Westpac amended its response plan to <a href="https://www.westpac.com.au/about-westpac/media/media-releases/2019/26-november1/">remove its claim</a> that LitePay was launched as part of an initiative with Australia’s Department of Foreign Affairs. It acknowledged that its memorandum of understanding with the department does not include the LitePay product.</em></p><img src="https://counter.theconversation.com/content/127700/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Louis de Koker is affiliated with La Trobe University. Some of his research on remittances was associated with the Consultative Group to Assist the Poor (CGAP), an independent think-tank on financial inclusion housed at the World Bank. The views expressed in this article are his own and are not necessarily shared by La Trobe University or CGAP.</span></em></p>Westpac’s decision to shut down its LitePay money transfer system will hurt people relying on remittances throughout the Pacific region.Louis de Koker, Professor of Law, La Trobe UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1215382019-08-07T17:13:22Z2019-08-07T17:13:22Z5 reasons why Trump’s Venezuela embargo won’t end the Maduro regime<p>The U.S. has <a href="https://www.cnn.com/2019/08/05/politics/trump-economic-embargo-venezuela/index.html">announced</a> an economic embargo on Venezuela, intended to put an end to President Nicolás Maduro’s authoritarian regime. </p>
<p>In an Aug. 5 <a href="https://www.whitehouse.gov/presidential-actions/executive-order-blocking-property-government-venezuela/">executive order</a>, President Donald Trump said that the tough new sanctions – which target any company or individual outside of Venezuela doing business directly or indirectly with Maduro’s government – were a response to the Maduro regime’s “continued usurpation of power” and “human rights abuses.” </p>
<p>All Venezuelan government assets in the United States are also now frozen. </p>
<p>The new measures represent a significant escalation from <a href="https://www.treasury.gov/resource-center/sanctions/programs/pages/venezuela.aspx">previous sanctions</a>, which mainly targeted government officials and some key industries such as oil and gas, gold and finance.</p>
<p>But my <a href="https://theconversation.com/profiles/marco-aponte-moreno-134249">analysis of Venezuela’s political and economic crisis</a> suggests that an embargo alone will not provoke Maduro’s ouster. Here are five reasons why.</p>
<h2>1. Venezuela’s economy is already broken</h2>
<p>Embargos are a <a href="https://www.cfr.org/backgrounder/what-are-economic-sanctions">foreign policy tool</a> meant to pressure rogue governments into changing their ways by cutting off their cash flow.</p>
<p>It’s too late for that in Venezuela. </p>
<p>After years of mismanagement and corruption by the Maduro government, Venezuela’s economy is in <a href="https://theconversation.com/inside-venezuelas-economic-collapse-80597">shambles</a>. The GDP has contracted by <a href="https://www.bbc.com/news/world-latin-america-46999668">more than 15% every year since 2016</a>. Hyperinflation hit <a href="https://www.cnbc.com/2019/08/02/venezuela-inflation-at-10-million-percent-its-time-for-shock-therapy.html">10 million percent</a> in 2019. </p>
<p>Maduro’s cash-strapped government <a href="https://www.forbes.com/sites/francescoppola/2017/11/14/venezuela-defaults/#3806fbe62755">defaulted on its dollar-based bonds</a> in 2017. This year it has <a href="https://www.bloomberg.com/news/articles/2019-06-04/venezuela-is-said-to-default-on-gold-swap-with-deutsche-bank">failed to make payments on US$1.85 billion</a> that Deutsche Bank and Citigroup loaned Venezuela using the regime’s gold as collateral. Venezuela’s government is nearly bankrupt.</p>
<p>But since this economic decline has happened gradually, beginning in 2014, wealthy Venezuelans – especially corrupt government officials – have already <a href="https://www.gazetadopovo.com.br/wiseup-news/who-are-venezuelas-wealthy/">put their money overseas</a>, primarily in European markets. For example, Venezuelans own some <a href="https://www.nytimes.com/2018/07/29/world/europe/spain-property-boom-venezuela.html">7,000 luxury apartments</a> in Madrid, according to The New York Times. </p>
<p>American sanctions just can’t hurt Venezuela’s ruling class the way they might have several years ago.</p>
<h2>2. The embargo leaves some cash flows untouched</h2>
<p>Trump’s harsh new sanctions on Venezuela are not a full trade embargo like the Cuba embargo, which has almost totally <a href="https://insightcuba.com/faq/trade-embargo-cuba">isolated the island from world markets since 1962</a>. </p>
<p>Imports and exports with the private sector – a <a href="https://www.washingtonpost.com/politics/trump-freezes-venezuela-govt-assets-in-escalation/2019/08/05/f8f4dd0a-b7eb-11e9-8e83-4e6687e99814_story.html">still sizable market</a> despite Maduro’s socialist policies – will continue to flow freely, as will remittances from Venezuelans living abroad. </p>
<p>These two income sources both come in dollars, which is far more stable and valuable than the local currency. Combined, they can keep the ailing Venezuelan economy afloat for some time. </p>
<p>An incomplete embargo, in other words, will not provoke complete economic collapse. </p>
<figure class="align-center zoomable">
<a href="https://images.theconversation.com/files/287182/original/file-20190807-144878-1a84vcw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/287182/original/file-20190807-144878-1a84vcw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/287182/original/file-20190807-144878-1a84vcw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/287182/original/file-20190807-144878-1a84vcw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/287182/original/file-20190807-144878-1a84vcw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/287182/original/file-20190807-144878-1a84vcw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/287182/original/file-20190807-144878-1a84vcw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/287182/original/file-20190807-144878-1a84vcw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">The U.S. embargo is sure to be unpopular in Venezuela. A wall in Caracas reads, ‘Trump, un-embargo Venezuela.’</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Venezuela-Executive-Order/6010ad273b83495897ff4d528ae3b38d/5/0">AP Photo/Leonardo Fernandez</a></span>
</figcaption>
</figure>
<h2>3. The poor, not the regime, will be hurt the most</h2>
<p>Venezuelans with <a href="https://www.theguardian.com/world/2019/mar/13/venezuela-hyperinflation-bolivar-banknotes-dollars">access to dollars</a> – through remittances or savings squirreled away before the crisis – are surviving this crisis. They can afford food, medicine and gasoline, and buy other goods to barter. </p>
<p>But most Venezuelans today are desperately poor. According to the United Nations, <a href="https://borgenproject.org/top-10-facts-about-poverty-in-venezuela/">90% of people there live in poverty</a>. That’s double what it was in 2014.</p>
<p>The Venezuelan minimum wage of roughly $7 per month is not enough to cover a family’s basic needs. As a result, malnutrition is spreading. Last year, Venezuelans reported <a href="https://borgenproject.org/top-10-facts-about-poverty-in-venezuela/">losing an average of 25 pounds</a>, and two-thirds said they <a href="https://borgenproject.org/top-10-facts-about-poverty-in-venezuela/">go to bed hungry</a>.</p>
<p>The majority of Venezuelans rely on the government to eat. Its monthly <a href="https://www.reuters.com/article/us-venezuela-politics-food/for-poor-venezuelans-a-box-of-food-may-sway-vote-for-maduro-idUSKCN1GO173">delivery of heavily subsidized food and basic goods</a> known as “CLAP” is a lifeline to the poor. If the government runs out of money, poor people will feel it the most – not the government officials and other Venezuelans with <a href="https://www.theguardian.com/world/2019/mar/13/venezuela-hyperinflation-bolivar-banknotes-dollars">access to dollars</a>. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/287109/original/file-20190806-84225-1pk34ph.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/287109/original/file-20190806-84225-1pk34ph.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/287109/original/file-20190806-84225-1pk34ph.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/287109/original/file-20190806-84225-1pk34ph.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/287109/original/file-20190806-84225-1pk34ph.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/287109/original/file-20190806-84225-1pk34ph.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/287109/original/file-20190806-84225-1pk34ph.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Venezuelan National Militia members carry boxes of subsidized food for distribution across the capital of Caracas, July 5, 2019.</span>
<span class="attribution"><a class="source" href="http://www.apimages.com/metadata/Index/Venezuela-Independence-Day/83058532fb664fe88fe46bd1f2507378/2/0">AP Photos/Ariana Cubillos</a></span>
</figcaption>
</figure>
<h2>4. China and Russia still support Venezuela</h2>
<p>Maduro has few international allies. When the Trump administration led efforts earlier this year to <a href="https://theconversation.com/venezuela-power-struggle-plunges-nation-into-turmoil-3-essential-reads-110419">recognize opposition leader Juan Guaidó as the legitimate president of Venezuela</a>, 60 countries joined it.</p>
<p>But China and Russia continue to be the Venezuela’s most powerful international boosters and have bailed out Maduro by giving his government <a href="https://www.washingtonpost.com/politics/2019/02/22/china-russia-have-deep-financial-ties-venezuela-heres-whats-stake/">massive loans</a> in the past. Both have <a href="https://www.euronews.com/2019/02/28/watch-live-un-security-council-votes-on-rival-us-russian-proposals-on-venezuela">vetoed every U.S. effort to pass resolutions against Maduro’s government</a> within the United Nations. </p>
<p>China has exploited <a href="https://www.washingtonpost.com/politics/2019/02/22/china-russia-have-deep-financial-ties-venezuela-heres-whats-stake/">Venezuela’s vast natural resources</a> for profit. Russia has made the South American nation a strategic geopolitical partner in the Western Hemisphere, a key ally in its <a href="https://www.nytimes.com/2019/03/08/world/americas/russia-venezuela-maduro-putin.html">efforts to undermine American influence</a>. </p>
<p>Neither of the two countries are likely to comply with an economic embargo to Venezuela. Analysts expect them to <a href="https://www.miamiherald.com/news/nation-world/world/americas/venezuela/article233590982.html">continue buying oil, gold</a> and other valuable commodities from Maduro’s regime, providing much-needed cash to his government.</p>
<h2>5. Remember Cuba?</h2>
<p>Embargoes rarely produce regime change of the sort Trump seeks in Venezuela. </p>
<p>Just consider Cuba, which this year celebrated the 66th anniversary of its communist revolution – 57 years after the Kennedy government imposed a <a href="https://www.treasury.gov/resource-center/sanctions/programs/pages/cuba.aspx">trade embargo against it</a>. The Cuba embargo didn’t end the Castro regime; it fueled anti-American sentiment, handing the Castros an easy scapegoat for all the country’s problems – thereby <a href="https://www.nationalgeographic.com/news/2014/12/141217-cuba-united-states-relations-culture-reaction-castro-obama-world/">improving the government’s own popularity</a>.</p>
<p>An embargo will almost surely do the same in Venezuela. Trump has given Maduro even <a href="https://www.forbes.com/sites/kenrapoza/2019/02/15/maduro-blames-trump-for-venezuelas-great-depression/">more ammunition to blame the U.S.</a> for his country’s economic woes. </p>
<p>Maduro has been <a href="https://www.nytimes.com/2015/03/12/world/americas/venezuela-nicolas-maduro-obama.html">doing that for years</a> anyway. Now, he won’t be totally wrong.</p><img src="https://counter.theconversation.com/content/121538/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Marco Aponte-Moreno does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>For one, you can’t break an economy that’s already broken.Marco Aponte-Moreno, Associate Professor of Global Business and Board Member of the Institute for Latino and Latin American Studies, St Mary's College of California Licensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1133132019-03-12T13:23:17Z2019-03-12T13:23:17ZFacebook’s cryptocurrency: a financial expert breaks it down<figure><img src="https://images.theconversation.com/files/263373/original/file-20190312-86682-1o1pdot.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">
</span> <span class="attribution"><a class="source" href="https://www.shutterstock.com/image-photo/bitcoin-coin-facebook-logo-on-laptop-1274283493">Grejak/Shutterstock</a></span></figcaption></figure><p>Facebook is <a href="https://www.bloomberg.com/news/articles/2018-12-21/facebook-is-said-to-develop-stablecoin-for-whatsapp-transfers">reportedly preparing</a> to launch its own version of Bitcoin, for use in its messaging applications, WhatsApp, Messenger and Instagram. Could this “Facecoin” be the long-awaited breakthrough by a global technology giant into the lucrative market for retail financial services? Or will it be yet another exaggerated “crypto” project, buying into the continuing excitement about decentralised peer-to-peer exchange but, in the end, not delivering very much? Time will tell, but my two decades of research into the economics of payments makes me sceptical. </p>
<p>We know little about Facebook’s plans. So far there is just one company statement about a new group set up to look into cryptocurrencies <a href="https://www.bloomberg.com/news/articles/2018-12-21/facebook-is-said-to-develop-stablecoin-for-whatsapp-transfers">reported by Bloomberg</a>: “Like many other companies, Facebook is exploring ways to leverage the power of blockchain technology. This new small team is exploring many different applications. We don’t have anything further to share.” </p>
<p>Some investigative journalism from Bloomberg and the <a href="https://www.nytimes.com/2019/02/28/technology/cryptocurrency-facebook-telegram.html">New York Times</a> reveals a little more. Facecoin (and the similar “Gram” cryptocurrency being developed by the privacy focused messaging app Telegram) will apparently be a “<a href="https://theconversation.com/bitcoins-successor-more-consistent-values-might-make-stablecoins-a-safer-cryptocurrency-option-107372">stablecoin</a>”. Rather than having a fixed amount of currency that fluctuates in price, depending on demand, Facecoin will have a fixed price and the amount of it in circulation will vary. So unlike Bitcoin it will not be a vehicle for speculation. </p>
<p>What will the fixed price be? Bloomberg reports it will be fixed against the dollar. The New York Times says that it will be against a combination of dollar, euro and yen. Who will use it? Facebook is apparently focusing on providing a technology solution for the large and lucrative remittance market for payments into India. Will transactions in Facecoin be anonymous like those in Bitcoin? No, they will be associated with Facebook accounts, so they won’t be an easy means to avoid laws and regulations.</p>
<h2>Reasons to be sceptical</h2>
<p>While this is a fascinating development, some scepticism is in order. If there is one common feature to the many hundreds of crypto and blockchain finance projects announced over the past four years, it is exaggerated early claims. In one ongoing research project, I have found that of 103 projects announced since 2015 applying so-called blockchain technologies to financial services, all but a handful have quietly disappeared. None have yet been taken through to commercial-scale launch (although around half a dozen may achieve that by 2021). </p>
<p>Is there anything about Facebook’s plans to suggest a different outcome? The obvious parallel is with the Chinese payment solution WeChat Pay, globally the largest mobile and internet payment solution used by “<a href="https://www.mobilepaymentstoday.com/news/allied-wallet-adds-wechat-pay-with-900-million-active-users/">900 million active users</a>”. In Beijing and Shanghai “<a href="https://www.asiaone.com/china/no-loose-change-beggars-china-now-accepting-mobile-payments">even beggars have QR codes</a>” that allow passers by to scan and give them money using their smart phones. The integration into the WeChat messaging system is what gave WeChat Pay the critical mass to achieve widespread acceptance. Facecoin’s integration with WhatsApp and other Facebook services could support a similarly rapid take-off.</p>
<p><div data-react-class="Tweet" data-react-props="{"tweetId":"1007553673059184640"}"></div></p>
<p>But WeChat Pay doesn’t involve cryptocurrency. It uses established server technologies to enable people to transfer money in and out of conventional bank accounts as well as to other users.</p>
<p>The New York Times reports, rather surprisingly, that Facecoin (unlike WeChat Pay) will be based on integration with cryptoexchanges, which trade conventional money for digital currencies, rather than with the conventional banking system. But given that cryptoexchanges are coming under <a href="https://www.ft.com/content/a7530198-ec7b-11e8-8180-9cf212677a57">increasing regulatory pressure</a> because of their lack of transparency and irregularities in how they operate, linking with them is hardly likely to encourage people to adopt Facecoin. </p>
<p>It is also difficult to make sense of the intended use of Facecoin for remittances. Major banks already send dollars virtually instantaneously and costlessly from one country to another. Costs and inefficiencies arise in <a href="https://www.saveonsend.com/blog/bitcoin-blockchain-money-transfer/">the final mile</a> when converting funds to local currency and allocating them to a local bank account or for cash collection. The Facecoin technology will do nothing to address these problems.</p>
<h2>Who pays out?</h2>
<p>Another question mark is about the backing for Facecoin. Unlike Bitcoin, which is not pegged to any other currency, Facecoin will need the backing of real money to maintain its fixed price. The safest approach will be full reserving: for every $1 of Facecoin issued, Facebook could hold $1 of reserves in a segregated account. </p>
<p><a href="http://www.businessdictionary.com/definition/fractional-reserve-system-FRS.html">Fractional or partial reserving</a> is also possible but who then guarantees the safety of those reserves? If reserves do not cover withdrawals, who is then responsible and what compensation is there for holders of Facecoin? Facebook would need a banking licence and subject itself to the full burden of banking regulation. Ideally, reserves would be held with a central bank. But central banks will be reluctant to support a private currency.</p>
<p>Perhaps the biggest reason for scepticism comes from the challenges Facebook already faces over user data, privacy and authenticity. If Facebook takes as big a role in daily payments as it already has in personal communications and social media, then it will become an even bigger target for the growing anti-trust movement that seeks to <a href="https://theconversation.com/why-the-eu-should-dismantle-facebook-97035">break up</a> the tech giants. </p>
<p>Fundamental change is possible. Cryptocurrency technologies <a href="https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2946160">could be used</a> to eliminate the instability of fractionally reserved banking. But this will have to be through a state currency replacing fractionally reserved bank transaction accounts and not through a private currency. </p>
<p>It would probably be wiser for Facebook to outsource Facecoin to an established international bank. But then, of course, this wouldn’t be such a major disruption of established financial services.</p><img src="https://counter.theconversation.com/content/113313/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Alistair Milne has recieved funding for research related to this article from RCUK, the Swift Institute, the Sloan Foundation and the Government Office for Science</span></em></p>There are good reasons to be sceptical of the Facecoin project.Alistair Milne, Professor of Financial Economics, Loughborough UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/1021542018-10-15T10:29:33Z2018-10-15T10:29:33ZMigrant money could be keeping Nicaragua’s uprising alive<p><a href="https://theconversation.com/las-remesas-podrian-mantener-viva-a-la-insurgencia-en-nicaragua-105102"><em>Leer en español</em></a>.</p>
<p>Protesting is now <a href="https://elpais.com/internacional/2018/09/29/america/1538186460_718736.html">illegal in Nicaragua</a>, according to President Daniel Ortega.</p>
<p>The Central American country has been embroiled in deadly <a href="https://theconversation.com/outrage-at-state-violence-puts-nicaraguas-president-on-notice-95547">political turmoil for months</a>. Demonstrations that <a href="https://www.npr.org/sections/thetwo-way/2018/04/22/604762080/violent-unrest-continues-in-nicaragua-over-social-security-reforms">began</a> in April against an unpopular social security reform quickly transformed into a broader movement aimed at ousting Ortega, Nicaragua’s authoritarian president.</p>
<p><a href="http://www.oas.org/en/iachr/media_center/PReleases/2018/187.asp">Up to</a> <a href="https://www.elespectador.com/noticias/el-mundo/asociacion-de-derechos-humanos-en-nicaragua-se-retira-por-amenazas-articulo-804512">450</a> people have since been killed, including a 16-year-old boy <a href="https://confidencial.com.ni/un-muerto-tras-ataque-a-marcha-por-los-presos-politicos/">caught in the crossfire</a> between government forces and demonstrators on Sept. 23. </p>
<p>The growing number of protesters arrested and charged with terrorism led the <a href="http://www.oas.org/en/iachr/media_center/PReleases/2018/187.asp">Inter-American Commission on Human Rights</a> to call on Ortega to <a href="https://confidencial.com.ni/cidh-gobierno-debe-suprimir-detenciones-ilegales/">stop what they called his government’s illegal detentions</a>. </p>
<p>Instead, the president in late September <a href="https://elpais.com/internacional/2018/09/29/america/1538186460_718736.html">banned</a> protests entirely. Thity-eight Nicaraguans were arrested on Oct. 14 for <a href="https://confidencial.com.ni/orteguismo-aumenta-represion-y-detiene-a-38-manifestantes/">planning to march against</a> their government.</p>
<h2>Ortega’s rise to power</h2>
<p>Ortega, a former revolutionary leftist who ruled Nicaragua in the 1980s, returned to office in 2007. Over the past 11 years, he has grown ever more <a href="https://www.economist.com/leaders/2018/04/26/riots-threaten-nicaraguas-autocratic-president">autocratic</a>, abolishing presidential term limits, enriching his family and restricting civil liberties.</p>
<p>The common wisdom is that Ortega enjoyed such a long and, until now, uncontested reign because Nicaragua’s <a href="https://datos.bancomundial.org/indicador/NY.GDP.MKTP.KD.ZG?locations=NI">economy boomed under his stewardship</a>, in part due to cheap and plentiful oil supplied by Hugo Chávez. </p>
<p>According to this theory, the growth allowed his government to pay for extensive <a href="https://elfaro.net/es/201609/centroamerica/19243/Daniel-Ortega-cosecha-votos-de-los-programas-sociales-que-sembr%C3%B3.htm">anti-poverty programs</a>, earning him widespread popularity in the Western Hemisphere’s <a href="https://www.cia.gov/library/publications/the-world-factbook/geos/print_nu.html">second-poorest country</a> – until the economy began to stagnate last year. </p>
<p>But that’s not the whole story behind Ortega’s long rise and sudden unpopularity. </p>
<p>While Nicaragua has prospered financially under his leadership, <a href="https://www.researchgate.net/profile/Benjamin_Waddell">my research finds that</a> migrants living in Costa Rica, the U.S. and Spain also greatly boosted the domestic economy by sending home millions of dollars each year. </p>
<p>Roughly 16 percent of the country’s population lives abroad. Their remittances, which last year totaled US$1.4 billion, have fueled consumption and tempered political pressure on Ortega’s government to reduce poverty.</p>
<p>Now, Nicaragua’s influential diaspora has <a href="https://globalvoices.org/2018/08/27/nicaraguas-diaspora-activists-bear-a-double-burden/">turned its attention</a> to the resistance against Ortega. </p>
<p>In a time when conflict and disaster are forcing <a href="https://www.nytimes.com/2015/11/01/world/europe/a-mass-migration-crisis-and-it-may-yet-get-worse.html">even more people around the world to flee their homelands</a>, these findings from Nicaragua underscore the central role that migrants can play in today’s globalized political economy.</p>
<h2>Migration as an escape valve</h2>
<p>Nicaraguans began migrating in significant numbers during Ortega’s first term, in the late 1980s. </p>
<p>The country was ravaged by <a href="http://www.envio.org.ni/articulo/2687">civil war and burdened by debt</a>. In 1989, Ortega’s socialist government was forced to undertake a series of austerity measures that left <a href="http://lasa.international.pitt.edu/Lasa2000/Dijkstra.PDF">14 percent of Nicaraguans unemployed</a>. </p>
<p>Subsequent governments enacted even harsher budget cuts, further driving up unemployment and pushing hundreds of thousands of Nicaraguans <a href="https://www.jstor.org/stable/25765217?seq=1#metadata_info_tab_contents">to seek work in neighboring Costa Rica</a>. </p>
<p>Today an estimated 500,000 Nicaraguans <a href="https://www.nacion.com/economia/agro/decreto-dara-nueva-prorroga-para-legalizar-trabajadores-migrantes/J5YCWI7HLNGMNIRJRYSEZN66RU/story/">live in Costa Rica</a>, and more are fleeing the country’s political chaos ever day.</p>
<p>Another <a href="http://www.pewhispanic.org/2015/09/15/hispanics-of-nicaraguan-origin-in-the-united-states-2013/">222,000 Nicaraguans live in the United States</a>, <a href="https://www.panamaamerica.com.pa/nacion/80-mil-nicaraguenses-en-panama-1071535">80,000 in Panama</a> and <a href="https://elpais.com/internacional/2018/04/23/america/1524494946_561490.html">an estimated 30,000 in Spain</a>. </p>
<p>Between 2007 and 2017 – the first decade of Ortega’s current administration – total migrant remittances to Nicaragua totaled <a href="https://www.bcn.gob.ni/estadisticas/sector_externo/remesas/index.php">$12.5 billion</a>. </p>
<p>That’s more than 10 percent of Nicaragua’s annual gross domestic product, on average, and in many years substantially more than <a href="https://tradingeconomics.com/nicaragua/foreign-direct-investment">total foreign direct investment in the country</a>. </p>
<p>Remittances also dwarf the <a href="https://confidencial.atavist.com/los-petrodlares-de-venezuela918v4">roughly $3.7 billion in oil aid</a> that Venezuela sent to Nicaragua during the same period.</p>
<h2>Remittances took the pressure off Ortega</h2>
<p>Ortega’s government indirectly benefited from this flood of foreign cash. </p>
<p>Migrant money helped poor Nicaraguans make ends meet and allowed <a href="https://ideas.repec.org/a/eee/jebusi/v77y2015icp42-59.html">consumers</a> to keep pace with the <a href="https://datos.bancomundial.org/indicador/NY.GDP.MKTP.KD.ZG?locations=NI">expanding national economy</a> – greatly reducing <a href="https://www.researchgate.net/publication/259512263_Migrants%27_Remittances_and_Economic_Voting_in_the_Mexican_Countryside">demand on</a> Ortega’s government to reduce poverty and unemployment. </p>
<p>Still, Nicaragua remains very poor. About <a href="https://confidencial.com.ni/cuestionan-datos-oficiales-pobreza/">40 percent of citizens</a> survive on less than $2.50 a day. </p>
<p><iframe id="9I1F3" class="tc-infographic-datawrapper" src="https://datawrapper.dwcdn.net/9I1F3/1/" height="400px" width="100%" style="border: none" frameborder="0"></iframe></p>
<p>As the director of Nicaragua’s Jesuit Migration Network, Lea Montes, explains, remittances keep <a href="https://www.laprensa.com.ni/2017/11/05/suplemento/la-prensa-domingo/2325318-los-tres-caminos-del-migrante-nicaraguense">many families housed and fed</a>.</p>
<p>As she points out, “It costs a family of four about $400 a month to get by, but the minimum wage is only $177 a month here.”</p>
<h2>Juana the florist</h2>
<p>Take the case of 70-year-old Juana Jiménez, a single mother who in the mid-1990s received a U.S. work visa – her “gift from God” – and worked as a florist in Miami for nearly 20 years. </p>
<p>The $200 to $300 a month that Jiménez sent home covered medical expenses for her son Erik, who was born with severe disabilities, and saw her family through Nicaragua’s leanest post-revolutionary years.</p>
<p>Remittances, in both Nicaragua and other developing countries, have <a href="https://openknowledge.worldbank.org/handle/10986/5096">social benefits</a> beyond keeping individual households out of poverty. Research shows that in such countries they have contributed to <a href="http://siteresources.worldbank.org/DEC/Resources/DoRemittancesPromoteFinancialDevelopment.pdf">reductions in poverty</a>, helped increase access to health care and <a href="https://econpapers.repec.org/article/eeedeveco/v_3a97_3ay_3a2012_3ai_3a1_3ap_3a156-165.htm">improved school attendance</a> by freeing children from the need to work.</p>
<p>Rather than complement government programs in those places, however, research shows that all to often, migrant remittances actually replace them. </p>
<p>For example, scholars <a href="https://www.researchgate.net/publication/233576307_Exit_Without_Leaving_Political_Disengagement_in_High_Migration_Municipalities_in_Mexico">Gary Goodman and Jonathan T. Hiskey</a> have found that, in Mexico, local governments often reduce their expenditures in areas that consistently receive remittances from abroad.</p>
<p>And as remittances increase, electoral participation in democratic countries with high migration tends to <a href="http://www.roygermano.com/uploads/4/5/0/2/45027125/germano2013.pdf">decline</a>. Rather than lobby public officials to upgrade their health clinic, say, or pave a road, citizens may look to the relatively well-off diaspora for solutions.</p>
<p>For a decade, the dual domestic impacts of international migration – economic growth and diminished citizen pressure – proved a winning combination for Ortega. </p>
<p>But then his government responded to April’s uprising with deadly repression.</p>
<h2>Remittances and dictators</h2>
<p>Nicaraguan migrants did not trigger the protests against Ortega, nor are they the reason the demonstrations grew and strengthened.</p>
<p>But, today, my research shows, they are now helping to keep this pro-democracy movement alive by <a href="https://confidencial.com.ni/the-caravan-across-europe-to-denounce-whats-happening-in-nicaragua/">informing the international community</a>, <a href="https://www.facebook.com/groups/NicasAutoconvocadosExtranjero/?hc_ref=ARTYcUFJCrcCzptG6pnxBRqCFUB67fgIRinvil2nn-z9hJvg6yewheDWIUDKOoodrws">creating international advocacy networks</a>, housing refugees and <a href="https://www.gofundme.com/nicaraguaprotest">channeling funds to anti-Ortega groups</a>. </p>
<p>It is too soon to know precisely how critical, or how financially substantial, migrant support has been to Nicaragua’s insurgency. </p>
<p>But studies done in other countries show that migrants from authoritarian countries frequently <a href="https://onlinelibrary.wiley.com/doi/abs/10.1111/ajps.12382">fund protests against dictators</a>.</p>
<p>According to political scientist Idean Salehyan, an expert in <a href="http://www.cornellpress.cornell.edu/book/?GCOI=80140100235990">transnational rebellions</a>, more than 50 percent of all national uprisings after World War II – including those in Cuba, Ireland, Pakistan and Sri Lanka – were spearheaded by insurgents abroad.</p>
<p>That’s because migrants do not just change their home countries financially. They also influence the way local residents think.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/239002/original/file-20181002-85611-1ldgb1b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/239002/original/file-20181002-85611-1ldgb1b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/239002/original/file-20181002-85611-1ldgb1b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/239002/original/file-20181002-85611-1ldgb1b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/239002/original/file-20181002-85611-1ldgb1b.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/239002/original/file-20181002-85611-1ldgb1b.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/239002/original/file-20181002-85611-1ldgb1b.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Nicaraguan expats protesting the Ortega government outside the Organization of American States headquarters in Washington on June 4, 2018.</span>
<span class="attribution"><a class="source" href="http://binaryapi.ap.org/5a927309f2844f4882debd3ff0e0b666/preview/AP18155615449559.jpg?wm=api&ver=0">AP Photo/Jacquelyn Martin</a></span>
</figcaption>
</figure>
<p>Having connections with migrants living in more developed countries <a href="https://www.sciencedirect.com/science/article/pii/S0305750X10001270">can encourage local children to stay in school</a>, <a href="https://link.springer.com/article/10.1007/s11150-009-9080-7">improve access to health care</a> and <a href="http://journals.sagepub.com/doi/abs/10.1177/0010414009331733">seed support for democracy</a>.</p>
<p>Ultimately, the influx of ideas and mindsets acquired abroad, known as <a href="https://www.tandfonline.com/doi/abs/10.1080/1369183X.2011.521361">social remittances</a>, can transform domestic politics. </p>
<p>At first, the mass exodus of Nicaraguans aided Ortega in his quest to amass power and wealth. </p>
<p>Now, those same migrants may contribute to his overthrow.</p><img src="https://counter.theconversation.com/content/102154/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Benjamin Waddell does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Nicaraguan migrants send over US$1 billion home each year. This money has played a changing role in domestic politics – first boosting the Ortega regime and, now, sustaining the uprising against him.Benjamin Waddell, Associate Professor of Sociology, Fort Lewis CollegeLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/920672018-02-20T10:25:02Z2018-02-20T10:25:02ZKenyan study sheds new light on gap between refugees and host communities<figure><img src="https://images.theconversation.com/files/207000/original/file-20180219-116351-1yrl77v.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">A Turkana woman buys food from a refugee woman in Kakuma camp in north western Kenya. </span> <span class="attribution"><span class="source">Refugee Studies Centre</span></span></figcaption></figure><p>Refugees are increasingly regarded as a development issue, rather than simply a focus for humanitarian aid. This reflects the fact that 84% of the world’s refugees are in <a href="http://www.unhcr.org/globaltrends2016">low and middle-income countries</a>, <a href="http://www.urban-refugees.org">more than half live in urban areas</a> alongside host country nationals, and that indefinite dependency on humanitarian aid is now regarded as <a href="https://sustainabledevelopment.un.org/partnership/?p=23569">undesirable and unsustainable</a>. </p>
<p><a href="https://www.penguin.co.uk/books/300094/refuge">Helping refugees to help themselves</a> through jobs, education, and other forms of economic inclusion is now mainstream refugee policy. And development actors like the World Bank are <a href="https://openknowledge.worldbank.org/handle/10986/25855">part of the institutional landscape</a>.</p>
<p>But this leads to an important question: how different are refugees and local host communities in development terms? To what extent do refugees require distinctive development policies or can they simply be included within existing national development plans? If indeed the objective of the Sustainable Development Goals is to <a href="https://sustainabledevelopment.un.org/sdgs">“leave no one behind”</a>, we need to understand whether refugees are being left behind – and if so, how.</p>
<p>This is the focus of a newly-published <a href="https://www.refugee-economies.org/assets/downloads/Refugee-Economies-Kenya-Report-web.pdf">report</a>, the first study to systematically compare socio-economic outcomes for refugees and local host communities. The research, by Oxford University’s <a href="http://www.rsc.ox.ac.uk/">Refugee Studies Centre</a>, focuses on Kenya. It’s a country typical of many low-income host countries in that it formally limits refugees’ right to work and freedom of movement. </p>
<p>Kenya’s nearly 500,000 refugees are mainly <a href="http://reporting.unhcr.org/node/2537">distributed across three sites</a>: the Dadaab and Kakuma camps, and the capital city Nairobi. The last two are the focus of the new report, which draws on research that will eventually form part of a broader multi-country, multi-year dataset. In addition to Kenya, the study will also focus on Uganda and Ethiopia, and will <a href="http://www.refugee-economies.org/">follow refugees and host communities over time</a>.</p>
<p>Based on interviews with more than 4,300 refugees and host community members, our new report reveals a complex picture. Neither refugees nor hosts inevitably do better; the “development gap” and the reasons behind it are more nuanced. The report compares and explains refugees’ and host communities’ welfare outcomes in three areas: livelihoods, living standards, and subjective well-being.</p>
<h2>Gaps between refugees and hosts</h2>
<p>In Kakuma camp, refugees are actually better off than the surrounding host population. For example, even though they have comparable employment levels, working refugees’ self-reported median income is higher than for the local Turkana (around $55 per month compared to under $25 per month). Refugees also have better diets, higher consumption and more assets. </p>
<p>Despite the gap, the Turkana hosts benefit immensely from the refugee presence; they rely on refugees as customers for their meat, firewood, and charcoal and are sometimes offered work with relief organisations. </p>
<p>In Nairobi, although refugees are better off than they would be in camps, they are worse off than the local host population across almost all metrics. For example, comparing Somali refugees with local hosts, the employment levels are 44% and 60% and the income gap is $150 per month compared to $200 per month. Refugees do worse across all other living standards indicators.</p>
<p>The picture that emerges from Kenya is that in camps refugees may sometimes be better off than surrounding hosts. This is partly because of the socio-economic base offered by international support. In the city, refugees find informal economic activity and do better than they would in camps, but they are still likely to be worse off than local citizens.</p>
<p>Four sets of factors seem to explain these gaps between refugees and hosts: regulation (how you are governed), networks (who you know), capital (what you have), and identity (who you are). In some cases these factors may advantage refugees. In other cases they may disadvantage refugees relative to hosts. These are the factors that distinguish the socio-economic lives of refugees from those of host communities.</p>
<h2>The four factors unpacked</h2>
<p><strong>Regulation:</strong> Refugees are often disadvantaged, and we show the cost to refugees of these restrictions. In Kakuma, refugee entrepreneurs are disproportionately likely to incur a formal “business tax”. This is paid by 30% of Somali businesses compared to 10% of local Turkana businesses. In addition, only 10% of the Turkana pay police bribes compared to 54% of South Sudanese, 43% of Congolese, and 23% of Somalis.</p>
<p><strong>Networks:</strong> Having crossed borders, refugees often have better transnational links. Remittances are the most obvious manifestation. Although not all refugees benefit equally, Somalis receive the highest levels of remittances of any surveyed group in either Nairobi or Turkana County. At least 43% of Somali refugees in Nairobi receive remittances, at a level more than twice that of local hosts. These transfers are identified as an important source of start-up capital for businesses.</p>
<p><strong>Capital:</strong> Refugees are often unable to access loans and bank accounts, making business start-up reliant upon informal sources. But on human and physical capital, education and health, outcomes are better in the camp context for refugees than local hosts. For example, in Kakuma, refugees have an average of 6.4 years of education compared to just 2.4 years for the Turkana. In the city, refugees generally face worse outcomes than hosts across all three forms of capital.</p>
<p><strong>Identity</strong>. Refugees’ different ethnic and religious identities can be an economically mixed blessing. They can facilitate in-group trust. But the same differences may also lead to discrimination.</p>
<p>The key takeaway is that refugees are economically distinctive compared to host communities – but not always just in negative ways. </p>
<h2>Improvements for both groups</h2>
<p>Our research identifies the factors that may lead to development gaps between refugees and hosts. Expanding opportunities, reducing constraints, and levelling the playing field in these four areas may offer a way to make both groups better off, and improve relations between them. </p>
<p>Three practical insights stand out. </p>
<p>First, even in a country with restricted regulations, refugees are economically active. Second, an important and neglected source of social protection for refugees come from refugees’ own activities and networks. Third, refugees’ and hosts’ economic lives are interdependent: a good refugee policy must also be a good host community policy. </p>
<p>To ensure that no one is left behind, every major refugee-hosting context should have an economic policy and strategy specifically for refugees and the immediate host community, based on robust analysis and consultation. Refugee policy may well be a humanitarian issue but it is also a development issue.</p><img src="https://counter.theconversation.com/content/92067/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>The Refugee Economies Programme, at the University of Oxford, is supported by the IKEA Foundation</span></em></p>Refugee policy may well be a humanitarian issue. But it is also a development issue.Alexander Betts, Professor of Forced Migration and International Affairs, University of OxfordLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/729672017-05-12T06:38:36Z2017-05-12T06:38:36ZGlobal compact on migration should focus on harnessing its win-win benefits<p><a href="http://refugeesmigrants.un.org/declaration">An agreement to address migrant and refugee crises worldwide</a>, which the UN General Assembly adopted in September, has been described by many in the United Nations as nothing short of a miracle. But it also appears imperilled at times by today’s shifting and increasingly difficult political landscape. </p>
<p>Throughout 2017, UN member states are holding consultations on elements of international cooperation and governance of migration as part of the development of a <a href="http://refugeesmigrants.un.org/migration-compact">Global Compact for Safe, Orderly and Regular Migration</a>. </p>
<p>On May 22 and 23, delegates will turn their attention to the current state of knowledge and good practice on the “drivers of migration”. These include climate change, natural disasters and human-made crises. </p>
<p>Now is the time to dispel outdated models of human mobility in favour of a holistic, nuanced view of migration patterns and their interaction with a changing global environment and economy.</p>
<h2>Simplifying migration drivers</h2>
<p>International discussions often consider development aid as part and parcel of migration management. That’s because of its potential to reduce the so-called “<a href="http://refugeesmigrants.un.org/sites/default/files/final_issue_brief_2.pdf">root causes of migration</a>”, or its drivers. </p>
<p>Migration professionals have been seduced by the concept of the “<a href="http://www.popline.org/node/308813">migration hump</a>”. It suggests that emigration may accelerate in the short term as economic development picks up and more households gain the resources needed to migrate. But that it eventually levels off as economic opportunities enable people to remain home or to return. </p>
<p>This idea is used to help explain why already high migration from <a href="journals.sagepub.com/doi/abs/10.1177/011719689300200306">Mexico to the US increased slightly in the late 1990s</a> following the signing of NAFTA, but is now a net negative flow. </p>
<p>If it sounds too convenient to be true, that’s because it is. A host of social factors, household ambitions and individual attributes <a href="http://www.sciencedirect.com/science/article/pii/S0959378011001531">contribute to migratory decisions</a>. And economic migrants at times seem caricatured as overly rational actors with perfect foresight of income differentials, embodying the figurative <em>Homo economicus</em> <a href="https://books.google.com/books?id=eOxPCgAAQBAJ&pg=PT117&lpg=PT117&dq=homo+economicus+economic+migrants&source=bl&ots=FMgNpiv0Pg&sig=kbzkKwRkL9H3faoDnvz5AAp4-wA&hl=en&sa=X&ved=0ahUKEwiT676_n-nTAhVM6yYKHYRECCcQ6AEINTAD#v=onepage&q=homo%20economicus%20economic%20migrants&f=false">derided by social scientists</a>. </p>
<p>No matter what its causes, migration is a legitimate way to diversify household income sources and create a buffer against future shocks. And in the context of a changing climate, <a href="https://environmentalmigration.iom.int/migration-environment-and-climate-change-working-paper-series-no-12016">mobility is particularly important for households that are dependent on resource-based livelihoods</a>. </p>
<p>These are usually the very households that lack access to adequate income-generating assets, credit and trade. When the right conditions are fostered, migration brings substantial <a href="http://onlinelibrary.wiley.com/doi/10.1111/geoj.12205/abstract">benefits for migrants and their families as well as for their communities of origin and of destination</a>. </p>
<h2>Remittances and development</h2>
<p>To develop resilient communities, low-skill and low-income families cannot be left in the dust. A new <a href="https://publications.iom.int/fr/books/making-mobility-work-adaptation-environmental-changes-results-meclep-global-research">comparative study</a> adds a significant building block to the expanding body of research on how migration serves among household strategies for adapting to changing environments. </p>
<p>Through empirical research in six countries – Dominican Republic, Haiti, Kenya, Mauritius, Papua New Guinea and Vietnam – the study confirms that migration from risky environments is win-win-win. </p>
<p>Despite important variations across the six countries, funds sent by family members abroad are an important source of income. </p>
<p>Households in the lowest 20% of income earnings were the most reliant on remittances. These are also among households demonstrating the lowest levels of education, land ownership, and access to formal credit. The capacity to invest in a family member to migrate, then, is significant. And the dividends can be immense. </p>
<p>Households that receive remittances have higher incomes in the medium to long term. That’s because the funds they receive boost their ability to move beyond basic consumption and invest in structural improvements as well as income-generating assets. </p>
<p>Remittances were used for long-term resilience-building efforts, such as improving housing, education and health care. When households can meet their basic needs for food and shelter, their ability to invest improves. </p>
<p>Migrant diaspora clearly provide a safety net for their home communities, particularly in the wake of <a href="http://essays.ssrc.org/remittances_anthology/wp-content/uploads/2012/07/Topic_23_Yang.pdf">natural disasters</a>. In Haiti, the value of remittances from Haitians abroad quadrupled between 1999 and 2013, from US$422 million to over US$1.78 billion. And it <a href="http://publications.iom.int/es/system/files/policy_brief_series_issue8_16june2016.pdf">surged by 20% following the 2010 earthquake</a>, yielding an extra US$360 million. </p>
<p>Migrants can also effectively pass on the skills and knowledge they acquired while away (social remittances), to help improve households and communities in their home countries. </p>
<p>In the study, at least two out of five migrant households surveyed reported learning new skills; in the case of Vietnam, the figure was as high as 82%. Migrant households’ reported ability to apply new skills upon return was 45% in Haiti, more than 70% in Kenya, and more than 80% in the rest of the countries surveyed.</p>
<h2>Raising all boats</h2>
<p><a href="http://www.worldbank.org/en/news/press-release/2017/04/21/remittances-to-developing-countries-decline-for-second-consecutive-year">Remittance flows to developing countries have declined for two years in a row</a> for the first time in history. This represents a potential loss of about US$29.8 billion (estimated remittances totalled $429 billion in 2016, compared to $429.8 billion in 2015 and $444.3 billion in 2014). </p>
<p><a href="http://pubdocs.worldbank.org/en/992371492706371662/MigrationandDevelopmentBrief27.pdf">A World Bank report</a> suggests the perception of rising xenophobia or xenophobic attitudes and policies discouraging migration are partially to blame. </p>
<p>This is significant as remittance flows have historically been resistant to significant decline even in times of global economic downturn. We <a href="http://siteresources.worldbank.org/EXTPREMNET/Resources/C17TDAT_297-320.pdf">saw this most recently</a> after the 2008 financial crisis when remittances dipped slightly (6%) for a year and then rebounded in 2010-11.</p>
<p>In fact, remittances have stably <a href="http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1199807908806/4549025-1450455807487/Factbookpart1.pdf">dwarfed official development aid by a factor of three</a> over two decades. </p>
<p>Remittances are used to care for sick or elderly family members, to bolster communities following crises, and for capital investments. They are a robust source of economic development. In our globalised world, development in these countries <a href="https://books.google.com/books/about/The_Theory_of_Economic_Integration.html?id=fKKaAAAAIAAJ">spurs the economic machinery that raises the standard</a> of living in developed countries, too.</p>
<p>The effects of climate change – increased intensity and frequency of extreme weather, significant warming in some hotspots and extreme temperatures, rising sea level, more erratic and unpredictable rain patterns, among other things – will <a href="https://www.routledge.com/products/9781138838178">influence the scale, duration, location and distance of pre-existing migration patterns</a>. </p>
<p>Families affected by environment-related shocks have a difficult time regaining their footing – and become <a href="http://publications.iom.int/es/system/files/policy_brief_series_issue8_16june2016.pdf">more vulnerable with each successive hazard</a>.</p>
<p>The findings outlined above reinforce the importance of migration for low-income and less-skilled households. Migrants respond to labour shortages, often putting themselves in risky situations. </p>
<p>But countries such as Canada, Australia and the United States are <a href="https://global.oup.com/academic/product/who-needs-migrant-workers-9780199580590?cc=us&lang=en&">exploring ways to reduce their imports of migrants</a> to only the most qualified applicants, developing points-based calculators. While the merits of defining a “desirable” migrant in economic terms are questionable at best, states retain the sovereign right to set migration quotas. </p>
<p>Unfortunately, this approach has the <a href="http://siteresources.worldbank.org/INTWDR2006/Resources/477383-1118673432908/Migration_and_Inequality.pdf">potential to reinforce inequality and undermine the positive outcomes</a> of migration worldwide.</p>
<p>As UN states develop a global compact on migration in 2017, there should be less of a focus on reducing complex migration phenomena to their “root causes” and more on the potential of migration as a win-win. </p>
<p>In a changing global environment, migration can be a greater-than-ever contributor to development for communities of origin, destination areas, and for the migrants themselves. </p>
<p>The complexity and wide spectrum of migration – both the highly skilled expat and the less-skilled migrant – should remain a part of these discussions, with a focus on harnessing the power of migration to fuel development and reduce global inequality.</p><img src="https://counter.theconversation.com/content/72967/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Julia Blocher previously benefitted from funding from the European Commission for the 'MECLEP' research project mentioned in this article.</span></em></p>In a changing and unsettled world, migration can be a greater-than-ever contributor to development for communities of origin, destination areas, and for the migrants themselves.Julia Blocher, Research Officer, United Nations UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/760592017-05-01T01:57:44Z2017-05-01T01:57:44ZCan blockchain technology help poor people around the world?<figure><img src="https://images.theconversation.com/files/167209/original/file-20170428-12970-fr3av3.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">No need for a bank: Just a smartphone and a blockchain. </span> <span class="attribution"><a class="source" href="https://insight.wfp.org/what-is-blockchain-and-how-is-it-connected-to-fighting-hunger-7f1b42da9fe">Houman Haddad/UN World Food Program</a></span></figcaption></figure><p>Big Wall Street companies are using a complicated technology called blockchain to further <a href="https://www.wsj.com/articles/wall-street-backs-blockchain-for-savings-on-derivatives-1483979438">increase the already lightning-fast speed of international finance</a>. But it’s not just the upper crust of high finance who can benefit from this new technology.</p>
<p>Most simply, a blockchain is an inexpensive and transparent way to record transactions. People who don’t know each other – and therefore may not trust each other – can securely exchange money without fear of fraud or theft. Major aid agencies, nonprofits and startup companies are <a href="https://www.technologyreview.com/s/604144/how-blockchain-can-lift-up-the-worlds-poor/">working to extend blockchain systems across the developing world</a> to help poor people around the world get easier access to banks for loans or to protect their savings.</p>
<p>In my work as a scholar of business and technology focusing on the impact of <a href="http://dx.doi.org/10.1080/01436597.2017.1298438">blockchain</a> and other modern technologies such as <a href="http://dx.doi.org/10.1080/01436597.2011.586225">cloud computing</a>, <a href="https://doi.org/10.1177/2053951714564227">big data</a> and <a href="http://dx.doi.org/10.1080/01436597.2016.1191942">the Internet of Things</a> on poor people, I see four main ways blockchain systems are already beginning to connect some of the world’s poorest people with the global economy.</p>
<h2>How does a blockchain work?</h2>
<p>A blockchain is a fancy word for a transaction-recording computer database that’s stored in lots of different places at once. The best-known example of <a href="http://www.lexology.com/library/detail.aspx?g=cf0c71c5-055a-4d57-92f8-c75d1e282414">blockchain technology</a> is the electronic cryptocurrency called bitcoin, but the concept can be <a href="https://theconversation.com/blockchains-focusing-on-bitcoin-misses-the-real-revolution-digital-trust-58125">applied in lots of different ways</a>.</p>
<p>One way to think about a blockchain is as a public bulletin board to which anyone can post a transaction record. Those posts have to be digitally signed in a particular way, and once posted, a record can never be changed or deleted. The data are stored on many different computers around the internet, and even around the world.</p>
<p>Together, these features – openness to writing and inspection, authentication through computerized cryptography and redundant storage – provide a mechanism for secure exchange of funds. They can even involve what are called “<a href="https://theconversation.com/blockchains-focusing-on-bitcoin-misses-the-real-revolution-in-digital-trust-58125">smart contracts</a>,” transactions that happen only if certain conditions are met – such as a life insurance policy that sends money to the beneficiary only if a specific doctor submits a digitally signed death certificate to the blockchain.</p>
<p>Right now, these sorts of services are available – even in the developed world – only because nations have strong regulations protecting the money people deposit in banks, and clear laws about obeying the terms of formal contracts. In the developing world, these rules often don’t exist at all – so the services that depend on them don’t either, or are so expensive that most people can’t use them. For instance, to open a checking account in some parts of Africa, <a href="http://siteresources.worldbank.org/DEC/Resources/Banking_Services_for_Everyone.pdf">banks require enormous minimum deposits</a>, sometimes more money than an average person earns in a year.</p>
<p>A blockchain system, though, inherently enforces rules about authentication and transaction security. That makes it safe and affordable for a person to store any amount of money securely and confidently. While that’s still in the future, blockchain-based systems are already helping people in the developing world in very real ways.</p>
<h2>Sending money internationally</h2>
<p>In 2016, emigrants working abroad sent an <a href="http://www.worldbank.org/en/news/press-release/2016/10/06/remittances-to-developing-countries-expected-to-grow-at-weak-pace-in-2016-and-beyond">estimated US$442 billion</a> to their families in their home countries. This global flow of cash is a <a href="http://www.imf.org/external/pubs/ft/fandd/2005/12/basics.htm">significant factor in the financial well-being</a> of families and societies in developing nations. But the process of sending money can be extremely expensive. </p>
<p>Using MoneyGram, for example, a worker in the U.S. with US$50 to send to Ghana <a href="https://www.newsghana.com.gh/report-puts-ghana-amongst-countries-with-high-cost-of-remittance/">might have to pay $10 in fees</a>, meaning her family would receive only $40. <a href="http://www.worldbank.org/en/topic/paymentsystemsremittances/publication/cost-sending-remittances-june-2015-data">In 2015, transaction costs and commission rates averaged</a> 10.96 percent for remittances sent from banks and 6.36 percent for sending money through money transfer operators. Companies justify their costs by saying they reflect the price of <a href="http://allafrica.com/stories/201703010933.html">providing reliable and convenient services</a>.</p>
<p>By contrast, Hong Kong’s blockchain-enabled Bitspark has transaction costs so low it <a href="http://www.scmp.com/lifestyle/technology/article/1679904/bitcoin-transactions-cut-cost-international-money-transfers">charges a flat HK$15 for remittances of less than HK$1,200</a> (about $2 in U.S. currency for transactions less than $150) and 1 percent for larger amounts. Using the secure digital connections of a blockchain system lets the company <a href="https://news.bitcoin.com/bitspark-bitcoin-remittance-asia/">bypass existing banking networks and traditional remittance systems</a>.</p>
<p>Similar services helping people send money to the Philippines, Ghana, Zimbabwe, Uganda, Sierra Leone and Rwanda <a href="https://bitcoinmagazine.com/articles/african-bitcoin-startup-wins-bill-melinda-gates-foundation-grant-launches-blockchain-event-series-nairobi-1436993383">also charge a fraction of the current banking rates</a>.</p>
<h2>Insurance</h2>
<p>Most people in the developing world lack health and life insurance, primarily because it’s so expensive compared to income. Some of that is because of high administrative costs: <a href="http://dx.doi.org/10.1002/jid.3380040602">For every dollar of insurance premium collected</a>, administrative costs amounted to $0.28 in Brazil, $0.54 in Costa Rica, $0.47 in Mexico and $1.80 in the Philippines. And many people who live on less than a dollar a day have neither the ability to afford any insurance, nor any company offering them services.</p>
<figure class="align-right zoomable">
<a href="https://images.theconversation.com/files/167206/original/file-20170428-13007-zo33ik.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=1000&fit=clip"><img alt="" src="https://images.theconversation.com/files/167206/original/file-20170428-13007-zo33ik.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=237&fit=clip" srcset="https://images.theconversation.com/files/167206/original/file-20170428-13007-zo33ik.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=400&fit=crop&dpr=1 600w, https://images.theconversation.com/files/167206/original/file-20170428-13007-zo33ik.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=400&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/167206/original/file-20170428-13007-zo33ik.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=400&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/167206/original/file-20170428-13007-zo33ik.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=503&fit=crop&dpr=1 754w, https://images.theconversation.com/files/167206/original/file-20170428-13007-zo33ik.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=503&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/167206/original/file-20170428-13007-zo33ik.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=503&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px"></a>
<figcaption>
<span class="caption">Smartphones are increasingly common in the developing world.</span>
<span class="attribution"><a class="source" href="https://www.flickr.com/photos/dfid/7561270846">Russell Watkins/UK Department for International Development</a>, <a class="license" href="http://creativecommons.org/licenses/by-sa/4.0/">CC BY-SA</a></span>
</figcaption>
</figure>
<p>In India, for example, <a href="http://www.tribuneindia.com/news/business/health-insurance-roadmap-for-2015/42439.html">only 15 percent of the population has health insurance</a>. Even those people <a href="http://www.ajmc.com/journals/issue/2011/2011-2-vol17-n2/ajmc_11feb_thomaswebx_e26to33">pay higher relative premiums</a> than in developed countries. As a result, people in South Asia pay a <a href="https://www.brookings.edu/wp-content/uploads/2016/07/theimpactofhealthinsurance_fulltext.pdf">much greater share of their health care costs</a> out of their own pockets than do people in high-income industrialized countries.</p>
<p>Because blockchain systems are online and involve verification of transactions, they can <a href="http://dx.doi.org/10.1080/01436597.2016.1191942">deter (and expose) fraud</a>, dramatically cutting costs for insurers.</p>
<p>Consuelo is a <a href="https://cointelegraph.com/news/consuelo-offers-blockchain-powered-microinsurance-to-migrant-workers">blockchain-based microinsurance service</a> backed by Mexican mobile payments company Saldo.mx. Customers can pay small amounts for health and life insurance, with claims verified electronically and paid quickly.</p>
<h2>Helping small businesses</h2>
<p>Blockchain systems can also help very small businesses, which are often short of cash and also find it expensive – if not impossible – to borrow money. For instance, after delivering medicine to hospitals, <a href="http://www.coindesk.com/ibm-amps-china-blockchain-new-supply-chain/">small drug retailers in China often wait up to 90 days to get paid</a>. But to stay afloat, these companies need cash. They rely on intermediaries that pay immediately, but don’t pay in full. A $100 invoice to a hospital might be worth $90 right away – and the intermediary would collect the $100 when it was finally paid.</p>
<p>Banks aren’t willing to lend money in places where <a href="http://www.livemint.com/Companies/vkpTgJ1M39TbRHvG1nZGsK/Reebok-India-fake-sales-and-secret-depots.html">fraudulent invoices are common</a>, or where manufacturers and their customers might have <a href="https://www.cryptocoinsnews.com/ibm-mahindra-develop-blockchain-supply-chain-finance-solutions-india/">inconsistent and error-ridden records</a>. A blockchain system reduces those concerns because these records must be authenticated before being added to the books, and because they can’t be changed.</p>
<p>Those Chinese pharmaceutical companies are <a href="http://www.coindesk.com/ibm-amps-china-blockchain-new-supply-chain/">getting help from Yijan</a>, a blockchain that is a joint effort of IBM and Chinese supply management company Hejia. Electronics, auto manufacturing and clothing companies facing similar difficulties are the <a href="https://www.cryptocoinsnews.com/chinese-fintech-firms-launch-blockchain-supply-chain-finance-platform/">test markets for Chained Finance</a>, a blockchain platform backed by financial services company Dianrong and FnConn, the Chinese subsidiary of Foxconn.</p>
<h2>Humanitarian aid</h2>
<p>Blockchain technology can also improve humanitarian assistance. <a href="https://oig.usaid.gov/sites/default/files/audit-reports/4-674-11-004-p.pdf">Fraud, corruption</a>, <a href="http://dx.doi.org/10.1002/tie.20404">discrimination</a> and <a href="https://oig.usaid.gov/sites/default/files/audit-reports/1-524-09-002-p.pdf">mismanagement</a> block some money intended to reduce poverty and improve education and health care from actually helping people.</p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/167208/original/file-20170428-12979-82psfw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/167208/original/file-20170428-12979-82psfw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=210&fit=crop&dpr=1 600w, https://images.theconversation.com/files/167208/original/file-20170428-12979-82psfw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=210&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/167208/original/file-20170428-12979-82psfw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=210&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/167208/original/file-20170428-12979-82psfw.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=264&fit=crop&dpr=1 754w, https://images.theconversation.com/files/167208/original/file-20170428-12979-82psfw.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=264&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/167208/original/file-20170428-12979-82psfw.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=264&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">A pilot project in Pakistan is using a blockchain system to help needy families get cash and food.</span>
<span class="attribution"><a class="source" href="http://innovation.wfp.org/blog/blockchain-crypto-assistance-wfp">Farman Ali/UN World Food Program</a></span>
</figcaption>
</figure>
<p>In early 2017 the U.N. World Food Program launched the first stage of what it calls “<a href="http://innovation.wfp.org/blog/blockchain-crypto-assistance-wfp">Building Block</a>,” giving food and cash assistance to needy families in Pakistan’s Sindh province. An internet-connected smartphone authenticated and recorded payments from the U.N. agency to food vendors, ensuring the recipients got help, the merchants got paid and the agency didn’t lose track of its money.</p>
<p>The agency expects using a blockchain system will reduce its overhead costs <a href="http://innovation.wfp.org/project/building-blocks">from 3.5 percent to less than 1 percent</a>. And it can <a href="https://insight.wfp.org/what-is-blockchain-and-how-is-it-connected-to-fighting-hunger-7f1b42da9fe">speed aid to remote or disaster-struck areas</a>, where ATMs may not exist or banks are not functioning normally. In urgent situations, blockchain currency can even take the place of scarce local cash, allowing aid organizations, residents and merchants to exchange money electronically.</p>
<p>Blockchains can even help individuals contribute to aid efforts overseas. Usizo is a South Africa-based blockchain platform that <a href="http://disrupt-africa.com/2015/11/5-african-crowdfunding-startups-to-watch/">lets anyone help pay electricity bills for community schools</a>. Donors can track how much electricity a school is using, calculate how much power their donation will buy and transfer the credit directly using bitcoin.</p>
<h2>Future potential</h2>
<p>In the future, blockchain-based projects can help people and governments in other ways, too. As many as 1.5 billion people – 20 percent of the world’s population – <a href="http://www.worldbank.org/en/programs/id4d">don’t have any documents that can verify their identity</a>. That limits their ability to use banks, but also can bar their way when trying to access basic human rights like voting, getting health care, going to school and traveling.</p>
<p>Several companies are launching <a href="https://hbr.org/2017/03/blockchain-will-help-us-prove-our-identities-in-a-digital-world">blockchain-powered digital identity programs</a> that can help create and validate individuals’ identities. Using only an internet-connected smartphone, a person is photographed and recorded on video making particular facial expressions and speaking, reading an on-screen text. The data are recorded on a blockchain and can be accessed later by anyone who needs to check that person’s identity. </p>
<p>Without email, phones, passports or even birth certificates, a blockchain could be the only way many poor people have to prove who they are. That could really make their lives better and expand their opportunities.</p><img src="https://counter.theconversation.com/content/76059/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Nir Kshetri does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>Already becoming a darling of Wall Street, blockchain technology’s biggest real benefits could come to the world’s poorest people. Here’s how.Nir Kshetri, Professor of Management, University of North Carolina – GreensboroLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/649452016-09-07T13:54:31Z2016-09-07T13:54:31ZAfter 25 years of independence, Tajikistan is a bastion of torture and repression<p>As Tajikistan marks 25 years since its independence from the Soviet Union, the fragile peace it has made has been offset by a brutal crackdown on the opposition and an impending economic crisis.</p>
<p>The Central Asian republic was <a href="http://countrystudies.us/tajikistan/8.htm">born</a> amid political turmoil, and quickly descended into a <a href="http://www.un.org/events/tenstories/06/story.asp?storyID=600">civil war</a> that cost more than 50,000 lives and turned some 250,000 people into refugees. A peace agreement in 1997 formally brought the war to an end, but the president, Emomali Rahmon, who came to power during the fighting, has now eradicated the opposition with whom he negotiated the accord; this year, he won a referendum <a href="https://www.theguardian.com/world/2016/may/23/tajikistan-votes-to-allow-president-emomali-rahmon-to-rule-indefinitely">allowing him to rule indefinitely</a>.</p>
<p>Order has returned since the chaos of the war ended, but memories of the peace are receding. The real dividends have gone to the president, his circle, and a few hundred families who are closely tied to the regime.</p>
<p>To many Tajiks, this year’s anniversary celebrations won’t feel all that celebratory. They will be tightly managed by the state, with no room for spontaneous public participation, critical comment or dissent. Approximately half the working-age male population will be absent from these celebrations, as they have migrated to Russia and other countries for work, and many of the country’s women, children and elderly citizens will have little enthusiasm for the anniversary when their economic prospects are so bleak.</p>
<p>Inflation and the depreciation of the currency have made the ordinary Tajik poorer this year. Around half of the country’s income depends on Tajiks working abroad and sending money home, but according to <a href="http://www.eurasianet.org/node/79401">Russia’s Central Bank</a>, the amount of money transferred from Russia to Tajikistan fell precipitously from $3.8 billion in 2014 to $1.28 billion in 2015. The <a href="http://www.asiaplus.tj/en/news/remittance-flows-tajikistan-reportedly-decline-221-percent">National Bank of Tajikistan</a> reports that the figure slid a further 22% in the first half of 2016.</p>
<p>National economic development is painfully slow. The <a href="http://www.casa-1000.org/MainPages/CASAAbout.php">highest hydroelectric dam in the world</a> is due to be built in Rogun before the end of the decade to export electricity to South Asia. But what resources Tajikistan has are generally used for the benefit of the few, not the many – look at the aluminium industry, for example, whose profits are <a href="https://blogs.exeter.ac.uk/excas/2014/05/22/camelflage-tajik-president-emomali-rahmon-and-james-fabiani-hide-expensive-washington-lobbying-secrets/">channelled into secretive offshore accounts</a>.</p>
<p>Worse still, the apparent pacification of the country conceals the by turns banal and brutal ways in which control is maintained. </p>
<p>The media is supressed; business is co-opted. The government has gradually discredited the last remaining political opposition, accusing it of links to Islamist terrorism as a pretext for crushing it. Political prisoners are <a href="https://www.amnesty.org/en/countries/europe-and-central-asia/tajikistan/report-tajikistan/">arbitrarily arrested, abused and tortured</a> in Tajikistan’s prisons, and their lawyers and relatives are intimidated and detained. A recent Human Rights Watch <a href="https://www.hrw.org/world-report/2016/country-chapters/tajikistan#5f08d5">report</a> found that “torture remains widespread in the criminal justice system” and that the police “routinely use torture to coerce confessions and deny detainees access to counsel”.</p>
<p>In recent weeks, a group of leading Tajikistani civil society and human rights activists <a href="http://blogs.exeter.ac.uk/excas/2016/08/22/statement-by-the-representatives-of-tajikistans-civil-society-about-status-of-political-prisoners/">appealed</a> to the UN and international community to publicly demand that the government complies with its own laws and international commitments.</p>
<p>Of particular concern to these activists is the status of prisoners linked to the Islamic Renaissance Party (IRPT), whose leader signed the <a href="http://www.c-r.org/accord-article/key-elements-tajikistan-peace-agreement">1997 peace agreement</a>.</p>
<h2>Beyond the pale</h2>
<p>Despite years spent carefully toeing a moderate line in the face of electoral fraud and repression, the IRPT was <a href="https://www.hrw.org/world-report/2016/country-chapters/tajikistan">banned in 2015</a>. This summer, two political prisoners linked to the party, <a href="http://www.eurasianet.org/node/80171">Kurbon Mannonov</a> and Nozimdzhon Tashripov, died in Tajikistan’s prisons. The health of another prisoner, former deputy chairman of the IRPT Mahmadali Hayit, is also in danger, and on <a href="http://www.rferl.org/content/tajikistan-opposition-politician-family-members-missing/27939830.html">August 22</a>, his wife and son were taken from their home by men in plain clothes and have not been seen since. On <a href="http://www.rferl.org/content/jailed-tajik-politicians-lawyer-remanded-yorov-hayit/27952368.html">August 29</a>, Hayit’s lawyer was remanded in custody.</p>
<p>One of the few IRPT leaders to have escaped imprisonment is its chairman, <a href="http://centralasiaprogram.org/blog/2016/01/27/interview-with-muhiddin-kabiri-leader-of-the-islamic-renaissance-party-of-tajikistan-in-exile/">Muhiddin Kabiri</a>, who went into exile in 2015. A genial man who maintained a persistently moderate stance in opposition, Kabiri is now wanted in Tajikistan on charges of terrorism. Given the obvious political motive for the campaign against the party and the government’s abuse of its members, it is astonishing that INTERPOL agreed to a Tajik request to put out a global “<a href="http://www.interpol.int/notice/search/wanted/2015-63685">red notice</a>” for his arrest.</p>
<p>Western states’ public expressions of concern about all this mean little without serious threats to end military aid and security co-operation. As things stand, the West seems happy to keep spending <a href="http://www.eurasianet.org/node/77751">millions of dollars</a> a year on Tajik border security, counter-terrorism and military training. These governments are apparently <a href="http://blogs.ft.com/beyond-brics/2015/09/29/us-looks-away-as-tyranny-steals-a-march-in-central-asia/6">unwilling to accept</a> that providing military aid and security training to a country that behaves like Tajikistan is ineffective, and perhaps even counter-productive.</p>
<p>The Tajik government, which obviously gives itself full credit for the fact that civil war has not returned, must be held responsible for the increasingly brutal authoritarianism and the economic decay which has marred the post-war era. INTERPOL, which claims to uphold international human rights standards, should make sure it is not <a href="https://www.fairtrials.org/policy-report-interpol-and-human-rights/">exploited</a> to serve the government’s political motives.</p>
<p>Tajikistan’s recovery and relative stability since the civil war should be a cause to celebrate – but a peace managed with such means is no peace at all.</p><img src="https://counter.theconversation.com/content/64945/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>John Heathershaw receives funding from the Economic and Social Research Council. </span></em></p><p class="fine-print"><em><span>Edward Lemon has received funding from the Economic and Social Research Council. </span></em></p>Tajikistan, a longstanding human rights violator, has been cracking down harshly on what’s left of its political opposition.John Heathershaw, Associate Professor in International Relations, University of ExeterEdward Lemon, PhD Candidate in Politics, University of ExeterLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/483152015-10-08T01:12:58Z2015-10-08T01:12:58ZReal lives, real risk: threats to small money remitters hit African families<figure><img src="https://images.theconversation.com/files/96904/original/image-20151001-5823-37ozrp.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Limitations to the flow of money to countries like Eritrea has family members in Australia worried.</span> <span class="attribution"><span class="source">David Stanley/Flickr</span>, <a class="license" href="http://creativecommons.org/licenses/by/4.0/">CC BY</a></span></figcaption></figure><p>All Australia’s major banks <a href="https://theconversation.com/bankers-are-about-to-ensure-money-transfers-go-underground-34487">have largely stopped serving small money remitters</a>, amid concerns about money laundering and terrorist financing risk. The options for sending money overseas are becoming limited to commercial banks and large international companies, often the most expensive remittance channel.</p>
<p>Almost one year on, we have interviewed 40 people based in Melbourne from Somalia, South Sudan, Ethiopia and Eritrea, to record, rather than debate, their views. </p>
<p>All senders of money worry they will not be able to send money home, money that feeds their families still in Africa and pays school and university fees. Some worry that if the money stops their parents will starve. Young people will join terrorist groups or decide to flee hunger by joining the boats. One Eritrean community leader said his cousin fled to the Mediterranean shores and died in the attempt to reach Europe.</p>
<p>Regulators are aware of what is happening. They meet with industry representatives, mainly behind closed doors, and debate whether the closures have any real impact. In this process no government or bank official is speaking with the affected communities. Community leaders fear that this marginalisation of those needing to support their families, increases their social exclusion and may feed radicalisation in Melbourne.</p>
<h2>What they said</h2>
<p>Community reaction is a mixture of bewilderment and a feeling of being sidelined. Badra (all the participants’ names are pseudonyms), who supports her family in Somalia and Kenya, says she is “just outraged”.</p>
<blockquote>
<p>“It was put in place without consultation. For me, it is another form of colonialism. People who have gradually built their lives after fleeing war and trauma, are now being cut down… My connection to my country of birth, my parents’ and grandparents’ country of birth, has been cut off.”</p>
</blockquote>
<p>Community members rely on their community-based remittance providers. Banks and other large international providers are too expensive but most importantly they don’t have the reach in the recipient countries and are not located close to family members of many senders. </p>
<p>Ojala from Somalia says:</p>
<blockquote>
<p>“Western Union doesn’t live in a remote area. It can take two days for our people to walk to the city. Then they don’t know English. And the fee is higher.”</p>
</blockquote>
<p>Central to their comments is that sending remittances is not optional. </p>
<p>Faith from South Sudan says: </p>
<blockquote>
<p>“I cannot let my mother die.”</p>
</blockquote>
<p>She sends money every fortnight, turn by turn, to her mother and siblings in Uganda, her father and siblings in South Sudan. How do you manage? we ask. “I budget,” she says. </p>
<p>Helen from South Sudan says: </p>
<blockquote>
<p>“Women send more often. They see the situation. They understand what is happening to the family.”</p>
</blockquote>
<p>Dawood from South Sudan says his family is waiting for his support:</p>
<blockquote>
<p>“Even though I have no money, I have to send. I ask others in my community, here or in Queensland to help. We have to.”</p>
</blockquote>
<h2>Views of remittance providers</h2>
<p>Community-based remitters are stressed. Many who had lost bank accounts, moved to other smaller banks but are fearing that those accounts will be closed too. We interviewed one remitter who, with his last account eventually closed by a smaller bank, was in the process of closing his ten-year old business. </p>
<p>Fuad a small remittance provider from Somalia says:</p>
<blockquote>
<p>“I am worried not only for the business, but …I don’t know how my mother, my brothers and sisters will live. It is very painful. If they close down this business, they close down the life of the people.” </p>
<p>“The Australian government gives us a licence… but the banks say you are too risky for us.”</p>
</blockquote>
<p>These community-based remitters – like all formal remitters - are registered with AUSTRAC and have compliance programs. Most have a customer base of a few hundred customers drawn from their ethnic communities. They know their customers and often their families personally. Customers are registered and send on average A$100-$200 per month. The people who receive their money have to show their ID. Everybody agrees that if a provider is not following the rules, it should be closed.</p>
<p>Abbas from Ethiopia with a remittance business says he feels regulators see people like him as “aliens”. These policies are made without consultation and are further marginalising his community. He sees the move as banks wanting to increase their market share by closing competing businesses.</p>
<h2>Identifying real risk</h2>
<p>These providers and sending communities face a serious dilemma. Their families live in regions with conflict and so the families’ needs are acute. At the same time these regions carry a high terrorism risk, making it even riskier for banks to deal with them. Regulators’ concerns, however, do not resonate with the community. Kubira, a Somalian woman asks “Is sending $150 to your mother, terrorism?”</p>
<p>Senders all indicated that remittances will continue because the survival of their loved ones depend on it. If the formal sector provides no practical alternatives, money may be sent informally with friends or carried by hand. Some of the informal channels are managed by people who are viewed as radical. Community leaders fear the consequences of driving senders, angered by account and business closures, into the hands of radical elements. Regulatory processes aimed at preventing terrorism in the Horn of Africa, can perversely result in increasing radicalisation and risk in Melbourne.</p>
<p>Regulatory processes against money laundering and funding for terrorism require banks to adopt appropriate – and relatively expensive – measures to monitor these customers. This makes the retention of the business of smaller, community-based remitters <a href="http://theconversation.com/lack-of-real-action-on-remittances-increases-terrorist-financing-risk-34706">unviable</a>.</p>
<p>AUSTRAC, the relevant regulator, <a href="http://www.austrac.gov.au/news/austrac-statement">publicly</a> encouraged banks to consider these relationships and to engage remitters with a view to maintaining accounts. This is helpful but regulatory authorities need to be more creative to address compliance costs and the risks of increased international penalties for compliance failures – a key driver of many of the closure decisions. In addition they need to address the threats by other international banks to cease doing business with Australian banks if they continue to service these providers.</p>
<h2>Time to talk</h2>
<p>An important step forward would be to engage the affected communities in Australia. It will show them the Australian government is concerned about their plight and enable officials to explain their regulatory objectives to these communities. A constructive discussion may assist in identifying factors that may lower the perceived risks posed by small community-based remitters. </p>
<p>Funds sent by these providers could be capped at $300 per customer per month, to limit the risk of terrorist financing. Regulators could leverage off the personal relationships between providers and their customers, supported by communities that have a stake in ensuring that these channels are used responsibly. That could open the door to more cost-effective risk mitigation measures by banks and help ensure continued flows of these vital funds.</p><img src="https://counter.theconversation.com/content/48315/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Supriya Singh does not have any funding or affiliation that is relevant, or could be perceived to be relevant to this subject. Her academic affiliation is with RMIT University. </span></em></p><p class="fine-print"><em><span>Louis de Koker does not work for, own shares in or receive funding from any company or organisation that would benefit financially from this article. He does provide policy advice to international bodies and groups that advance financial inclusion.</span></em></p>With fewer options available to send much-needed money to their family overseas, migrant communities fear severe consequences.Supriya Singh, Professor, Sociology of Communications, Graduate School of Business & Law, RMIT UniversityLouis de Koker, Professor of Law, Deakin UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/418252015-06-08T04:17:07Z2015-06-08T04:17:07ZTowards another resource curse? Remittances and support for democracy in Africa<figure><img src="https://images.theconversation.com/files/83975/original/image-20150604-3407-878ort.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">Remittance recipients whose priority is the socioeconomic improvements of their lives were found to be less engaged with democratic processes.</span> <span class="attribution"><span class="source">Reuters/Mohamed Nureldin Abdallah</span></span></figcaption></figure><p>Much has been written about the <a href="http://www.migrationpolicy.org/research/impact-remittances-economic-growth-and-poverty-reduction">impact of remittance</a> inflows on economic and social outcomes, including economic development, inequality and poverty. But little is known about the effect they have on the attitude of remittance recipients to democracy in sub-Saharan Africa. </p>
<p>Many countries in sub-Saharan Africa have recorded substantial increases in inflows of money from other countries. These include official aid and foreign direct investment. Remittances now <a href="http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1288990760745/MigrationandDevelopmentBrief24.pdf">exceed official aid</a> in many. They also include remittances from relatives who have left their home country and resettled elsewhere. </p>
<p>A <a href="http://www.merit.unu.edu/publications/working-papers/abstract/?id=5635">recent study</a> finds that remittances have a different impact when it comes to support for democracy. Although similar studies have been done in <a href="http://www.researchgate.net/publication/259512263_Migrants'_remittances_and_economic_voting_in_the_Mexican_countryside">Mexico</a>, this is the first to use the priorities of citizens as the basis for studying the relationship between remittances and <a href="http://www.afdb.org/en/documents/document/working-paper-185-remittances-and-the-voter-turnout-in-sub-saharan-africa-evidence-from-macro-and-micro-level-data-34858/">political engagement</a> in sub-Saharan Africa.</p>
<p>The study relied on the <a href="http://www.afrobarometer.org/about">Afrobarometer</a> data. This contains a series of national surveys on the attitudes of citizens towards democracy, market, civil society and other aspects of development. The surveys are available for 36 sub-Saharan African countries.</p>
<h2>Positive and negative effects</h2>
<p>There is a wide body of literature on the impact of <a href="http://www.africaneconomicoutlook.org/en/outlook/financial_flows/">remittances</a> on poverty alleviation and reduction of income inequality. These cash transfers can also help recipients survive periods when they have shortfalls in their other incomes. Remittances may under some circumstances also contribute to <a href="http://www.economist.com/blogs/freeexchange/2014/08/remittances-and-growth">economic growth</a>. </p>
<p>They have negative effects too. Remittances have been found to have a <a href="https://www.imf.org/external/pubs/ft/wp/2008/wp0829.pdf">negative effect</a> on the quality of institutions. This is because remittances can be seen as substitutes to government spending on public services. They do this by enabling recipients to buy services they would otherwise be entitled to demand from the state. </p>
<p>When remittance recipients buy pubic services such as education or health from the private sector, for example, this often leads to a decline in <a href="http://www.sciencedirect.com/science/article/pii/S0305750X11002361">government effectiveness</a> and accountability. It may also result in an increase in <a href="http://www.sciencedirect.com/science/article/pii/S0165176512005514">corruption</a>.</p>
<h2>Impact depends on where priorities lie</h2>
<p>The impact depends on the priorities remittance recipients have chosen. Recipients who have chosen <a href="http://www.achpr.org/instruments/achpr/">rights and freedom</a> as their priority were found to be as supportive of democracy as much as non-recipients. But recipients who rank higher improvements in their standard of living were found to be less engaged with democratic processes.</p>
<p>The study’s findings strike at the core of <a href="http://americasquarterly.org/charticles/charticles_fall2012/charticle_new_middle_class/Charticle-fall2012.pdf">democratisation theories</a> which have singled the <a href="http://ecdpm.org/wp-content/uploads/DP167-Africas-Middle-Class-Plenty-Extreme-Poverty-October-2014.pdf">growth of middle income earners</a> as one of the driving forces for democracy. </p>
<p>The umbilical cord between remittances and democratic processes is the provision of <a href="http://www.ft.com/intl/cms/s/0/517e31c8-45bd-11e1-93f1-00144feabdc0.html#axzz3c6821Nuu">public goods</a>, a role fulfilled by the state. Public goods include public services such as health, education and roads.</p>
<p>The incentive therefore for supporting democracy depends, among other factors, on whether the priority chosen by remittance recipients is a good that can be exclusively provided by the state. But it also depends on whether the state is willing and able to provide such a public good. </p>
<p>Remittances enable recipients to buy public services. This means they no longer have an incentive to hold government accountable for providing, or improving the quality of, pubic services. </p>
<figure class="align-center ">
<img alt="" src="https://images.theconversation.com/files/83977/original/image-20150604-3393-q99ooz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&fit=clip" srcset="https://images.theconversation.com/files/83977/original/image-20150604-3393-q99ooz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=600&h=404&fit=crop&dpr=1 600w, https://images.theconversation.com/files/83977/original/image-20150604-3393-q99ooz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=600&h=404&fit=crop&dpr=2 1200w, https://images.theconversation.com/files/83977/original/image-20150604-3393-q99ooz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=600&h=404&fit=crop&dpr=3 1800w, https://images.theconversation.com/files/83977/original/image-20150604-3393-q99ooz.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=754&h=507&fit=crop&dpr=1 754w, https://images.theconversation.com/files/83977/original/image-20150604-3393-q99ooz.jpg?ixlib=rb-1.1.0&q=30&auto=format&w=754&h=507&fit=crop&dpr=2 1508w, https://images.theconversation.com/files/83977/original/image-20150604-3393-q99ooz.jpg?ixlib=rb-1.1.0&q=15&auto=format&w=754&h=507&fit=crop&dpr=3 2262w" sizes="(min-width: 1466px) 754px, (max-width: 599px) 100vw, (min-width: 600px) 600px, 237px">
<figcaption>
<span class="caption">Many citizens in sub-Saharan Africa rely on remittances from another country.</span>
<span class="attribution"><span class="source">Reuers/Omar Faruk</span></span>
</figcaption>
</figure>
<h2>The effect of remittances on democracy</h2>
<p>Recent studies have also explored the effects of these inflows on the behaviour and attitude of citizens to politics. Migrant remittances have the potential to <a href="https://www.utexas.edu/cola/depts/government/_files/pdf/job-candidate-abstracts/Roy%20Germano.pdf">lower political participation</a> by recipients.</p>
<p>Yet little is known about the effects of receiving remittances on the legitimacy of democracy in Africa, a region where democracy is a relatively new concept. Legitimacy of democracy is defined as the degree of endorsement and support for democracy by the citizens.</p>
<p>Democracy has been posited as a <a href="http://www.unicef.org/socialpolicy/files/Democracy_as_a_Universal_Value.pdf">universal value</a> and then associated with many desirable features, among them <a href="http://www.unesco.org/new/en/social-and-human-sciences/themes/democracy/report-on-democracy-and-development/">development</a> and social welfare. This has raised the question why some countries are democratic while others are not. Political scientists argue that the <a href="http://www.afrobarometer.org/publications/wp134-sources-state-legitimacy-contemporary-south-africa-theory-political-goods">legitimacy of democracy</a> is an important determinant of the level of democracy supplied in a nation. </p>
<p>Following this line, several researchers have done valuable analyses to determine the most prominent <a href="http://www.ned.org/sites/default/files/LipsetarticleAPSR.pdf">socioeconomic characteristics</a> that may explain the degree of support for democracy of citizens.</p>
<p>Other researchers have explored the link between the <a href="http://www.afrobarometer.org/publications/wp75-testing-mechanisms-influence-education-and-support-democracy-sub-saharan-africa">level of education</a> and democracy. They tested to what extent the different levels of education may increase the likelihood that citizens support democracy. </p>
<p>The findings of the study on the impact of remittances on attitudes to democracy point to the risk of remittances hindering the development of democracy in sub-Saharan Africa. A lot depends on whether the balance of Africa’s population tilts more towards individuals who are more concerned about improving their standard of living than rights and freedom.</p><img src="https://counter.theconversation.com/content/41825/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Maty Konte works for United-Nations University. She is affiliated with United-Nations University (UNU-MERIT).</span></em></p>Remittances may hinder the development of democracy in sub-Saharan Africa. A lot depends on whether recipients value rights and freedom much more than improving their standard of living.Maty Konte, Research Fellow, United Nations UniversityLicensed as Creative Commons – attribution, no derivatives.tag:theconversation.com,2011:article/368752015-02-09T11:07:22Z2015-02-09T11:07:22ZRemittances support families’ basic needs but don’t expect them to drive economic growth<figure><img src="https://images.theconversation.com/files/71355/original/image-20150206-28601-k206zj.jpg?ixlib=rb-1.1.0&q=45&auto=format&w=496&fit=clip" /><figcaption><span class="caption">The old-fashioned way to send money home. </span> <span class="attribution"><span class="source">Shutterstock</span></span></figcaption></figure><p>The World Bank recently forecast that remittances to developing countries will <a href="http://siteresources.worldbank.org/INTPROSPECTS/Resources/334934-1288990760745/MigrationandDevelopmentBrief23.pdf">total more than US$450 billion this year</a>, a bit bigger than Venezuela’s economy and more than double a decade a go. Given the sheer size of these money transfers, we should expect them to have significant macroeconomic effects on the countries that receive them. </p>
<p>And in some respects, remittances do live up to the hype. For example, <a href="http://www.imf.org/external/pubs/ft/wp/2009/wp0991.pdf">research shows</a> that remittances can reduce the volatility of the economies that receive them by stabilizing overall demand for goods and services. </p>
<p>They also inject significant cash into government coffers because recipients spend a large share of the transfers on imports and other taxable products. In this way, remittances <a href="http://www.imf.org/external/pubs/ft/op/259/op259.pdf">have created a fiscal cushion</a> for cash-strapped governments and even enabled some countries to avoid debt crises.</p>
<p>But one highly anticipated effect of remittances has failed to materialize. Although many observers hope or expect remittances to promote economic growth, research in this area consistently fails to find a strong connection between the two. <a href="http://www.imf.org/external/pubs/ft/wp/2009/wp09153.pdf">Some studies</a> find that remittances contribute to growth only weakly, while others find that they actually reduce it in the receiving countries.</p>
<p>Perhaps most disappointing is that despite the fact that many developing countries receive very large amounts of remittances – relative to the size of their economies – there is not a single remittances success story. In other words, there is no example of a country for which remittances have clearly driven its economic development. </p>
<h2>Why they don’t spur growth</h2>
<p>There are two main reasons why remittances don’t seem to automatically lead to higher long-term growth. First, there are multiple ways remittances can affect an economy. And for every path that promotes growth – such as when remittances enable children to go to school or someone to start a business – there are other, equally potent pathways that have little effect or actually lead to lower growth. </p>
<p>For example, in many countries, remittances are often used to purchase land or existing homes, which does not contribute to GDP. Even worse, in some cases remittances may have <a href="http://www.mb.com.ph/ofws-fuel-philippine-property-market/">fueled property-market speculation</a>, such as the recent housing bubble in Manilla, capital of the Philippines.</p>
<p>Another important way that remittances can reduce growth is through the moral hazard problem. People who receive remittances have an incentive to reduce their own labor, because they know that their relatives working abroad will send them money regularly. </p>
<p>Moreover, the worse things are at home, the more money the remitters will send, because these transfers are intended in large part to insure the family against hardship. This only strengthens the recipients’ incentives to reduce their productive efforts. Thus, <a href="http://www-wds.worldbank.org/servlet/WDSContentServer/WDSP/IB/2007/01/26/000016406_20070126111038/Rendered/PDF/wps4120.pdf">remittances can lead to lower growth</a> because recipients have an incentive to work and invest less.</p>
<p>Another reason why remittances aren’t strongly associated with higher growth is that they simply aren’t intended to promote it. As mentioned above, the main motivation behind remittances appears to be to provide for the family’s basic needs of food, clothing and shelter. In short, they are intended to insure families against poverty, and <a href="http://www.migrationpolicy.org/research/impact-remittances-economic-growth-and-poverty-reduction">they are very effective at this</a>.</p>
<p>Therefore, it shouldn’t be surprising that remittances are mainly spent on consumption and on acquiring shelter, rather than on education or investment projects. </p>
<h2>Dangers of dependence</h2>
<p>All this evidence suggests that remittances <a href="http://www.worldbank.org/content/dam/Worldbank/GEP/GEP2015a/pdfs/GEP15a_web_full.pdf">do play an important role in economies as a consumption stabilizer</a>, and therefore also as an overall economic stabilizer. But this means that if remittances fall unexpectedly, this could lead to recession. The world saw some evidence of this after the recent financial crisis, which caused global remittances to decrease for <a href="http://data.worldbank.org/data-catalog/migration-and-remittances">the first time in decades</a>.</p>
<p>In Africa, for example, some countries lost 0.2% to 0.5% of GDP growth because of the decline in remittances. And a few North African countries that were highly dependent on remittances from Europe <a href="http://www.imf.org/external/pubs/ft/wp/2010/wp1024.pdf">lost as much as 1% in 2009</a>. Analysis of central Asian economies showed that consumption fell faster than remittances, indicating that the latter’s decline was perceived to significantly reduce household resources. </p>
<p>This also places fiscal stress on governments as revenues from consumption taxes such as import duties slump. This limits their ability to plow more money into the economy to counteract the decline in remittances and resulting drop in consumer spending. Therefore, remittance-dependent economies can receive a double shock when these payments fall.</p>
<h2>Misunderstanding remittances’ real role</h2>
<p>Fortunately, however, these occasions have been very rare. Remittances have proven to be a dependable source of income that millions of families use to meet their basic needs. This suggests strongly that expecting them to drive long-term economic growth misunderstands the role they actually play in most remittance-receiving economies. </p>
<p>This isn’t to say that remittances cannot facilitate growth. But they most likely do this by stabilizing consumption and creating conditions that are conducive to economic growth. </p>
<p>By fostering a stable macroeconomic environment, remittances give governments fiscal space to invest more of their tax revenues in infrastructure and public institutions. It is up to policymakers to take advantage of these growth opportunities and to use the money transfers to indirectly spur economic activity.</p><img src="https://counter.theconversation.com/content/36875/count.gif" alt="The Conversation" width="1" height="1" />
<p class="fine-print"><em><span>Connel Fullenkamp does not work for, consult, own shares in or receive funding from any company or organization that would benefit from this article, and has disclosed no relevant affiliations beyond their academic appointment.</span></em></p>The World Bank recently forecast that remittances to developing countries will total more than US$450 billion this year, a bit bigger than Venezuela’s economy and more than double a decade a go. Given…Connel Fullenkamp, Professor of the Practice, Duke UniversityLicensed as Creative Commons – attribution, no derivatives.