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UNITED NATIONS CAPITAL DEVELOPMENT FUND Microfinance |
Issue 16 / September 2005 |
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Book Review – Remittances: Development Impact and Future Prospects*
Edited by Samuel Munzele Maimbo and Dilip Ratha By Roma Jhaveri, Research Assistant, Asia Pacific Research Center, Stanford University 
In the foreword to Remittances: Development Impact and Future Prospects, former World Bank President James D. Wolfensohn states that the challenge of governments with respect to remittances will be to capitalize on the overall development potential of remittance flows into developing countries “while respecting the fact that these are private, hard-earned incomes of poor people seeking to better their lives.” As remittances, the financial transfers from migrant workers abroad to their families in developing countries, become perhaps the largest source of external finance in developing countries, it becomes more and more important that governments address this challenge. This book seeks to begin that process. The purpose of this book is to serve as a discussion of the current remittance landscape, rather than as a presentation of any particular thesis. Editors Maimbo and Ratha begin by asserting that their goal is to address the constraints present in sending money to family members as well as to improve the overall development impact of this money. They then open the forum to contributing authors to touch on recommended and existing policies, processes and infrastructure necessary to support a development-oriented transfer of money between migrant workers and their families in their home countries. Divided into five sections, the book revolves around three central themes: current remittance flows and their development potential; the infrastructures, formal and informal, necessary to facilitate these flows; and the implication of remittances on developing and already-developed countries. The authors provide region-specific examples of remittance outcomes and challenges, including commentary on the infrastructural obstacles faced in Punjab, India in encouraging entrepreneurial activity, the failure of financial policy in Albania to ensure that remittance money reaches recipients and the need to rely on informal channels of money transfer in Somalia because of the absence of a formal financial system. The authors also put forth many suggestions for governments to improve their current remittance environments. The suggested approaches to improving the overall development impact of remittances are the most insightful parts of the book. An example is the proposal to extend banking services to currently unbanked populations. For the sender, this would mean that money could be saved and sent less frequently, in larger chunks, thereby reducing per-transaction costs associated with remitting money. By enabling account-to-account transfers, banks would also encourage recipients to save more, as opposed to cash transfers. Other proposals detailing methods of increasing recipient investment opportunities and improving formal remittance channels so as to replace informal channels are equally thought-provoking. This book is academic in nature, but its editors make clear that its intended audience includes financial sector policy makers, researchers and providers of remittance services. Other readers will find the volume to be a comprehensive introduction to the complex relationship between remittances and development. In particular, readers with an interest in exploring new methods of stimulating development will benefit from the lessons and recommendations of this book. *To purchase Remittances: Development Impact and Future Prospects, please visit the International Year of Microcredit's Made by Microentrepreneurs online store: http://www.shopmicro.org/. |
