 |
| Don
Terry, manager of the MIF, and Joan Rosás,
of Caixa de Barcelona, answer reporters’
questions about the growing importance of remittances
in Latin America.
(Photo by Wilie Heinz) |
|
Milan,
Italy - Remittances sent by Latin American and Caribbean
workers in industrialized nations to their home countries
must pay "an outrageous amount" in fees to
make those transfers, according to Donald F. Terry,
manager of the Multilateral Investment Fund.
Terry
said that remittances have become a key source of
capital for the region, last year totaling $32 billion,
originating mostly from the United States, Japan and
Europe. However, senders had to pay some $4 billion
in fees to send their earning home, he said.
Terry
told reporters that these high costs were not the
outcome of some conspiracy, but rather the result
of inefficiency. Currently, only a fraction of transfers
are made through formal financial institutions, which
usually charge lower fees to their customers than
traditional money wiring companies. A combination
of competition and technology are already helping
to cut the costs of remittances, which are typically
sent by low-income immigrants. As more people gain
access to banks and credit unions, they will be able
to use electronic services to send money to their
relatives.
The
challenge for the IDB and the MIF, Terry said, is
to help Latin American and Caribbean financial institutions
that work with poor people -- such as credit unions
and microfinance institutions -- build networks that
will allow them to take part in the distribution of
remittances. The MIF has already brokered contacts
between Spanish and Latin American financial institutions.
For example, la Caixa de Barcelona, a leading Spanish
credit union, has already reached agreements with
counterparts in Colombia, Ecuador and Peru, and is
currently working on a pact with a Dominican bank.
Competition from large institutions like La Caixa
has already driven down the fees of traditional wire
transfer services in Spain. It is also helping hundreds
of thousands of immigrants to enter the formal financial
system, opening the door to other services such as
savings accounts, mortgages and insurance.
Proposals
for social inclusion
Other
events at the Annual Meeting included the seminar
"Good Practices for Social Inclusión:
Dialogue Between Europe and Latin America and the
Caribbean." In his opening remarks, IDB President
Iglesias emphasized the need to work with all groups
to ensure that social exclusion will no longer be
a tragedy for individuals, result in the isolation
of communities, and cause the loss of potential contributions
of nations.
The IDB and other development organizations consider
social exclusion one of the key causes of high levels
of poverty and inequity in the region. Participants
at the meeting noted that the poverty of socially
excluded groups is not transitory, but rather can
persist for generations unless ambitious measures
are taken to combat it.
Proposals to reduce social exclusion include the elimination
of discriminatory barriers to schools and employment
so that the youth of the excluded groups can fully
participate in the economy and contribute to growth
and social stability.
Studies carried out by the IDB indicate that the expansion
of education and job benefits to excluded groups would
result in a 36 percent increase in the gross national
product of Bolivia, 14 percent in Guatemala, and 13
percent in Brazil.
Serious
repercussions
In a seminar on globalization and regional development,
IDB President Iglesias affirmed that more must be
done to distribute the benefits of integration more
equitably among regions within countries as well as
among individuals.
According to the president, a little-discussed aspect
of this problem is the "fact that the process
of globalization has had unequal effects on subnational
territories or regions, which can result in explosive
political repercussions and barriers for the process
of social and economic development."
The IDB president made his remarks at a seminar "Global
and Local: Confronting the challenges of regional
development in Latin America and the Caribbean. Also
participating in the seminar was Anna Kajumulo Tibaijuka,
executive secretary of U.N.-HABITAT; Roberto Formigoni,
president of Lombardy Region of Italy; and Eduardo
Frei, former president of Chile. Other speakers included
officials of municipal and regional governments, representatives
of international organizations, and academic experts.
In his remarks, Chile's Frei emphasized that the benefits
of globalization can only be realized in the context
of a stable international environment.
Frei also called upon governments to engage civil
society in achieving equity among regions. "Civil
society must become the motor of development,"
he declared, adding that local people must determine
their own needs and the course they take to will solve
their own problems, without recourse to models from
the outside.
A stronger civil society will help to drive the process
of decentralization and increased autonomy for local
and regional government, said Frei.
The seminar was sponsored by Italy's Ministry of Foreign
Affairs, the Milan association Globus et Locus, and
the Program of Economic Development and Creation of
Local Employment of the Organization of Economic Cooperation
and Development.
New
agreements on agriculture
IDB President Iglesias and David Harcharik, deputy
director general of the United Nations Food and Agriculture
Organization, signed a memorandum of understanding
today pledging the two organizations to cooperate
to promote food security and reduce rural poverty.
Among the possible areas for new initiatives are rural
competitiveness, regional economic development, water
and land management, agricultural technology and trade
and the strengthening of public-private productive
alliances.
Also signed by the IDB and the International Fund
for Agricultural Development was a memorandum of understanding
to cooperate to reduce rural poverty in Latin America
and the Caribbean.
