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Remittances: What Are They and Why Do People Send Them?

Remittances have remained a trending and powerful topic despite the twists and turns of technology and society.

This kind of money transfer, sent by a migrant worker to his or her home country, does more than connect families.

Remittances sustain fragile households and economies. As an imperative lifeline, we must ensure it’s always available to those who rely on it.

The impact of remittances

Currently, there are 232 million migrant workers in the world who send home more than US$600 billion a year, according to the World Bank.

For some 25 developing countries, remittances now constitute over 10% of their GDP. For countries like Haiti, Nepal and Tajikistan, more than 25% of their GDP comes from remittances.

Statistically, developing nations receive three times as much funding through remittances than through foreign aid.

At the same time, migrant workers remain active participants within their host economies, contributing as tax payers, filling in gaps in their industries and creating overall demand in the local job market.

Why people send remittances

Migrant workers send money home to support their family members, granting them a means to cover their basic needs.

At the same time, remittances have a direct impact on health, education and poverty levels, and even help develop infrastructure in communities.

According to the United Nations Development Program (UNDP), children in El Salvador and Sri Lanka coming from remittance-receiving families have a lower school drop-out ratio, even boosting investment in private tuition.

In Sri Lanka, these children are even born with a higher birth weight. Remittances are also used for local investments and to support small entrepreneurs. They help pay off loans and restore credit.

However, there’s one overarching benefit.

Remittances allow for families to regain their financial autonomy, making their future payments a matter of choice and not obligation.

Where Ria comes in

Ria aims to be the link between migrant workers and their loved ones. We work hard to ensure migrant workers can reach their family members anywhere within our networks, which includes over 145 countries and 361,000 locations. Our goal is to reach every corner of the world, no matter how remote, so we can be there for those who need it most. If you want to learn more about how women migrant workers closed the remittance gender gap, click here.

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