The Giving World by Hammami Hijazi Mona;Niblett Robin;

Author:Hammami Hijazi, Mona;Niblett, Robin;
Language: eng
Format: epub
Publisher: Infinite Ideas

9

More effective remittances – the role of government policy

Governments can use their policies to direct remittances towards productive uses in many ways. These outcomes vary from simple increases in consumption to involvement in large-scale infrastructure projects. They include, for example, increasing the wealth and purchasing power of individuals in recipient countries, enabling people to consume more; encouraging remitters to become social entrepreneurs; encouraging the collective use of remittances for investing in larger projects at a community level; promoting the investment by remitters in government bonds which allows for this money to be pooled and used for projects at a macro scale by governments.

Primarily, government initiatives will be of two types. Passive policies are designed to facilitate the payment of remittances. The aim is to maintain a flow of remittances from the host country; however, they are not usually designed to affect the behavior of the remitter in terms of what they use their remittances for. Active policies go a step further as they are usually an attempt to direct those remittance flows to a particular target, and to make sure that the remittances have the maximum developmental impact.

With both passive and active policies, one important shared aim is to encourage migrants to remit money through more formal mechanisms. As we have seen, by their very nature, informal remittance flows are hard to track or influence in terms of their use, and it is difficult to monitor their impact. It is in the interests of governments, and in many cases both the migrants and the recipients of remittances, that migrants feel able to use formal mechanisms to send money. However, a range of measures will be required if formal mechanisms are to be more palatable.

PASSIVE POLICIES

The most basic and common remittances are transfers of money from migrants to their family members. With these remittances targeted for private and personal use, there are limits to what governments can do in terms of interventionist policies. As a result, any government policies that are directed at these types of remittance tend to be passive ones. That is to say, they tend to be policies that facilitate the flow of money between borders, and are less directed at trying to influence the goals of the remitter or the recipients of that remitter. Even with smaller remittances, however, there may still be policies that attempt to change the behavior of remitters to either give collectively or to channel their money towards more investment-oriented purposes.

Information disclosure and awareness

One of the simplest things that governments can do to facilitate the transfer of monies home is to help migrants and their families understand the formal remittance process: what services are available to them, how those services work, and what are the costs involved, for example.

A large part of this will be about explaining the channels available for migrants to send money home, and how those formal mechanisms work. This does not just mean banks, money transfer companies, or credit unions. It might include how to take advantage of new technology to make remittances, such as the use of mobile phones and payments.

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