Thank you for inviting me to take part in this discussion with such a distinguished audience on a topic of keen interest to the Ibero-American Community of Nations.
Migration and remittances are not new phenomena, nor are they confined to one particular part of the globe. For example, for over 200 years millions of Europeans have set out for distant shores in search of a better life. Between 1800 and 1970 Latin America and the Caribbean had an estimated 21 million immigrants, mainly from Spain, Italy, and Portugal. Over a million Spaniards emigrated to other European countries, just between 1959 and 1970. Remittances from these people—along with their knowledge and ideas, investments, political influence, and philanthropy—made a decisive contribution to the economic awakening of their home countries.
More recently, this flow has reversed direction, and the Latin American diaspora in North America and, increasingly, in Europe has become a mainstay of our relationship across continents. An estimated 25 million Latin American and Caribbean people now live abroad and are likely to send to their home country over $50 billion in 2005. This figure vaults our region into first place as the world’s largest recipient of remittance flows. Taken altogether, the over 200 million small transfers by migrants each year are Latin America and the Caribbean’s richest source of international financing, surpassing official development assistance (some US$6 billion in 2004) and total foreign direct investment (some US$44 billion in 2005).
The challenge for us, then, is to mobilize governments, civil society, and the private sector to replicate the successful model of Portugal and Spain, which proves that countries need not resign themselves to a fate of structural emigration. Behind the remittances are people. This means we must provide more and better opportunities for self-determination, so that migrants and their families can drive development in their home communities.
The Inter-American Development Bank’s experience is that one of the most effective methods is to link the diaspora with their families through the banking system, so as to boost the impact of remittances and offer these transnational families the financial services and products they need to get ahead. The main issue today (besides high transfer costs) is that, despite some innovative initiatives, remittance flows generally remain outside the financial systems. By improving the region’s banking and lending systems, these flows can be leveraged so that they are used more efficiently and have a multiplier effect on development.
The IDB, for example, has acted as intermediary between Andean and Spanish banking institutions, to reduce or eliminate transfer costs and develop such products as remittance-backed mortgages and microcredits for the families of migrants. Examples of best international practices in this area are the relationship between Spanish savings banks and Banco Solidario de Ecuador, and the efficient channeling of remittances from New York to Portugal and Brazil by Portugal’s BCP Bank.
The IDB has pioneered the identification, quantification, and study of how remittances are channeled and used. IDB member countries include both recipients and the principal sources of remittances. It is therefore uniquely positioned to promote regional public-private partnerships to tap the potential of remittances for lending to microenterprises and small business, long-term financing for housing, and investments in education, health and social security.
We have identified this as a priority for the next decade. The IDB has and will continue to invest in ways of leveraging remittances so as to create tangible advantages for our countries and their inhabitants. These efforts seek to provide more and better opportunities for millions of families across the region who receive remittances to get more out of their resources while expanding opportunities for future generations of workers in their own countries, so that there is less pressure to emigrate and Latin America and the Caribbean can fully harness its greatest asset, its people. You can rest assured that the IDB will remain your staunch ally in promoting remittances as a development tool and a bridge to a brighter future for our peoples.