remittances & postal networks

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

REMITTANCES & POSTAL NETWORKS

EUROGIRO, ROME MAY 6TH 2010

Robert W. Meins

Remittances SpecialistFinancing Facility for RemittancesInternational Fund for Agricultural Development

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

The challenge:Remittances to rural areas

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

A transfer of $200 is sent from the UK to Kuyunga, Uganda, 50 kilometers from the capital Kampala.

The sender has two options:

1) Send directly to Kuyunga using Western Union.

2) Send to a competing firm in Kampala.

Kayunga

Kampala

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Kayunga

Remitter sends $ 200,-

- Transfer fees $40.00

- Exchange rate margin 1.28 %

- Fees on the receiving side

$0

Actual amount received in Kayunga

$ 157.44 (21.28%)

Picking up remittances in rural areas:

Remitter sends $ 200,-

- Transfer fees $19.03

- Exchange rate margin 1.15 %

- Fees on the receiving side

$0

Actual amount received in Kampala

$ 176.68 (11.66%)

Kampala

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

The financial crisis &Remittances in 2010

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Kaza

chst

an

Mold

ova

Guin

ea

Uganda

Venezu

ela

Arm

enia

Turk

ey

Leso

tho

Bra

zil

Pola

nd

Egypt

Cost

a R

ica

Ukra

ine

Georg

ia

Mexic

o

Nig

eri

a

Moro

cco

Colo

mbia

India

Ecu

ador

Jam

aic

a

Alb

ania

Hondura

s

Guate

mala

Uru

guay

El Salv

ador

Bolivia

Cape V

erd

e

Eth

iopia

Indonesi

a

Nic

ara

gua

Dom

inic

an R

epublic

Jord

an

Peru

Para

guay

Kenya

Philip

pin

es

Guin

ea-B

issa

u

Sw

azi

land

Mauri

tius

Bangla

desh

Pakis

tan

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Impact of the financial crisis:Remittance growth in 2009 YTD:

Source: Most recent reporting from Central BanksSource: Most recent reporting from Central Banks

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Colo

mbia

Mexic

o

Bra

zil

Kenya

Guate

mala

Hondura

s

Nic

ara

gua

Arm

enia

Para

guay

Pakis

tan

El Salv

ador

Jam

aic

a

Turk

ey

Dom

inic

an R

epublic

Philip

pin

es

Bangla

desh

Georg

ia

-50%

-40%

-30%

-20%

-10%

0%

10%

20%

30%

Impact of the financial crisis:Remittance growth in 2010 YTD:

Source: Most recent reporting from Central BanksSource: Most recent reporting from Central Banks

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

The Financing Facility for Remittances (FFR)

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

The Facility… $18 million dollar multi-donor fund

Consultative Group for Assistance to the Poor European Commission Government Luxembourg Government Spain Inter-American Development Bank UN Capital Development Fund, and Housed at the International Fund for Agricultural

Development

FFR manages 40 projects in 38 countries around the globe

Open to private, public and civil society organizations

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

What we do… Annual Calls for Proposals Global Forum on Remittances “Sending Money Home” series of studies RemittancesGateway.org portal Dissemination

European Parliament G8 Working group on remittances Global Forum on Migration & Development Conferences

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Why we do it…

Lower the cost of remittances through competition

Improve capillarity, service rural areas Broaden the scope of financial services Bank the unbanked

… to empower migrant workers and their families to advance on the road to financial independence.

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

FFR’s approach to reaching rural areas

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

3 ways FFR seeks to increase “capillarity”

Microfinance (networks)

Mobile financial services

Postal networks

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Postal networks’ importance to remittances 657,000 post offices in 191 countries 500,000 in rural areas

80% of designated postal operators provide some sort of financial services

1,15 billion money orders sent by Posts worldwide in 2007

Source: UPU

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

UPU-IFAD project in West Africa

Total number of inhabitants: 43.5 million

Number in rural areas: 28.7 million

Service unavailable in rural areas, where other money transfer companies are absent

Necessity to extend that action in rural areas: answer to the 2007 Call for Proposals

In 2008: approval of the project, launch in September 2008

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

UPU-IFAD project in West Africa

Target: migrants and recipients of remittances in rural areas of 6 West African countries: Benin, Burkina Faso, Mali, Mauritania, Niger, and Senegal

Main activities: Connection of 273 rural post offices in 6 countries Set up of the communication infrastructure (call centres,

direct connection) New technology, equipment, training Cash is available in rural post offices – transportation and

management Associate remittances with other financial services (account-

based services, microfinance)

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Benefits

Low-cost and quality service available in rural areas

Reduction of competitors tariffs on various corridors

Reinforcement of rural Posts for provision of universal service

First step in financial inclusion process for rural poor

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Results to date

IT, commercial and Operational Model updated on the basis of new UPU Regulations and regional conditions

New equipment installed and tested 14 October 2009: connection of rural postal

offices and opening of electronic remittances services

Training and cooperation Low-cost and quality service available in rural

areas

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

2010 Call for Proposals

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

2010 Call for proposals

Grant financing for projects related to maximizing the development impact of remittances

up to $250,000 for projects

up to $500,000 for mobile financial services

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Topic areas

Mobile financial services 

Housing

Postal networks (Micro-) Insurance

Microfinance networks Migrant pensions and other government-to-person payments

Financial services innovations

Securitization

Migrant entrepreneurship and investment (funds)

Open window (innovative projects in other areas)

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Basic information

Who can apply? Private sector Public sector Civil society

Cross-sector partnerships encouraged Execution period: 2 years Deadline (short) concept proposals: June

7th 2010

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Must have Legal status in country where you operate Audited financial statements

Act on behalf of themselves (not as an intermediary)

Provide counterpart 10-30% non-profit 50% for for-profit (minimum half of which in

cash) Project must be in IFAD member countries

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Tunis recommendations

Increase competition

Empower market actors

Achieve effective and efficient

regulation

Adopt new technologies

Expand access to financial services

Make more financial services available in

rural areas

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

RemittancesGateway.org

Institutionally neutral platform

Documents News Events Country profiles

All are welcome to contribute

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

QUESTIONS & ANSWERS

Financing Facility for RemittancesInternational Fund for Agricultural Development (IFAD)

Contact information…

Robert W. MeinsR.Meins@ifad.org+39 06 5459 2059

www.ifad.org/remittanceswww.remittancesgateway.org