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The Debilitating Cost of Remittances | Economic Empowerment | GZERO Media

The debilitating cost of remittances

Dilip Ratha knows how hard it is to work abroad and send money home. Why? Because he had to go through the same hoops when he was a migrant.

It's the inconvenience and the cost, the World Bank's head of KNOMAD and lead economist says during a livestream conversation on closing the global digital gap hosted by GZERO in partnership with Visa.

Still, Ratha points out, these flows are a lifeline for millions of poor families around the world. And they keep the lights on in remittance-dependent economies like El Salvador or Lebanon.

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How Can We Get Unbanked People to Go Digital? | Closing The Gap | GZERO Media

How can we get unbanked people to go digital?

Sending remittances can be prohibitively expensive. How come?

It costs a lot to manage cash in a secure way for unbanked people, Rubén Salazar, global head of Visa Direct, says during a livestream conversation on closing the global digital gap hosted by GZERO in partnership with Visa.

But some players are making progress in reducing costs, which the UN wants to cap at 3% by the end of the decade.

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Watch live October 19: Can access to digital tools transform the world's economy?

Is digitization crucial to economic growth? GZERO Media is partnering with Visa to explore what it means when 70% of the global economy’s growth in the next decade is projected to come from digitally-enabled businesses – yet 3.7 billion people lack internet access. What are the tools and initiatives needed to bring more people into the digital economy?

Live on Wednesday, October 19, our expert panel will explore the impact of digitization on empowering consumers and small businesses. Please register to attend.

Closing the Gap: Digital Tools for Economic Empowerment

Wednesday, October 19, 2022 | 11 am ET / 8 am PT

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Critical Lifeline: Remittances and the Developing World | GZERO Media

Critical lifeline: remittances and the developing world

Remittances offer a vital lifeline to some 800 million people around the globe. In Mexico, the migrant advocacy group APOFAM highlights how groups of people can work together to make a difference for families impacted by migration. APOFAM’s members are related to migrants who have moved to the US, many of them undocumented, and the group helps pool resources to aid Mexicans. Whether it’s a Mexico-based mother of two whose husband works in the US or a group of elderly artisans, APOFAM helps people flourish thanks to remittances.

Watch our recent livestream discussion on remittances and other tools for economic empowerment.

A woman speaks on the phone outside a money exchange office in Ciudad Juarez, Mexico.

Reuters

Hard Numbers: Mexicans benefit from US labor boom, UAE-Euro remittances surge, Egypt feels the Ukraine burn, Bangladesh’s cap

16.6: Remittances to Mexico in the year leading up to July rose a whopping 16.6% to $32.8 billion, in large part due to the US’ post-pandemic booming labor market. Unemployment levels remain very low in the US – a good thing for Mexican remittances – though that could change as the US Federal Reserve doubles down on its effort to quell inflation.

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Applicants looking at job offers displayed on a glass window of a recruitment agency in Manila, Philippines.

Reuters

Remittances We’re Watching: OFW superheroes, Central America flows, Ukraine war

The Philippines: From remittances to migrant worker superpower?

Being an Overseas Filipino Worker is nothing to sneeze at. When OFWs, as they're popularly known, go home for Christmas carrying huge cardboard boxes of gifts, they have a dedicated customs line and huge billboards thanking them for doing such a good job. Why? Because the remittances they send make up almost 10% of GDP. What's more, the Philippine labor diaspora is among the world’s biggest at 10% of the population — and a prized voting bloc. That’s why President Ferdinand Marcos Jr. spent almost as much time visiting OFWs in the US and the Gulf as he did on the domestic campaign trail. It paid off: Marcos killed it with OFWs, who helped him last May win a plurality of the vote for the first time since his authoritarian dad was in charge. Now, Marcos Jr. wants OFWs to play an even bigger role in his administration. For one thing, he’s asking them to go beyond remittances and actually invest in crucial business sectors such as tourism. For another, Marcos thinks the Philippines can punch above its tiny diplomatic weight by leveraging the power of its huge expat workforce to achieve political goals like trade deals. If a pandemic-era deployment ban on Filipino nurses worsened a global shortage, imagine what would happen to the shipping industry if Manila called back a quarter of the world's seafarers.

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The Graphic Truth: Sending money home

Migrants leave their countries of origin not only to find work opportunities — the hard-earned money they send back helps keep the lights on back home. After a COVID-related blip in 2020 – which saw a small decline but defied disastrous predictions – global remittances sent by migrants to relatives in their countries of origin are again on the upswing. That’s a big deal for the migrants’ families and for governments of nations who rely on that revenue to keep the economy from collapsing. We take a look at the countries that send and receive the most migrant cash, those that most depend on remittances, and how inflows have performed recently.

Money floating around the globe.

GZERO Media

Money on the move

What are remittances?

Some think of globalization mainly as cross-border flows of goods, services, ideas, and information. But crucial to globalization’s dynamism, and its powers of disruption, is the accelerating global movement of human beings. In fact, this is one of history’s oldest stories. People judge life “over there” to be safer and maybe more prosperous than life “over here,” and they hit the road in search of opportunities for richer lives and livelihoods.

And many of these people hope to help others. In every region of the world, migrants cross borders that separate poorer countries from wealthier ones in hopes of earning money they can share with those they’ve left behind, and the digital age has made it much easier for someone earning a relatively high wage abroad to send money back home in a matter of seconds. These financial flows are known as “remittances,” and they account for an increasingly large part of global economic activity. Small payments by large numbers of people add up: The World Bank estimated earlier this year that global remittances will reach $630 billion in 2022, a 4.2% annual jump.

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