Diaspora Economic Remittances on Home Countries Part I

Migration and Money Transfer

Until recently, most people associated migration with cattle herders, traders and craftsmen (people who make things) traveling to exchange goods or to craftsmen who seek to practice their craft where it is needed. These cattle herders, traders, craftsmen were seen called nomads. Historically, nomadic people are considered people who migrate, or move from place to place, rather than living in one place.

In recent times, we now understand that it is not only nomads who migrate.  People migrate. The study of human life (anthropology) shows that people migrate, and migration has continued under the form of both voluntary migration within one’s region, country, or beyond and involuntary migration. Some involuntary migrations are caused by war and conflicts, human trafficking, and slave trades, among other causes.

Migration is a trend that has been taking place for millions of years and continues today all over the world. When individuals can no longer acquire the necessary resources to sustain themselves at their location they migrate to the places where these resources are available. The Dominicans, the Indians, Armenians and Liberians have been migrating to several parts of the globe over the years and forming their own settlements in these countries. However, the beginning of the 21st century marked a new period in the history of migration with the transformation in the field of communication technology and transportation, which have made extensive networks connecting migrants in host countries to maintain strong relations with those in their homeland and also with the global community of migrants in the Diaspora.

In the age of globalization, followed by proliferating population movements and cultural exchanges across national boundaries, the very frontiers of nation states are subjected to contestation. Compared to the early periods of human history where men migrated from one place to another, one country to another especially in search of food and shelter, people largely tend to migrate today because of opportunities for advancement, survival and changes in their life-styles. The disaporic communities of this new century are in the position to extend their connections to their home country and to establish these networks globally through the use of modern communication technology.

As a result of the transformation in technology, several world economies have benefited through links with national diasporas. The Dominican Republic, Latin America and Liberia seem to be among examples of countries that received major remittances for survival and developmental push from their nationals located throughout the world. While in most countries the main Diaspora related benefit for the domestic economy was and is still associated with private transfers, and remittances sent by members of diasporas to their relatives and friends sent at home, other countries managed to complement this financial support by much more active involvement of the Diaspora in other economic and development activities.

Although transnational community has become a debated theme in Diaspora studies, the focus is much related to Diaspora; that is migrants’ communities. Transnational community generally refers to migrant communities living abroad in host counties but maintain economic, political, social and emotional ties with their homeland and with other diasporic communities of the same origin. These qualities include the community’s presence in different parts of the world, the relation they have with their compatriots and their relatives and also with their home country.

In view of the definition of transnational community to refer to disaporic groups to refer to migrant communities, this paper will consider transnationalism community to mean migrants and also disaporic groups.

This article aims to provide an analysis of the potential importance of Diaspora Economic Remittances on home country. This study will focus on Liberia.  Drawing from the Dominican Republic and other Diaspora groups for crucial analysis, this reader will focus on two essential features of Transnational linkages of remittances to home countries. The analysis in this paper will be drawn from course materials, documents and interviews.

This article deals with two sections: The first section deals with the increase statistics of Diaspora Economic Remittances. The second section on the Impact of Diasporas Economic Remittances on Home Countries summarizes differences between Liberia and the Dominican Republic and other Diaspora groups’ participation in economic and development mobilization in their home countries.

In analyzing the complexity of development, Albert Author (1958) said that development is not about allocation of existing resources but about mobilizing resources that are hidden, scattered or not utilized appropriately. The practice of relationship between Disaporic groups and their home countries supports this idea.

Financial contributions of many Diasporas around the world to countries of origin are by and large documented and seen as very significant. Many South Asian nations receive more than US $2 billion in remittance a year (Castles 1999).  Economies of Central America and the Caribbean show that there is shift in economic orientation from agriculture exports to labor exporting practices. Usually agriculture has been considered a key for economic growth for the Caribbean.

Official statistics recorded US$ 80 billion in migrant remittances to developing countries in 2002, (Cerstin Sander, 2003). Taking into account informal flows and underreporting of official data, estimates put the value much higher, at between US$ 100 and 200 billion.

Global flows of migrant remittances and transfer channels have recently become an important discussion in the study of economics and diaspora studies.  Many aspects which contribute to a better understanding of remittance flows or their role, however, are less known partly because they are less recorded as in the case of Liberia where documentation are not readily available.

Remittances have become the second largest capital flow in most countries including Latin America, Dominican Republic, India, Liberia and other countries.  Official estimates of migrants’ remittances are in the tone of $100 billion annually, some 60 percent of which go to developing countries, (Gammeltoft, Peter, 2002).

Annual remittance to developing countries has doubled between 1988 and 1989. Like Miraflores in the Dominica Republic and others, remittance to developing countries goes first to lower –middle income and low-income countries.

Statistics indicate that remittances constitute one of the stable capital flows to developing countries. Latin America and the Caribbean received the lion share of remittances in nominal terms with $25 billion followed by South Asia with $16 billion.

With no record on Liberia and the underreporting or complete lack of data, statistics on remittances to Sub-Saharan Africa is recorded at 5% by those to the other regions. Half of the Liberia’s citizens rely on remittances from the Diaspora especially since the beginning of the war, (Saah N’Town, 2003).

Latin America, as one of the top receiving regions with a relatively large diaspora in the United States, has received the most concerted attention and has been strongly profiled and supported through the initiatives of the Multilateral Investment Fund. North and Latin America along with Spain are setting some trends in remittance transfer services, in part due to the sheer volume and concentration of markets. Several banks and smaller money transfer operators in the United States and Spain have recognized the business opportunity and provide attractive and innovative services, including integrated financial service offers and access through ATMs.

The launch of the World Bank’s Global Development Finance report for 2003 has profiled particularly the significant role of remittances in capital flows to developing countries. It has helped to launch and legitimize the magnitude and role of remittances to financial analysts.

Meanwhile some of the top receiving countries of remittances – such as the Philippines, India, Bangladesh, Brazil and Mexico – have understood the importance of remittance flows for some time and have engaged in initiatives such as to leverage their investment or facilitate awareness about money transfer services.

Remittances and their investment are significantly hampered by inefficiencies and access barriers in financial systems and services, both in sending and receiving countries, (Gammeltoft, 2002). It is estimated that on average one third of remittances flow through informal channels; for countries with weak financial sectors or tight forex controls, sending money via informal channels is more common.

The International Monetary Fund reveals an increase of migrant’s transfer from 43 billion US $ in 1980 to over 70 billion in 1995.  A breakdown in this statistics in several African countries including Cape Verde, Cameroon, Ghana, Madagascar, Mali, Morocco, Senegal Togo and Tunisia indicated that the amount of annual official remittances increased by 100%.

A large proportion of over of over $3billion in remittance that Africans receive from the Diaspora each year originate from the United States, (Pamela E. Bridgewater, 2003)

Statistics of remittances to Somaliland are tiny due to insufficient data. The value of remittances to Somaliland is estimated at some US $500 annually-around four times the value of live stocks exports. And the average annual remittance received by household was $4, 170 with approximately 120,000 recipient households throughout the country, (Ismail I. Ahmed, 2000).

These estimates of remittances to Somaliland are consistent with other studies and transfers to countries such as Eritrea and Sudan with similar migrants’ population.

Dominican Diasporic group based in Boston have also been sending remittance to their community in their country of origin, MiraFlores, (Peggy Levitt, 2001). These remittances improved the lives of the people of Miraflores both in their homes and at community levels.

About the author: Musue N. Haddad is a Liberian Journalist/Photo-Journalist. She holds a graduate degree from George Washington University, and has worked both at home and outside of Liberia. She received several national and international awards for her journalistic practices and human rights work, including the Nelson Mandela Award for “Best Student in Photo-Journalism,” Human Rights Award from the United Nations Association of the National Capital Area (UNA-NCA), for “outstanding dedication and service towards the recognition, promotion and protection of the inherent dignity and equal and inalienable rights of all members of the human family.” and Human Rights Watch Hellmann-Hammett Award, granted to writers around the world who have been the targets of political persecution. In 1998/1999, she received the Press Union of Liberia “Journalist of the Year” and ‘”Photo-Journalist of the Year” awards.