March 28, 2004

Latino workers 'send $38bn home'

Latin American and Caribbean workers sent $38bn back home from abroad in 2003, the Inter-American Development Bank believes.

The sum is probably an understatement, the IADB says, but is still bigger than foreign direct investment and official aid combined.

The vast majority of the money came from workers in the US, with Japan in second place.

The cost of sending the money home was $6bn, the IADB said.

That was lower than in previous years, said Donald Terry, head of the IADB's private lending arm the Multilateral Investment Fund.

"From our perspective it is still much too high, although the trend is encouraging," he said.

The US was the main source of the money, with $31bn sent in 2003 - with Japan's $3bn in second place.

The biggest beneficiaries were Mexico, with $13.2bn, and Brazil, which received $5.2bn.


Globally, experts believe remittance flows could be as much as $150bn a year.

The flow is the result of the mass migration in the 1990s, when millions of people from developing countries looked for jobs overseas to ease the pressure on the finances of their families back home.

Some of the flow comes from professionals in Europe, the US and Japan, many of whose remittances support networks of relatives and friends.

But much of it comes from individuals who are often working illegally in low-paid jobs.

There are different ways of getting the money back home.

The IADB said almost four in five Latinos in the US, for instance, use money transfer agents, although banks tend to be cheaper.

Elsewhere - particularly for Asian workers - informal networks such as hawala tend to be popular, experts say.

The IADB is working with 22 "stakeholders", including banks and money transfer firms, to cut the average cost by half before 2010 and boost the number of families receiving money through official channels by 50%.