Statement by Ms. Harriet Schmidt, Director, Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States at the Regional Consultative Meeting on
Migration, Remittances and Development in Africa, Accra, Ghana, 4 September 2007
Dear Colleagues from the United Nations System and other Multilateral Institutions,
Ladies and Gentlemen.
It is a great privilege to join you at this meeting on remittances and development in Africa. The importance of remittances as a source of external finance for poverty reduction and development in Africa and other developing regions cannot be over-emphasised. Indeed, migrants’ remittances are only second to official development assistance as a source of external finance for the 50 Least Developed Countries, 34 of which are in Africa. For millions of poor people in these countries, remittances often make the difference between going to bed hungry or not; staying in or dropping out of school; or even between life and death. Yet, important as they are to the lives of millions of people, remittances do not come without challenges. It is therefore essential that as remittances assume ever greater significance in the economies of these countries, sufficient attention is paid to their implications for sustainable development. In this context, I am very pleased that the momentum on the issue generated by the High Level Segment of the Economic and Social Council in 2004, and subsequently the Ministerial Conference of LDCs on Enhancing the Development Impact of Remittances in Benin last year, has been maintained, as demonstrated by this meeting.
Perhaps no other source of development funding raises as many paradoxes as remittances. Remittances are, of course, directly linked to migration. In many cases, especially in the vulnerable countries, this migration has been forced, be it by civil conflict, political persecution or economic difficulties. For people from the LDCs, migration is often a case of escaping from an unbearable situation, rather than a matter of preference. The irony of it is that having escaped their countries, migrants then help sustain the economies of those very countries through remittances. This can have a positive effect by, for example, helping to improve the economic situation. But it can also have the unintended consequence of helping to sustain undemocratic governance. By paying for people’s access to basic goods such as water, health and education, remittances can encourage undemocratic governments to abdicate their duty to ensure the access of all citizens to basic services. Such governments can more easily divert public resources from the social sectors to financing narrow political interests.
Secondly, migration very often leads to brain drain. Skilled people, often trained at great national expense, leave with precisely the kind of skills that are needed to develop their home countries. Where countries gain through remittances, they lose through brain drain. Of course, one appreciates why skilled people would migrate to a country where their skills will be better paid for. But this creates a vicious cycle where skilled people migrate because they can’t find fitting jobs at home, and the economy is not able to provide the necessary jobs because of the loss of skilled manpower. For the LDCs, the ideal situation would be where they export unskilled labour, which they often have in surplus, but retain their skilled labour. This should be the cornerstone of their migration policies. The complication, of course, is that the receiving countries are often more open to skilled migrants.
Thirdly, migrants increasingly face a difficult situation in their host countries. They are often, unfairly perhaps, seen as the cause of the economic woes of the host countries. Their rights are often not adequately protected, living under the threat of detention and deportation, not to mention the exploitation they may have to endure. Unfortunately, it is the kind of labour force that LDCs can afford to export – the unskilled workers – that are most unwanted and suffer the greatest hardships. Multilateral action is required to protect the rights of such workers. But at the same time, LDCs need to take an active interest in the welfare of their citizens abroad through bilateral channels.
In light of these challenges, remittances, important as they are to African and many other developing countries, should not be taken as the panacea for sustainable development. Such countries need to pursue policies which, while encouraging the inflow of remittances, seek to improve the domestic socio-economic environment to encourage more and more people to remain and fulfil their ambitions at home. Indeed, to the extent that governments can influence the use of remittances, which are essentially private resources, the objective should be directing them towards areas that help to improve the domestic socio-economic environment. Improving the domestic situation is not only a matter of providing basic services and creating jobs, but also improving good governance, including the rule of law and protection of human rights.
Encouraging the inflow of remittances and improving the socio-economic situation at home are directly linked and reinforce each other. Political instability, lack of security and lack of public law and order may discourage migrants from sending money home, instead encouraging them to invest their saving in the host country. Foreign exchange restrictions and taxing remittances can also discourage migrant workers from sending money home, or encourage them to use informal, unrecorded channels, thus depriving the government of the information necessary to devise appropriate policies to enhance the quantity and development impact of remittances. While many of the measures needed to attract more remittances lie within the power of the migrant workers’ countries of origin, international cooperation is needed to address equally challenging constraints in the host countries, including access to reasonably-priced banking and money transfer services.
Some of these issues can be addressed within the context of regional organisations. While, traditionally, the highest proportion of remittance flows to the LDCs has been from the North, South-South remittances now account for a significant part of remittances to LDCs. This provides an opportunity for devising regional solutions to the challenges of migration and remittances.
Developing appropriate policies on remittances, whether at the national, regional or global level, requires reliable and up-to-date information and data. Remittances are particularly difficult to track, since they are private transfers and a large part of them goes through informal channels. Innovative approaches are therefore needed to generate the information necessary to put in place effective policies. In this regard, the decision of the Ministerial Conference of LDCs on Enhancing the Development Impact of Remittances to establish a remittances observatory in Benin is very important. The Office of the High Representative for the Least Developed Countries, Landlocked Developing Countries and Small Island Developing States is working with the International Organisation for Migration to get the observatory in place.
It is also important that the migrant workers have a role to play in shaping policies concerning remittances and migration at all levels, if such policies are to have the desired effect. This regional workshop is a major contribution towards that goal. I therefore look forward to your exchanges and recommendations on this topical issue.
I thank you for you attention.