# **Conclusions**

Workers’ remittances constitute an increasingly important source of income for many families in developing countries, especially poor families, whose relatives have emigrated to other countries in an effort to improve their own and their family’s well-being. While in 1996 developing countries received $58 billion dollars in remittances, in 2003 they received $96 billion dollars. For 25 developing countries, remittances represented more than 5% of their GDP in 2003. If the upward trend in international migration and mobility of people continues, workers’ remittances are likely to become even more important for developing countries in the future.

Despite the increasing volume and value of remittance inflows to developing countries, this study found that most countries do not have in place the mechanisms that would allow them to maximize the developmental effect of remittance inflows. Data on remittances is not adequate, fees paid by senders and recipients of remittances are still high, and many recipients of remittances in developing countries do not have access to financial products that would allow them to improve their living conditions –such as bank accounts, life and non-life insurance products, consumer credit, etc. Moreover, if more people in developing countries had better options to save a part of their remittance income in formal financial institutions, then a larger part of the remittance flows that countries receive could be channeled to finance productive investments, thus fostering economic growth.

The study found that there is a need to improve the data on remittances in most countries covered in the survey. In many countries, remittance statistics are based on data that commercial banks provide to central banks or other financial sector authorities. However, remittances paid by money transfer companies – which tend to dominate the remittance industry in many countries – or other types of financial institutions (such as credit unions, post offices) are often not captured in remittance statistics in developing countries. Only 38% of countries collect data from money transfer companies. Moreover, less than 25% of countries measure remittance transactions that occur through informal channels, such as money carried by migrants themselves to their home countries, money sent through “hawala” operators, and money sent through travel agencies or other informal means.

Given the limited coverage of existing remittance data, current statistics are most probably under-estimating the total value of remittances inflows to developing countries. It is important that developing countries improve their existing statistical tools to measure remittances inflows. Better data on remittances is important for the formulation of macroeconomic policy, because large remittance flows can affect the level of savings, investment and consumption. Furthermore, data on remittances constitutes an important tool to monitor cross-border flows of money and timely detect money-laundering or other illicit activities that may undermine the integrity of a financial system.

While there is a growing need in developing countries to improve remittance statistics, international guidance in this area is required. In particular, there is a need to establish simple and homogeneous reporting requirements across countries that do not undermine the competitive position of market players, especially small institutions. In addition, there is a 30