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REMITTANCES

Usually understood as the money or goods that migrants send back to families and friends in origin countries, remittances are often the most direct and well-known link between migration and development.

In 2023

USD 857 billion

were estimated to be sent in remittances,
an estimated 1.6% increase from 2022 (USD 843 billion)

USD 656 billion

were estimated to be sent in remittances,
to low- and middle-income countries

6.4%

was the global average cost of sending USD 200 in the fourth quarter of 2023, over double Sustainable Development Goal 10.c.1



Trends

Globally, remittance flows are estimated to have increased by 4.6 per cent from USD 865 billion in 2023 to USD 905 billion in 2024, a larger increase than previously projected (+3%) (World Bank, 2024a; GMDAC analysis based on Ratha et al, 2024b). Remittances continued to be greater than Foreign Direct Investment (FDI), having increased by 57 per cent in the last decade in contrast to a 41 per cent reduction in FDI. 

Since 2015, remittances have been the largest source of external finance flows to low-and middle-income countries (LMICs) other than China (Ratha et al., 2024). Though remittances are private funds and therefore cannot replace public spending, remittances to LMICs have surpassed the volume of Official Development Assistance (ODA) in all World Bank/KNOMAD estimates since 2000 (ibid.), and exceeded Foreign Direct Investment (FDI) flows to LMICs by more than USD 270 billion in 2023 (GMDAC analysis of ibid.).

In 2023, remittance flows to LMICs are estimated to have increased by 0.7 per cent to reach USD 656 billion (Ratha et al., 2024). This growth is much slower than the sharp increases recorded in 2021-2022 after the Covid-19 pandemic (ibid.).

India has been the largest recipient of remittances since 2008 (ibid.) In 2023, the top five recipient countries for remittances inflows among LMICs in current USD were:

  1. India (120 billion)
  2. Mexico (66 billion)
  3. China (50 billion)
  4. the Philippines (39 billion)
  5. and Pakistan (27 billion)(ibid.).

In terms of remittances as a share of gross domestic product, by contrast, the top five recipients in 2023 were smaller economies:

  1. Tonga (41%)
  2. Tajikistan (39%)
  3. Lebanon (31%)
  4. Samoa (28%)
  5. Nicaragua(27%)(ibid.).

In the fourth quarter of 2023, the global average costs of sending USD 200 continued to be high at 6.4 per cent, 0.2 percentage points higher than the previous year and more than twice the target of 3 per cent of the Sustainable Development Goal 10.c.1 (Ratha et al., 2024). Globally, remittances sent digitally cost an average of 5 per cent, while those non-digitally cost 7 per cent (ibid.). Sub-Saharan Africa continued to have the highest average remittance costs in Q4 2023, at about 7.9 per cent; East Asia and Pacific and South Asia had the lowest average remittance costs at 5.8 per cent (ibid.).

Though remittances sent via mobile operators account for less than 1 per cent of all transfer volume, they remain the cheapest channel, with an average cost of 4.4 per cent during the fourth quarter of 2023, followed by money transfer operators (average cost of 5.5%) and post offices (7.7%) (ibid.). With an average cost of 12 per cent during Q4 2023, banks remained the most expensive channel for remittance transfers (ibid.).

Trends in remittances vary by region. For more details on the national, regional and sub-regional trends, explore the Portal's interactive dashboard: remittance inflows (in USD), remittance outflows (in USD), remittances received (as % of GDP), remittance costs (from country)remittance costs (to country).








The remittances sent to Joanita by her husband in South Korea have had a huge and positive impact on their lives, she explains. “They provide for our daily needs, including education and support to my widowed mother and relatives.” Remittances have the power to transform and enable small families like Joanita's – not only because they provide for basic needs, but they also give hope for the future. 

However, Joanita, like many others in her country, still faces difficulties in receiving the remittances. One of the issues is the high transfer fee. For a dollar-based economy such as Timor-Leste, where people live on less than USD 2.15 a day, every cent counts.

“The transfer fee is obviously quite high,” says Joanita. She hopes for cheaper remittance fees and a fairer currency exchange process. Read more on IOM storyteller...



About the data



Remittances are usually understood as financial or in-kind transfers made by migrants to friends and relatives back in communities of origin.

However, the statistical definition of international remittances only partially reflects this common understanding. The International Monetary Fund, the main provider of international remittances statistics based on Central Bank data, defines remittances as the sum of two main components in their Balance of Payments Statistics manual:

(1) “Compensation of employees”: This refers to income earned by temporary migrant workers in the host country, and the income of workers who are employed by embassies, international organizations and foreign companies (or “the income of border, seasonal, and other short-term workers who are employed in an economy where they are not resident and of residents employed by nonresident entities” (IMF, 2009: 272). It is important to highlight that the entire income of temporary migrant workers  is included in this definition, although the income may never actually be transferred (at least not entirely) to the origin country as migrants still have to cover their own living costs. Furthermore, the salaries of staff employed by foreign employers (such as embassies or transnational companies) also count as remittances, as these civil servants, diplomats, military personnel and others are considered residents of the origin country (IMF, 2009), although most of these employees may not be migrants nor transfer this money anywhere else.

(2) “Personal transfers”: These are all current transfers in cash or in kind made or received by residents (be it migrants or non-migrants) from or to individuals in other countries (“all current transfers between resident and non-resident individuals” (IMF, 2009: 273).

Remittances can also be sent within countries and not just across borders. These are called internal remittances. Furthermore, not all remittances are of financial or in-kind nature. Social remittances are defined as “the ideas, behaviours, identities and social capital that flow from receiving- to sending-country communities” (Levitt, 1998: 927). Social remittances include innovative ideas, valuable transnational networks, knowledge, political values, policy reforms and new technological skills. 

Various sources collect and disseminate migrant stock data at the national and international levels.

The World Bank provides annual estimates of remittances flows globally, based on national balance of payment statistics produced by central Banks and compiled by the IMF. (See definitions of the two main remittances components above that give examples of what is included and what is not [Plaza and Ratha, 2017: 65-78]). Data cover remittances inflows into and outflows from countries. The latter are less prominent in the migration and development debates but can be an indication of significant immigrant populations in a country, especially if they exceed remittances inflows.

Additionally, the World Bank also publishes estimates on bilateral remittance flows. The basis for bilateral remittances estimates are weighted migrant stock data, the weighted income of migrants based on the per capita income in the country of destination, and the weighted income in the origin country of the migrant (Ratha and Shaw, 2007: 43). 

The World Bank also produces estimates of remittance transaction costs on a quarterly basis. These are “average transaction costs of sending remittances to a specific country” and are computed as “the simple average of the total transaction cost in percentage for sending USD 200, charged by each single remittance service provider (RSP) included in the Remittance Prices Worldwide (RPW) database to a specific country”. World Bank researchers derive these estimates by either undertaking actual transactions themselves to obtain prices, or by sending inquiries on the transfer costs to a number of banks and money transfer operators (World Bank, n.d.). 

The World Bank’s KNOMAD (The Global Knowledge Partnership on Migration and Development, active from 2013 until 2024), launched the International Working Group on Improving Data on Remittances (RemitStat) in collaboration with over 45 countries where remittances provide a financial lifeline, as well as the International Monetary Fund (IMF), UN, OECD, and Eurostat. The Working Group aims to monitor the implementation of remittance data compilation guidelines, improve the timeliness and comparability of data and improve international cooperation in remittance data collection and dissemination (ibid). The Working Group assigned its six thematic groups (high-frequency data on remittance flows; remittance channels and instruments; bilateral remittance flows; types of senders and recipients; definition and data compilation guidelines (to address misclassification, improve comparability over time and across countries); and estimation of unregulated flows) to compile recommendations on the challenges faced within remittance data collection. The groups researched their topics and conducted surveys to guide the future efforts of the Working Group. Learn more about their progress here.

From 2007 to 2017, the Financing Facility for Remittances (FFR) of the International Fund for Agricultural Development (IFAD) published data and statistics on remittances through its series of Sending Money Home reports based on information from Central Banks, the IMF, and the World Bank RPW database, among others. The reports cover central issues affecting remittances from both a global and regional perspective and provide comparative indicators to measure the importance of remittances among regions and subregions.

RemitSCOPE is an online tool by IFAD's FFR which provides regional, subregional and country-level data and remittance market analyses. It aims to address the fast-changing market realities in the remittance industry in order to help bring together the goals of remittance families, as clients, and the strategies of the private-sector service providers. RemitSCOPE provides market profiles for 54 countries in Africa and profiles for Latin America and Asia are scheduled to be published in 2024.

The UN Impact Capital for Development (UNCDF) Benchmarking Tool for Remittances shows and compares countries’ remittances data collection. It includes details on the granularity of data, use cases, methods and disaggregation. The dashboard presents the stakeholders responsible for collecting, analyzing and publishing remittance data, the type of remittance data collected, methodology and reasoning for the data collection.

The World Bank estimates are used to provide a large dataset covering most countries around the world. This allows the user to understand trends and the magnitude of transfers, comparing them to other flows such as Official Development Assistance (ODA). 

Specific, representative migration and remittances surveys can provide detailed, and reliable information at the national or local level (World Bank, 2011). This also includes commodity transfers, such as consumer items, that are not part of the official recordings but that can be significant, especially in South-South contexts (Melde and Schicklinski, 2011).

Due to the methodological challenges outlined below, the estimates are far from accurate (De Arcangelis et al., 2023Alvarez et al., 2015Brown et. al, 2014World Bank, 2016Plaza and Ratha, 2017IMF, 2009; Fernandes et. al, 2023).

The balance of payments category of “compensation of employees”, as defined by the IMF, can potentially significantly overestimate migrant remittances if a country has a large UN and/or embassy presence, and hosts factories of transnational corporations employing large numbers of workers. These employees are counted as “non-residents” or migrants in the country, and all their salaries are recorded as remittances. It is thus not possible to ascertain whether the official IMF and World Bank figures are accurate for these countries or considerable overestimates due to embassy, UN and foreign companies’ staff salaries being counted as well (Alvarez et al., 2015). 

Statistically, migrants who reside in a country for at least 12 months cannot be distinguished from other residents who are not migrants as these statistics are based on residence and not migratory status (Alvarez et al., 2015: 43). In the second component of remittances – “personal transfers” – the IMF considers if a transfer is made across borders, regardless of the residency status, nationality or country of birth of a person, as this information is often not available. The receiver or sender of the money transfer may thus not only be a migrant but also a citizen with links to another country, for instance. Thus, remittances can be conflated with larger sums of money sent by private investors and diaspora members for business investments, property purchase and other financial transactions. This leads to the probable overestimation of transfers.

When comparing remittances estimates over time, it is important to note that the documented growth in remittances globally in recent years may have actually derived from changes in how remittances are measured, rather than actual increases in such financial flows (Ratha, 2003World Bank, 2006Clemens and McKenzie, 2014). Almost 80 per cent of the increase in recorded remittances during the period 1990—2010 may be accounted for by changes in measurement, and only a fifth may reflect changes due to higher numbers of international migrants and the incomes they are likely to be earning in destination countries (Clemens and McKenzie, 2014). In addition, both reporting of remittance transactions has been improved and migrants have increasingly used more formal payment methods as informal channels decreased as part of anti-money laundering measures (ibid.). 

It is also important to keep in mind that IMF and World Bank estimates focus on remittances transferred through official channels, such as banks. Not all small transactions by migrants conducted via money transfer operators (such as Western Union), post offices, mobile transfer companies (like M-Pesa in Kenya) are included in all the countries, neither are informal transfers (such as via friends, relatives or transport companies returning to the origin community), depending on the sources of data used by different central banks. As informal remittances that are not systematically included in balance of payments can be significant in volume and can account for 35 to 75 per cent of formal remittances, in particular in the context of South-South corridors, the official figures are likely to  underreport remittances (Irving et al., 2010World Bank, 2011Fernandes et. al, 2023). Due to the largely unknown scope of informal transfers, some countries, in particular in sub-Saharan Africa, do not report remittances figures to the IMF in their balance of payments. Data on remittances also vary from country to country due to differences in the availability of data, national legislative and policy frameworks, using citizenship instead of residency status in the definition, and for the simplification of processing the data (Irving et al., 2010World Bank, 2011Plaza and Ratha, 2017).

Bilateral remittance estimates are prone to the limitations of data on migrant stocks described here. The calculation is based on the gross national income (GNI) per capita in the origin country of the migrant and thus cannot account for GNI being higher there as the assumption is that migrants move to countries with higher incomes (Ratha and Shaw, 2007). The World Bank further acknowledges issues around not being able to attribute a transfer to a specific country, especially when passed through an international bank (Ratha and Shaw, 2007). It is thus important to underline that these are calculated estimates and do not represent accurate figures (Alvarez et al., 2015).

The testing of remittance channels through fictitious transfers of money by World Bank analysts entails significant limitations as well. Only a few corridors are monitored. Differences in transaction costs based on the amount sent, with the higher amounts likely to cost less to send, distorts the  representativeness of relevant data. Costs may also change quickly, meaning the reported transaction costs rapidly become outdated (Alvarez et al., 2015). Nonetheless, estimates of transaction costs can help to monitor progress towards the Sustainable Development Goal (SDG) target of reducing sending costs to 3 per cent of the amount remitted.




I honestly don’t know how my family would have survived if my wife didn’t get the opportunity to work abroad,” said Modi, who grew up along Kenya’s coast. “Life was very difficult, and the few jobs available did not pay. But with the money my wife has been sending us from Saudi Arabia, our lives have been transformed."

Thanks to her job abroad, Modi's wife Aisha has been able to send around USD 1,200 in remittances to her husband and their two daughters each month. Read more on IOM storyteller...



Resources

Key mobility figures from IOM GMDAC, available by region, sub-region and country where data is available.

Fernandes, D., Gravesteijn R., Aneja A.

2023

Approaches to Evaluating and Estimating Informal Remittance Flows in Developing Economies. UNCDF Migrant Money Notes 7.

International Monetary Fund (IMF)

2009

Balance of Payments and International Investment Position Manual, 6th edition (BPM6), IMF, Washington, D.C.

2009

International Transactions in Remittances: Guide for Compilers and Users, IMF, Washington, D.C.

Alvarez, P.S. et al.

2015

‘Remittances: How reliable are the data?’, Migration Policy Practice V(2): 42-46.

Plaza, S. and D. Ratha

2017

‘Remittances’, in Global Migration Group (eds.) Handbook for Improving the Production and Use of Migration Data for Development. Global Knowledge Partnership for Migration and Development (KNOMAD), World Bank, Washington, D.C.: 65-78.

WorldBank

2023

Migration and Development Brief 39: Leveraging Diaspora Finances for Private Capital Mobilization. December 2023. World Bank, Washington, DC

2023

Migration and Development Brief 38. Remittances Remain Resilient But Are Slowing. June 2023. World Bank, Washington, DC

2022

2022

Migration and Development Brief 37. Remittances Brave Global Headwinds , Special Focus: Climate Migration. November 2022. World Bank, Washington, DC. 

Migration and Development Brief 36. A War in a Pandemic: Implications of the Ukrainian crisis and COVID-19 on global governance of migration and remittances flows. May 2022. World Bank, Washington, DC. 

2021

Migration and Development Brief 35. Recovery: COVID-19 Crisis Through a Migration Lens. November 2021. World Bank, Washington, DC. 

2021

Migration and Development Brief 34. Resilience: COVID-19 Crisis Through a Migration Lens, October 2020. World Bank, Washington, DC.

2020a

Migration and Development Brief 33: COVID-19 Crisis Through a Migration Lens, October 2020. World Bank, Washington, DC.

2020b

Migration and Development Brief 32: COVID-19 Crisis Through a Migration Lens, April 2020. World Bank, Washington, DC.

2019

Migration and Remittances: Recent Developments and Outlook. Migration and Development Brief, No. 31, April 2019. World Bank, Washington, DC.

2019

Data release: Remittances to low- and middle-income countries on track to reach $551 billion in 2019 and $597 billion by 2021. People on the Move blog.

2019

Leveraging Economic Migration for Development : A Briefing for the World Bank Board (English). Washington, D.C. : World Bank Group.

2018a

Migration and Remittances: Recent Developments and Outlook. Migration and Development Brief, No. 30, December 2018. World Bank, Washington, DC.

2018b

Migration and Remittances: Recent Developments and Outlook. Migration and Development Brief, No. 29, April 2018. World Bank, Washington, DC.

2016

Migration and Remittances Factbook 2016. World Bank, Washington, D.C. 

2011

‘Data Notes’, The Migration and Remittances Factbook 2011, Migration and Remittances Unit, World Bank, Washington, D.C.

2006

Global Economic Prospects 2006: Economic Implications of Remittances and Migration. Washington, DC.

Irving, J., S. Mohapatra and D. Ratha

2010

‘Migrant Remittance Flows. Findings from a Global Survey of Central Banks’, World Bank Working Paper No. 194, World Bank, Washington, D.C.

Clemens, M. A. and D. McKenzie

2014

Why Don’t Remittances Appear to Affect Growth? CGD Working Paper 366, Center for Global Development, Washington, DC. 

Ratha, D. 

2007

“Leveraging Remittances for Development.” Policy Brief, Migration Policy Institute, Washington, DC.

2003

“Workers Remittances: An Important and Stable Source of External Development Finance.” Global Development Finance, World Bank, Washington DC.

International Fund for Agricultural Development (IFAD)

2023

GFRID Summit 2023: Outcomes Report

2017

Sending Money Home: Contributing to the SDGS, one family at a time.

2015

Sending Money Home: European flows and markets.

2013

Sending Money Home to Asia: Trends and opportunities in the world's largest remittance marketplace.

Funkhauser, E.

2012

‘Using longitudinal data to study migration and remittances’, in: Vargas-Silva, C. (ed.) Handbook of Research Methods in Migration. Edward Elgar: Cheltenham, UK and Northampton, MA, USA: 186-206.

Melde, S. and J. Schicklinski

2011

Remittances in the African, Caribbean and Pacific countries’, Background note ACPOBS/2011/BN02.

Levitt, P.

1998

‘Social Remittances: Migration Driven Local-Level Forms of Cultural Diffusion’, International Migration Review, Vol. 32(4): 926-948.