For purposes of this article remittances can be defined as amounts transferred in the form of a gift, rather than a loan, from one country to another by a person A, who has access to money through a compensated activity, to a person B who is usually a member of person A’s family and who is in need of money.

Remittances are an essential tool for development.  For numerous developing countries, they are the main source of inward investment, foreign exchanges and they contribute positively to the balance of payments.

Further, they play a key role in enabling the poorest of the poor not only to survive but also to access education and start businesses.  Unlike other types of investments, they go directly to those that they target and avoid the huge transaction costs fostered by corruption or unnecessary/imposed intermediaries (the new common form of corruption).

Remittances are also important in the development of micro-finance.  Remittances can be the proof of regular income needed to obtain micro-finance facilities aimed at starting a business.

Moreover, remittances are an essential part of the migratory virtuous circle.  Highly skilled, skilled and less skilled migrants leave their countries of origin in search of employment and a better life.  They are not using their skills back home but in another country.  They constitute a loss for their country and their families.  The fact that they are able to find work in their hosting country and send money back home compensates for the loss and helps the home country develop.

In the realm of remittances, the only weak link – where abuses and corruptive practices can snake in – lie in the transfer process used to send the money from country A to country B.  Remittances organizations or Money Transfer Operators need to be able to deliver moneys to the designated beneficiary.  However, in some countries governments have restricted the number of local delivery points or licences to remitting entities.  Licences have to be obtained and multiple intermediaries paid off.  This in turn allows only a few players into the market who can, then, take advantage of the situation.  Not unlike micro-finance, once a useful, positive and efficient tool of development, remittances have slowly been diverted into the pockets of those who need the least but who control the flow.