REMITTANCES

Definition: Remittances are the money that immigrants send to their home country while working abroad. There are 2 types of remittances:

1. Family Remittances: This is money sent by individual immigrants to family and friends back home. These remittances are often used to meet their most basic needs. Family remittances dwarf development aid and foreign investment. They are said to be the single most important factor fighting poverty in the world today.

2. Community Remittances: This is money sent by individual immigrants and by hometown associations to communities in their home country. This money has traditionally been used for infrastructure, like parks, roads and churches. Increasingly, it is destined for government coffers. Mexico has a ‘Tres por uno’ program, which matches 3 tax dollars for every 1 dollar donated to a regional government.

Remittances Worldwide:

–          1 in 10 people around the globe is directly involved with remittances.

–          The U.S. is the largest source country, with $42 billion of remittance outflows annually.

–          Latin America is the region with the largest and fastest growing remittance flow. It received nearly 40% of the $126 billion in remittance sent to developing countries in 2004.

–          Remittance to Latin America exceeds foreign investment and development aid.

–          Were remittances to stop flowing, Latin America’s economies would collapse in an estimated three months.

–          This rapid growth in remittances is slowing as more Latin American immigrants blend into U.S. society and send less money home.

–          Remitters come disproportionately from the working poor and many times are in the United States illegally.

–          Migrants remit on average 12.6 times a year, typically $150/200/250 each time. These remittances constitute approximately 10% of their household income.

–          A quarter of remitters send money home first, even before paying their own bills.

–          Remittance rates increase every year despite drops in the U.S. economy.

–          Remittances tend to increase when the home country’s economy slows, making it a particularly effective anti-poverty tool.

–          Remittances promote economic growth, increased investment and community development.

–          Remittances can also result in higher interest rates and inflation.

Remittance Statistics:

–          46% of all Hispanics born outside the U.S. regularly send money to their country of origin.

–          57% of immigrants from El Salvador send remittances

–          60% of U.S. remittance senders are male

–          63% are under the age of 40

–          59% are married

–          59% have not completed high school

–          57% make less than $30,000 a year

–          64% of those who are employed are unskilled laborers

–          45% say they plan to move back to their home country

–          55% do not have credit cards

–          43% do not have bank accounts