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Immigrants sent 3.7 billion euros from Spain to Latin America in 2006, says IDB fund

MADRID – Latin American immigrants sent some 3.7 billion euros (about $5 billion) from Spain to their countries of origin during 2006, according to estimates released today by the Inter-American Development Bank’s Multilateral Investment Fund (MIF).

Should current demographic and economic trends persist, by 2010 remittances from Spain to Latin America could reach 5 billion euros a year (approximately $7 billion), MIF Manager Donald F. Terry said at a news conference held here.

“Spain has adopted many of the best practices in the world for bringing immigrants into a host country’s economic mainstream. What’s more, the links forged by financial institutions in Spain and Latin America are helping to boost the development impact of these remittances,” said Terry.

According to the MIF, Spain is the second largest source of remittances to Latin America after the United States. The population of Latin American immigrants has trebled over the past five years and there now are some 1.8 million living here.

The estimates for flows from Spain to Latin America stem from a survey commissioned by the MIF and financed by the Spanish Ministry of Economy. The MIF has done similar studies in the United States, Japan, Portugal and several Latin American and Caribbean countries.

The results of the survey were analyzed by Terry and Sergio Bendixen, who heads the firm that conducted the poll between March and April, involving 1,100 Latin American migrants in almost every region of Spain.

Migration and remittances

According to the survey, three in four Latin Americans in Spain send money regularly to their homelands, although there are wide variations among nationalities. Nine in 10 Dominicans send remittances while fewer than half of Argentines send money home.

A vast majority of the polled immigrants (at least 92%) make less than 30,000 euros a year. Around half of these workers (48%) make between 10,000 and 20,000 euros a year. On average, Latin Americans send about 15% of their earnings to their countries.

“The study shows clearly that Latin Americans in Spain feel a great responsibility for their families and they contribute as much as possible to their welfare,” Bendixen said. “At the same time these immigrants express satisfaction with the respect and friendship they’ve been met with in Spain, which many consider their new homeland.”

Two in three immigrants use money transfer companies. One in four uses a bank or a credit union, a higher proportion than among Latin American immigrants in the United States.

Typically, Latin Americans in Spain send between 100 and 300 euros a time. Nearly half of them (54%) pay between one and five euros for these services. About 10% pay no fees because they have accounts with Spanish financial institutions.

Some of the results of the survey underscored the growing integration of Latin American immigrants into mainstream economic life here. For example, 70% of those polled said they contribute to Spain’s social security system.

Additionally, 77% said they have bank accounts here. Among people who make more than 10,000 euros a year the percentage rises to 91%. In contrast, only 23% of those polled said they have bank accounts in their countries of origin.

Many migrants were optimistic about the future and evidenced a strong entrepreneurial spirit. More than half said they want to start their own businesses (29% in Spain and 25% in Latin America). About half (49%) expect to improve their living standards and three in 10 want to buy homes in Latin America.

Nearly half (47%) migrated to Spain in search of jobs. Only 28% of those polled said they had considered moving to the United States. Among these, most chose Spain because either they obtained visas or had relatives or friends already living here.

According to Spanish census data, the main groups of Latin American immigrants here are Ecuadorians (414,000), Colombians (269,000), Argentines (262,000), Bolivians (136,000) and Peruvians (126,000).

Significant numbers of Latin Americans can be found in almost all regions of Spain but the biggest concentrations are in Madrid (470,000), Catalonia (391,000), Valencia (196,000) and Andalusia (139,000). Within Spain, Madrid is the leading source of remittances to Latin America, at more than one billion euros a year, followed by Barcelona with around 673 million euros a year.

MIF and remittances

The MIF, an autonomous fund administered by the IDB, started to study remittances in the year 2000 to gauge their impact in Latin America and the Caribbean. Besides revealing the real magnitude of these flows, the MIF’s work helped spur competition among service providers, leading to steep drops in costs for money transfers to major Latin American cities.

Following its mandate to promote microenterprise and small business development in Latin America and the Caribbean, the MIF also finances projects to involve more remittance families in the formal financial system and expand their access to products and services such as mortgage loans, microcredit, savings accounts and insurance.

 

 

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