With international remittance flows to the developing world set to top $167bn this year, a newly released report by the United Nations shows that remittance flows to the African continent, averaging US$17bn per annum between 2000 and 2003, have surpassed Foreign Direct Investment during the same period.

While official aid remains atop the list of external finance flows to Africa, worldwide remittance flows are more than double official aid, and governments, NGOs and the private sector alike are beginning to capitalize on these transfers as a driving force for growth.


Case in point, the Latin American Federation of banks recently announced a plan to channel remittances into small business loans and a range of other financial products to benefit the poor in Latin American and Caribbean countries.


Meanwhile across the Pacific, non-profits like Unlad Kabayan are funneling remittance payments from migrant workers into sustainable micro-enterprise creation.


Step further to the west and you can find emerging private sector enterprises like Thamel.com, providing an innovative e-commerce platform as a vehicle for remittance payments by the Nepalese diaspora.  And with the proliferation of mobile phones across the world, providers from the Philippines to South Africa have turned their attention to the facilitation of remittance transfers.


Speaking on remittances, Dilip Ratha, co-author of the World Bank's 2006 World Economic Prospects Report, notes:


"High fees are a significant drain on the savings of the migrants and also a significant drain on the funds that are flowing to essentially poor people."


“Reducing remittance costs can increase migrants’ savings and result in increased flows to developing countries – to poor people.”


With the increasing formalization of the once largely informal remittances market (still estimated to be as large as 50% of the formal market), improved systems and technology, such as those mentioned above, are emerging to facilitate faster, simpler transfers; simultaneously, and most importantly, driving down fees.


That these improvements in the remittances market, directly benefitting the poor, are emerging sustainably and often times profitably from the private, NGO, and government sectors alike, attest once more to the opportunities for poverty alleviation and income generation, lying in wait at the bottom of the pyramid.

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