Remittances in GCC total $20bn or 12.5% of global money transfers

Remittances are globally estimated at US $167 billion a year (according to the World Bank) and felt to be the most direct link between migration and development.

According to McKinley, remittances are an important source of foreign exchange. 'In many cases, remittances' inflows are far greater than international official development assistance. Globally, as a form of external financing, remittances are second only to foreign direct investment.'

McKinley sees a clear role for postal operators, especially in developing countries, and urged them to train postal employees properly and adopt technology to do this type of work. 'Attention must be given to informing migrants and remittance recipients of these services as they become available.'

He added, 'Postal operators can help to lower remittance transfer costs, improve transfer services and expand choice. Playing a larger role in this marketplace will not only be good business, but will also help enhance the contribution postal services currently make to global development.'

Developing postal financial services, especially in developing countries, is a priority for the UPU. Through its Postal Technology Centre in Berne (Switzerland), the UPU provides a suite of applications, International Financial System, to facilitate electronic fund transfers between public postal operators and even with certain banks. Electronic money transfers are quickly replacing the traditional paper postal money order.

McKinley pointed out that the UPU 'was making a step in the right direction' by developing a worldwide network for electronic funds transfers that connects postal operators in all of its member countries, facilitates interconnection with other networks, and provides citizens access to postal and non-postal financial services.

There are 190 million migrants in the world today, or one in every 35 people, and close to 50 per cent of migrants move from one developing country to another, generating between 30 and 45 per cent of all remittances in the world, said the head of the IOM.

With postal public operators increasingly developing their financial services offerings, remittances and their significance to development and poverty reduction is a key global trend being examined and debated at the UPU's high-level conference taking place in Dubai. The conference, which ends on Thursday, aims to identify the trends and issues that will shape the UPU's World Postal Strategy 2008-2012, a four-year roadmap its 191 member countries will adopt at their next Congress in Nairobi in 2008.

Speaking to more than 700 delegates from close to 140 countries, McKinley said there was a need to strengthen financial infrastructures in order to handle remittances, where fees, in some cases, can reach 20 per cent of the transferred amount and currency conversion rates can be as high as six per cent.

Some 40 countries, including large ones such as China, are connected to the UPU's IFS network, which is expected to grow to 60 countries by the end of this year. The UPU is busy developing its financial network in the Arab world. At the moment, Algeria, Djibouti, Egypt, the United Arab Emirates, Morocco and Tunisia are connected to the UPU's financial network, and Saudi Arabia will be connected shortly.

With about three-quarters of the UAE population of four million being foreigners, the network enables these workers to make rapid fund transfers to their home countries at modest cost.

One hundred and twenty-nine countries are signatories of the UPU Postal Payment Services Agreement, which dates back to 1878 and the introduction of the first international money order service. More than two thirds of the world's Posts offer financial services; in many cases these extend into isolated regions where traditional financial institutions don't exist. They perform some US $10 billion transactions each year, including US $14 million international money orders for a total value of over US $4 billion.

Key facts about remittances


• Remittances in the world are estimated at US $167 billion by the World Bank, more than double the amount of five years ago.

• There are 190 million migrants worldwide, that's one in every 35 people.

• Close to 50 per cent of migrants move from one developing country to another, generating between 30 and 45 per cent of remittances flow south-south.

• In Guatemala, remittances are believed to have reduced the incidence of poverty by 20 per cent, in Uganda, by 11 per cent, and in Bangladesh, by six per cent.

• Remittances often flow to poor and marginalized families, and make up a large percentage of total household income, supplementing income lost to unemployment, illness, retirement, emigration, falling wages or crop failure.

• Migrants who avoid formal channels to send remittances do so because fees are too high. In some cases, they are as high as 20 per cent of the transferred amount and currency conversion rates can be as high as 6 per cent.