By Sharon Tibenda

28^th Feb 2011

The United Nations agency that promotes the integration of developing countries into the world economy is calling for cheaper ways for migrant workers aka ‘Nkuba Kyeyos’ to send money back home so as to maximize the economic impact.

The agency says costs of sending money from overseas can be high, with the current average remittance fee standing at about 8.7%.  At a two day UN Conference on Trade and Development (UNCTAD) in Geneva last week, UN Deputy Secretary-General Petko Draganov also said that, “…there is still a lack of safe, reliable, accessible transfer systems for remittances…for some countries, excessive margins are charged”.

To lower remittance costs, speakers at the meeting called for expanding access to banks for both sending and recipient families, since many, particularly in rural areas, do not have accounts.  They also said there is need to offer a variety of options for money transfers such as through post offices, microfinance institutions, banks, the Internet, and mobile phones.

Mr. Draganov noted that remittances account for about 2% of the gross domestic product (GDP) of all developing countries.  In some countries like Lesotho, Nepal, Samoa, Haiti and Bangladesh, he said, the percentage is much higher, averaging about 8% of GDP.

‘Kyeyo’ money has reduced overall household poverty

He said migrant remittances, although varied, have in fact reduced poverty at the household level in many developing countries.  He pointed to a recent UNCTAD study which found that in countries where remittances make up 5% or more of GDP, it leads to reduction of 3.9% in the poverty headcount ratio.

In Uganda for example, a significant amount of remittance transfers is spent on household consumption and human capital, such as food, education, housing, health and related purchases.  If managed well, Mr. Draganov said, such remittances “…can create jobs and business opportunities that raise living standards and keep future potential migrants at home”.

Female ‘Nkuba Kyeyos’ more generous but hit hardest by costs

UN Population Fund (UNFPA) Deputy Executive Director Purnima Mane said women now outnumber men among economic migrants in the wealthy nations of Western Europe and North America. Although they tend to earn less than their male counterparts, evidence shows that they send a higher proportion of their incomes home and do so more dependably and more often.

Purnima Mane however noted that, “…there has been too little analysis of the relation between gender and remittances.  Because of the frequency of these financial transfers, women migrants – and their children back home – are especially hurt by high transaction costs”.

For her part, UN Deputy High Commissioner for Human Rights Kyung-wha Kang warned that the rights of migrant workers should not be neglected in any discussion of remittances, since “…development cannot be defined solely in economic terms”. END.  Please log into www.ugandacorrespondent.com every Monday to read our top stories and anytime mid-week for our news updates.