TMP Online

In the first of his monthly columns, Murad Qureshi AM, gives his personal view on remittances. following on from Jon Cruddas MP’s article on the subject last week. 

Surprise surprise, this week we learn that since the G8 nations met in Gleneagles in 2005, the richest nations are backsliding on their promises of aid to Africa, except for the honourable exception of the UK government with record levels of development aid.

Only £1bn of the £ 12.5 bn aid pledged at Gleneagles by 2010 has been given so far; so much for the grand standing of politicians at Gleneagles, the tax dodging of celebs like Bono and business’ erratic investment in the developing world. But, as Jon Cruddas MP pointed out last week, there is one group you can rely on - migrant workers.

Migrants workers send money back to their families, many of whom belong to the UK’s minority ethnic communities and are often the cleaners, mini-cab drivers and waiters serving the developed world’s economies. Many of them are New Commonwealth immigrants - like my parents - who have been sending money back home to Bangladesh for two decades. More recent arrivals from Eastern Europe, like my Polish cleaner, are doing the same. These “remittances” have only recently been acknowledged by the World Bank and the Department for International Development (DfID); they have been ignored by the British international NGOs.

Migrants around the world send home over $250bn each year, with £2.7bn at the very least coming from Britain. Indeed, the figures which DfID has been working from are now considered to be a major underestimate - an Indian banker based in the UK, tells me that the Indian community alone sends £3bn from our shores. This capital flow has grown so quickly that, according to the World Bank, it is now more than twice the size of the world’s development spending. The World Bank calls this migration ‘a powerful force for poverty reduction’ with the money coming from an estimated 200 million people now living in countries where they were not born. DFID recognizes that these remittances are hugely important for people on low incomes in the developing countries and this money plays a huge role in promoting international development and fighting poverty. This puts into context who is doing what for the developing world. Because they are not sexy, remittances remain the untold story of international development.

But we can make this money go further for the developing countries. First, as the World Bank and DFID emphasize, we can reduce the high cost of sending money ‘back home’, and secondly we could give tax relief so that our international development contributions match their remittances - given that they are addressing poverty better then our aid programmes.

In recent times there has been concern over the alleged security surrounding the unofficial flows. But what better way to make these flows official than by giving tax breaks which don’t involve a lot of bureaucracy.

Moreover these flows are often greater than the official flows of aid. In 2004/5 the UK’s Bangladeshi community sent back almost £300 million - largely in response to floods in that August and the Pakistani community responded in a similar vein when the earthquake struck Pakistan in December 2005. That is more then twice the official aid that flows from the UK to Bangladesh and that pattern is repeated time and again.

The World Bank Annual Global Economic Prospects Report of 2006 suggests that remittance inflows into Ghana have helped cut its poverty level by 5 per cent, Bangladesh by 6 per cent and Uganda by 11 per cent. In addition, remittances appear to help households maintain their consumption levels in the face of economic shocks and adversity. Remittances help increase household income, provide investment in education and health and bolster entrepreneurship. It is not surprising to see that two of the biggest recipients of remittances in the world at present are the world’s next two economic superpowers, India and China. Both receive just over $20 billion annually.

The questions this poses is how to make it easier and cheaper for individual senders to send back monies and how can we match these flows in our official aid budgets.

Remittances and money transfer is the Cinderella of development assistance to the developing world and not only should we drive the cost down but also give it tax relief, to help the unofficial flows become official flows. But let us first acknowledge the huge efforts of migrant workers on this front, which are all to often ignored, yet a constant source of enormous assistance to the poor of the world. And do so without the individual remitters having to be involved in a lot of paperwork and bureaucracy.

Murad Qureshi AM is a member of the London Assembly