Press Coverage
AAGM: Global Initiative to Improve Remittances Services Launched
AAGM: Global Initiative to Improve Remittances Services Launched US$10 million fund to finance innovative projects around the world, with support from European Commission, Luxembourg, IDB, CGAP and UNCDF has been launched. The United Nation's International Fund for Agricultural Development (IFAD) on Tuesday announced the launching of a global initiative to improve remittances services that allow foreign workers to send money back to their families in rural areas around the world. With financial support from the European Commission, the government of Luxembourg, the United Nations Capital Development Fund, the Consultative Group to Assist the Poor and the Inter-American Development Bank, the Rome-headquartered IFAD will establish a US$10 million Financing Facility for Remittances to fund innovative money transfers to Africa, Asia, Latin America and the Middle East. "Remittances are a vital lifeline for rural families around the world," said Pedro de Vasconcelos, coordinator of IFAD's new remittances program. "These transfers go directly to improve the living standards of millions and millions of poor households." According to estimates by different multilateral agencies, worldwide remittances could represent more than US$250 billion a year, far surpassing overseas development assistance to poor countries. While competition has driven down the cost of these services between major cities, they are still more expensive when sent to rural areas lacking formal financial services. IFAD's fund will promote access to cheaper remittances by assisting financial institutions in rural areas interested in providing cost-effective services either directly or as agents of banks or money transfer companies. Priority will be given to proposals linking remittances with other financial services such as savings, insurance and loans. "The positive impact of remittances increases dramatically when they are tied to other financial services," said Donald F. Terry, manager of the IDB's Multilateral Investment Fund, a pioneer in the study of remittances to Latin America and the Caribbean. "The challenge is to find mechanisms that will turn remittances from a poverty reduction plan to a development tool, benefiting millions of poor families and their communities." IFAD plans to select a first round of grant recipients later this year after a call for proposals and a competitive review process. Projects may receive grants of up to US$260,000.
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