Remittance industry to empower the next generation global workforce

dubai - Remittance savings can contribute to economic transformation at a national level

As someone closely associated with the money transfer industry, the UN's International Day of Family Remittances reminds me to focus on the most important aspect of my work: namely the hundreds of millions of people who rely on remittances to enable their families and communities lead a better life. Today, amid the heated discussions and deliberations around fintech disruptions and innovations, we tend to overlook something very fundamental - that people, not technology, are responsible for how others benefit from its innovation.

The true purpose of remittances isn't to move money from one country to the next. Its purpose is to empower the expatriate workers feeding their families, educating their children and creating better lives from thousands of miles away. Today is a day to highlight the tremendous contribution expatriate workers have made, not only for their families but also to the world. It makes us proud and strengthens our resolve to invest in the future of remittances which is the future of many communities.

Let's take this moment to appreciate the collective impact of the millions of people working away from home.

Worldwide, 250 million people, or three per cent of the global population, live outside their home country. Many of these world citizens maintain strong ties with their home countries sending significant parts of their income to families back home. As a result, there are at least 500 million more impacted lives - spouses, children. This means around 10 per cent of the world relies on remittances for food, health, education and housing.

The UN estimates that every year, $500 billion flows between family members. For perspective, $500 billion would make the remittance industry the 23rd biggest 'country' globally by GDP. The contribution of the GCC countries to global remittance volumes is significant, with Saudi Arabia and the UAE figuring in the top three sending countries right behind the US, facilitating nearly $80 billion in expatriate remittances in 2017. On the receive side, India, China, Philippines and Mexico feature as the biggest markets, collectively accounting for $196 billion in remittance receipts in 2017.

These worker remittances provide a stable and sizeable income stream for not only the families of expatriate workers, but also for many developing markets. While foreign direct investment (FDI) and private capital contribute to economic prosperity, families need a constant flow of income to support their daily needs, not mention building long-term financial resiliency. For instance, the impact of remittances is more pronounced for many emerging markets such as Kyrgyzstan, Tajikistan and Nepal where the direct contribution to the GDP is in excess of 30 per cent.

Migrants, as a link connecting communities, nations and economies, are critical to our prosperous future; they will constitute a significant part of the next generation global workforce, and they are one of the most important factors in national human capital development for developed and developing countries around the world.

Empowering these brave individuals looking to build a better future for their families and future generations is a noble and necessary task to take on for public and private sectors.

Today, as we celebrate the courage and positive impact of those working away from their families, there is still progress to be made. How do we better help serve these families? How can we leverage technology to enable and empower more families?

Having to pay $15 to send $200 or around 7.5 per cent (global average cost as per the World Bank) is a significant burden on senders. The 2030 goal of the UN is to reduce it to three per cent, or $6. It's our obligation to continue working towards this goal. Why? Because when we reach this goal, $20 billion will go towards the betterment of families around the world. Imagine the compounding impact of every dollar saved, every debt paid and every business created.

Innovations in technology such as leveraging mobile wallets and integration with national ID programmes have facilitated significant progress in simplifying payment complexities and reducing the industry cost structures. That being said, getting there requires continued dedication from private and public sectors, willingness to invest resources into building efficient international rails for money movement, and, finally, a customer-centric approach to development and delivery. Savings on an individual level reached through cost-efficient, fast transactions not only enable long-term prosperity on a family level, but is also sure to contribute to economic transformation at a national level.

As an industry, we have been privileged to serve millions of families across the globe and we're proud to celebrate them on the International Day of Family Remittance. These families drive our collective mission to invest our time and resources to improve our products and services because we know its transformative power for them and their communities.

The writer is executive director, Finablr, and CEO, UAE Exchange Group. Views expressed are his own and do not reflect the newspaper's policy.