As the flow of remittances has expanded massively in recent years, many in the private sector have taken advantage. While this has positive effects for facilitating formal transactions (rather than, say, having your cousin deliver money by hand), there has not been enough competition to keep prices reasonably low. Transfer services such as Western Union can take as much as 15% of the money a migrant worker sends his family in Nicaragua from the US. Rates this high hurt the ability of remittances to have positive development impacts and give senders incentives to transfer their money through informal networks.

 

Fresh off the presses, a new publication by the Foundation for Development Corporation argues for creative solutions to breaking this oligpolistic market open. In Remittances, Microfinance and Development: building the links, a slew of authors with experience in the field make the case for why MFIs should be in the remittances business. A telling excerpt gives the main gist of the book:

"Some people think I'm crazy."

These were the words of Alexandre Wainberg as quoted by The Estado de Sao Paulo last Sunday (Article in Portuguese - Subscription required). In an excellent piece detailing the environmental damage and social issues surrounding the aquaculture sector in Brazil, the Estado focuses on Wainberg as a lone and oftentimes beleaguered advocate of sustainable practices. What was most fascinating in reading this was seeing the pure passion and entrepreneurial drive of someone willing to essentially defy an entire local industry; the question that kept popping into my head was: where is the government support?