Remittances to developing countries projected to reach $550b
Remittances, which have been identified as main contributors to GDP in low- and middle-income countries are projected to reach $550 billion in 2019, making them the largest source of external financing in these countries.
The benefits of remittances from international migrant workers are however reduced by the high cost of transferring money, the United Nations (UN) has said.
In one of its latest reports it explains that in “the first quarter of 2019, the average cost of sending $200 was still high, at around seven per cent. That is more than double the SDG target of three per cent by 2030.”
The UN Sustainable Development Goals (SDGs) Report 2019, which was recently released notes that the cost of money transfers was “highest across many African corridors and small islands in the Pacific, at about 10 per cent.” Adding that, personal remittances from migrant workers abroad “are becoming the largest source of external financing in developing countries.”
“Total global remittances reached $689 billion in 2018, up from $633 billion in 2017. Remittances to low- and middle-income countries over that period rose by 9.6 per cent, reaching a record high of $529 billion in 2018. That was more than three times the amount of ODA they received in 2018, and was significantly larger than foreign direct investment (if China is excluded)”.
The report notes that while advances have been made in some areas, monumental challenges remain that require urgent attention and more rapid progress to realize the 2030 Agenda’s far-reaching vision.
Noting that personal remittances are at an all-time high, but official development assistance (ODA) is declining, “and private investment flows are often out of sync with sustainable development.”
It says ODA is the largest source of external financing for least developed countries (LDCs).
“Nevertheless, in 2018, less aid went to LDCs and African countries, where it is needed most,” it said.
According to the report, donor countries are not living up to their pledge to ramp up development finance, tamping down efforts to achieve global goals and that despite recent progress, industrialization in least developed countries is still too slow to meet the 2030 target.
It says the disparities in industrial productivity between rich and poor nations remain stark and adds that for instance, manufacturing value added (MVA) per capita was only $114 in LDCs compared to $4,938 in Europe and Northern America, in 2018.
“The growth of manufacturing in both developing and developed regions slowed in 2018, attributed largely to emerging trade and tariff barriers that constrain investment and future expansion.”
“Despite the slowdown, the global share of MVA in GDP increased marginally from 15.9 per cent in 2008 to 16.5 per cent in 2018, when it began to plateau.”
The report adds that in LDCs, the share of manufacturing in total GDP increased 2.5 per cent annually between 2015 and 2018. However, that still falls short of the pace needed to achieve a doubling of the MVA share in GDP by 2030, and calls for accelerated action.
The advice the report gives is that the effective mobilization and use of domestic resources, underscored by the principle of national ownership, is vital to achieving the SDGs.
Stressing that assessing the tax burden-that is, revenue in the form of taxes-is an important fiscal policy exercise with economic and social implications.
“A well-functioning revenue mobilization system is a prerequisite for strong, sustained and inclusive economic development”, it notes.
Focusing on other areas, the UN report warns that the most urgent area for action is climate change. It also states emphatically that the “world is not on track to end poverty by 2030.”
“Extreme poverty remains stubbornly high in low-income countries and countries affected by conflict and political upheaval, particularly in sub-Saharan Africa.”
It adds that among the” 736 million people who lived on less than $1.90 a day in 2015, 413 million were in sub-Saharan Africa. This figure has been climbing in recent years and is higher than the number of poor people in the rest of the world combined.”
It points to other defining issues such as the increasing inequality among and within countries, saying “poverty, hunger and disease continue to be concentrated in the poorest and most vulnerable groups of people and countries.”
It explains that over 90 per cent of maternal deaths occur in low-and middle-income countries. Three quarters of all stunted children live in Southern Asia and sub-Saharan Africa.
By Eunice Menka
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