Susanna Wolf

OHRLLS

Labour migration, financial investments and more:

opportunities and challenges linked to South‐South migration cooperation

Briefing on South-South Migration Cooperatiom

Tuesday 29 November 2011, United Nations Headquarters, New York

Mr. Sandagdorj Erdenebileg, Acting Director

UN-OHRLLS

Introduction

• More than 215 million people live outside their countries of birth

• In 2010, remittances recovered to the 2008 level of $325 billion after having dropped to $307 billion in 2009 as a result of the global financial crisis.

• Flows are projected to rise to $346 billion in 2011 and $374 billion by 2012

Benefits of migration and remittances

• Poverty and hunger reduction • Higher human capital accumulation• Higher investment on health and education • Access to information and communication technologies • Promotion of private enterprises • Child labour reduction • Helping households be better prepared for natural disasters• Diasporas can be an important source of trade, capital,

technology, and knowledge for origin countries.• Their savings and wealth can be leveraged for development

projects through diaspora bonds and remittance-backed bonds.

Importance of the global south

• Substantial changes have taken place at the global level in the control and distribution of resources

• Economic and political power has been shifting towards the South due to high and sustained growth rates in larger developing countries, particularly China, India, Brazil and South Africa

• The Istanbul Programme of Action has identified the developing countries as a key development partner of LDCs within the context of S-S cooperation. They are important partners for LDCs for aid, trade, investment, technology transfer and migration.

South-South Migration • South–South migration is significantly larger than migration from the

South to high-income OECD countries • High-income non-OECD countries such as the Gulf countries are

also major destinations for migrants from the South. • Over 80 % of South-South migration estimated to take place between

neighbouring countries• Mobility among the countries of the South is likely to increase

further as the emerging countries continue to become important power in global economic landscape

• Immigration in developing countries has not captured much attention

• Most South-South labour mobility relates to lower-skilled workers and informal job markets

• The Movement of large numbers of skilled migrants (brain drain) also occurs towards countries in the South (17.5% in 2005)

Determinants of South-South Migration

• Income differences, proximity, and networks are the major drivers of migration

• Motivations for South-South migration also include seasonal patterns and flight from ecological disasters or civil conflict.

• Other motivations include transit to the North and petty trade

Challenges of South-South migration

• Lack of general data and research on the impact of South-South migration on development

• Lack of information as the South-South migration often takes place outside of existing frameworks

• High degree of informality in labour markets and lack of creation of formal employment

• Limited legal migration opportunities for lower skilled migrant workers, especially young migrants

• Often restrictions are imposed by the countries of the South on immigrants

• External shocks such food, energy, financial and economic crises, political conflicts

• Social system are often not developed enough and are difficult to access by migrant workers

• Immigration and intra-regional migration in countries of the South need to be strengthened on the political agendas

Opportunities of South-South Migration

• Intra-regional migration entails less distance and costs• Less cultural and linguistic differences simplify the integration and

potentially reduce psychosocial effects• Well-developed informal remittance channels • Regional labour markets can offer a new entity of analysis and

cooperation linking demand and supply, including through GATS Mode 4

• The reduction of costs of migration can imply important poverty reduction gains for larger parts of migrants than those that have the resources to migrate to developed countries.

• Recognition of qualifications may be less of an issue for lesser skilled migration and easier among countries with similar educational systems. Regional integration, such as in CARICOM, can offer an opportunity to address the issue.

• Southern growth poles will become more attractive for potential migrants, and the expansion of their economies may simultaneously allow migrants already working there to remit greater financial resources.

Migration and the least developed countries

Stock of emigrants: 27.5 million or 3.2 percent of population (2010)

Destinations: • High-income OECD countries (19.2 percent); • High-income non-OECD countries (9.8 percent); • Low and Middle-income developing countries (63.0 percent); • Unidentified (7.6 percent)

Top 10 emigration countries: Bangladesh, Afghanistan, Burkina Faso,Mozambique, the Republic of Yemen, Mali, Haiti, Nepal, Sudan, Eritrea

Composition • Females as percentage of immigrants: 47.4 percent (compared to

48.4 percent for the world)• Refugees as percentage of immigrants: 18.6 percent (compared to

7.6 percent for the world)

Importance of remittances for LDCs Development

ODA US$37.2 billion (2009)

FDI US$ 26.4 billion (2010)

Remittances US$ 25.9 billion (2010)

Remittances

Remittances inflows to LDCs have grown by almost 17 per cent

per year over the last decade

RemittancesUS$ billions

1995 2000 2004 2005 2006 2007 2008 2009 2010e

Inward remittance flows to LDCs

3.9 6.1 10.8 11.9 14.2 17.4 22.9 24.2a 25.9

To all developing countries 55.2 81.3 159.3 192.1 226.7 278.5 324.8 307.1 325.5

Outward remittance flows fromLDCs

0.7 1.4 1.4 1.5 1.7 2.4 2.5 2.6b —

From all developing countries 10.4 9.5 28.5 33.0 41.0 52.7 67.3 58.7 —

Source: Migration and remittances factbook 2011, 2nd edition

Remittances to LDCs (current US$ (billions))

  2002 2004 2006 2008 2010     2002 2004 2006 2008 2010

Angola       0.08     Malawi 0.00        

Bangladesh 2.86 3.58 5.43 8.94 10.85   Mali 0.14 0.16 0.21 0.43 0.44

Benin 0.08 0.06 0.22 0.25 0.25   Mozambique 0.05 0.06 0.08 0.12 0.13

Bhutan     0.00 0.00 0.00   Myanmar 0.11 0.12 0.12 0.12 0.13

Burkina Faso 0.06 0.04 0.07 0.10 0.10   Nepal 0.68 0.82 1.45 2.73 3.47

Burundi   0.00 0.00 0.00 0.03   Niger 0.02 0.06 0.08 0.09 0.09

Cambodia 0.14 0.18 0.30 0.33 0.37   Rwanda 0.01 0.01 0.02 0.07 0.09

Congo, Dem. Rep.             Samoa 0.05 0.09 0.11 0.14 0.14

Djibouti 0.01 0.02 0.03 0.03 0.03   Sao Tome and Principe 0.00 0.00 0.00 0.00 0.00

Equatorial Guinea             Senegal 0.34 0.63 0.93 1.48 1.35

Ethiopia 0.03 0.13 0.17 0.39 0.22   Sierra Leone 0.02 0.02 0.02 0.03 0.06

Gambia, The   0.06 0.06 0.06 0.12   Solomon Islands 0.00 0.01 0.00 0.00 0.00

Guinea 0.02 0.04 0.05 0.07 0.06   Sudan 0.98 1.40 1.18 3.10 1.97

Guinea-Bissau 0.02 0.03 0.03 0.05 0.05   Tanzania 0.01 0.01 0.02   0.02

Haiti 0.68 0.93 1.06 1.37 1.50   Togo 0.10 0.18 0.23   0.33

Kiribati 0.00 0.00 0.00 0.02 0.04   Uganda 0.42 0.31 0.41   0.91

Lao PDR 0.39 0.63 0.59 0.60 0.75   Vanuatu 0.00 0.00 0.00   0.01

Lesotho   0.06 0.08 0.06 0.03   Yemen, Rep. 1.29 1.28 1.28   1.24

Madagascar 0.03 0.01 0.00 0.00 0.00   Zambia   0.05 0.06   0.04

Remittances to LDCs (% of GDP)

  2001 2003 2005 2007 2009     2001 2003 2005 2007 2009

Angola .. .. .. .. ..   Mali 3 4 3 5 5

Bangladesh 4 6 7 10 12   Mozambique 1 1 1 1 1

Benin 4 2 4 5 4   Nepal 3 12 15 17 23

Bhutan .. .. .. 0 0   Niger 1 1 2 2 2

Burkina Faso 2 1 1 1 1   Rwanda 0 1 1 1 2

Burundi .. .. 0 0 2   Samoa 18 15 27 24 26

Cambodia 3 3 3 4 3  Sao Tome and

Principe 1 2 1 1 1

Djibouti 2 4 4 3 3   Senegal 6 7 9 11 11

Ethiopia 0 1 1 2 1   Sierra Leone 1 3 0 3 3

Gambia, The .. 15 13 9 11   Solomon Islands 1 1 2 0 0

Guinea 0 3 1 4 2   Sudan 6 7 4 4 4

Guinea-Bissau 5 5 3 6 6   Tanzania 0 0 0 0 0

Haiti 18 29 24 20 21   Togo 5 8 9 11 11

Lao PDR 0 0 0 0 1   Uganda 6 5 3 4 5

Lesotho 58 59 45 40 36   Vanuatu 20 1 1 1 1

Liberia .. .. 6 8 3   Yemen, Rep. 14 12 8 6 4

Madagascar 0 0 0 .. ..   Zambia .. 1 1 1 0

Malawi 0 .. .. .. ..              

Sources of remittances to LDCs

According to World Bank estimates of bilateral

remittances, in 2010:

• Two thirds of remittances inflows to the LDCs originated in Southern countries

• Remittances sent to LDCs from developed and transition economies accounted for a mere 35 per cent of the total, despite the fact that migrants working in these countries typically remit greater sums of money.

Share of remittance inflows to LDCs 2010

Source: UNCTAD secretariat calculations, based on World Bank Bilateral Migration and Remittances 2010

Decision taken in the Istanbul Programme of Action on Remittances

Remittances are significant private financial resources for households in countries of origin of migration. There is a need for further efforts to lower the transaction costs of remittances and create opportunities for development-oriented investment, bearing in mind that remittances cannot be considered as a substitute for foreign direct investment, ODA, debt relief or other public sources of finance for development. (Para 123)

Goals and targets (Para 124) Reduce the transaction cost of remittance flows and foster the development impact of remittances.

Action by least developed countries (Para 125.1)

(a)Make efforts to improve access to financial and banking services for easy transaction of remittances;

(b) Simplify migration procedures to reduce the cost of outward migration;

(c) Take appropriate measures to better utilize knowledge, skills and earnings of the returning migrants;

(d) Provide necessary information, as available, to workers seeking foreign employment.

Action by development partners (Para 125.2)

(a) Resist unfair and discriminatory treatment of migrant workers and the imposition of unreasonable restrictions on labour migration in order to maximize the benefits of international migration, while complying with the relevant national legislation and applicable international instruments;

(b) Consider developing, where appropriate and in accordance with domestic laws, a system of short-term migration, including workers from least developed countries;

(c) Remove unnecessary restrictions on outward remittances and support the lowering of transaction costs;

(d) Consider supporting the least developed countries in establishing the International Migrants Remittance Observatory, on a voluntary basis.

Innovative financing tools leveraging on migration and remittances

• Greece has announced that it will issue diaspora bonds in 2011 for $3 billion mainly for debt management and has filed registration with the US Securities and Exchanges Commission in order to be able to sell the bond to investors in the US.

• The Ethiopian Electric Power Corporation issued a diaspora bond in December 2008 with help from the Ethiopian central bank, but it was not successful in raising significant amount of financing.22

• Nepal also issued a local currency diaspora bond in June 2010• The Government of Zimbabwe has also established a committee that will

facilitate issuance of a diaspora bond.

Diaspora bonds and remittance-backed bonds are being viewed as potential sources that can finance infrastructure and development projects at lower cost and longer maturities. Preliminary estimates suggest that Sub-Saharan African countries can potentially raise $5-10 billion per year by issuing diaspora bonds.

Several countries have introduced diaspora bonds in recent years or are in the process of doing so

Productive use of remittances by co-development schemes

Small scale projects supported by ODA could be implemented in LDCs, where remittances could be invested with attractive and guaranteed dividends. This can incentivize productive investment of remittances.

Recipient States should facilitate legal frameworks allowing migrants to retain accounts in foreign currency. They could prepare a portfolio of projects for joint ventures with local business people. They should also continue to simplify the administrative formalities to set up business for example by promoting a one window approach or one stop shop, and facilitate access to credit for investment in productive sectors.

Conclusion

• Migration is a key component of regional and global integration and contains huge potentials

• Besides remittances, migration can be leveraged for skill and technology transfers and diaspora investments.

• LDCs and their development partners can adopt policies that encourage circular migration, co-development measures in favour of skills development, incentives for return of migrants, creating employment opportunities, improve linkages and networks between the Diaspora and home countries through improved communication technology to facilitate exchange of skills and knowledge, strengthening data collection, establishment of centres of excellence and promoting research on migration and remittances.

Thank you.