The Whispered Secret to Growing Remittances
Fans of remittances should be thinking about how to increase labor migration.
Recent cuts in foreign aid have again thrust the importance of remittances into the spotlight, and their role in addressing development challenges. Diaspora giving directly to their families and communities of origin has long dwarfed foreign aid’s contributions in many countries. In 2023, $857 billion in recorded remittances was nearly 4x foreign aid (peak aid?) of $223 billion. Commentators like Kevin Brown remarked on these trends even before this year’s blunt force dismantling of USAID. And CGD has just published some excellent thinking about how to make the most of remittances in light of the aid cuts.
The importance of remittances is still under-studied, but at least there are major programs, global fora, World Bank data tools, a full-fledged startup ecosystem, and a global industry association devoted to the topic. There has been research showing how remittances can act like insurance, and an analysis of the link between remittances and climate resilience.
However, the remittances discourse at times only nods and winks to the primary way that these remittances grow: more labor migration. I’ve been in conversations where remittances are treated as a sort of manna from heaven: let’s make good use of them, but the total quantity is out of our hands. We talk about reducing fees on remittances by a few percent, but what if we could double the number of people sending them? What if we tripled the potential earnings of migrants through opportunities in OECD countries with better pay than the two-tiered labor markets of the Gulf?
These questions are no longer academic, as cross-border livelihoods are increasingly a viable area for investment thanks to global demographics. In this context, focusing on reducing remittance fees rather than scaling the total amount of remittances is like a business strategy targeting better interest rates on cash balances but omitting plans to grow revenues.
Too political in 2025?
“More migration” might seem at odds with today’s political conversation in the Global North. Funders based there will sometimes avoid the topic of migration entirely – even though its effects will rival those of climate change in many places – because it is “too political.” But this view does not consider how labor mobility efforts can take migration out of the realm of politics and into the realm of business and employment, where cooler heads often prevail. I’ve talked to too many people from countries or governments labeled as “xenophobic” about their growing efforts to attract foreign talent to believe that we can’t do migration in a non-partisan way.
In Europe, largely uncapped work visa pathways are based on employer selection before arrival and often require pre-vetting of language and technical skills. These policies create practical challenges for would-be migrants, but they address the most common public objections to “unchecked immigration” and have been unaffected by political winds or “crackdowns.” The places I’ve visited in the past year doing the most to support legal labor pathways are Germany, Japan, Italy, and Spain. (Add up the numbers in these links to see that they are collectively targeting 3 million foreign workers over the next 3 years.) Their current governments range from very left to very right, but what they have in common are populations with a median age of 45 or greater.
As worker migration numbers rise, rotational mobility models can further address political concerns by separating the question of “who can work here” from “who can vote,” and replacing unidirectional with circular migration.
Permission to think outside the border
Even when destination countries are willing to make a way, the “development community” is often hesitant to embrace the idea of growing remittances through increased mobility. We like that remittances enable individuals from the Global South to have greater collective influence than bilateral aid agencies from former colonial powers, but we may be conflicted by the fact that people leave home to earn the money they send back. The average Filipino seafarer remits $14,000 every year or 2.5x the country’s GDP/capita – an amount that in-country livelihood programs cannot match – but seafaring is a difficult job that we ourselves might not want to do.
I can think of at least three answers for those of us who like remittances but feel conflicted about helping to grow the number of people who send them.
Firstly, migration and local development are not in conflict but rather in symbiosis with each other. If you want to help a local community, and members of that community want to migrate (as many do), you can still help that community by helping them migrate. For example, Malengo financed Peter (name changed) to move from Uganda to fulfill his dream of attending university in Germany. As soon as he got a student job in Germany, he started sending remittances so that his younger brother could complete secondary school. Now, two people are getting educated instead of zero, one locally and one abroad, and this is before Peter starts making “real money” in Germany. If you think that remittances are comparable to aid, it follows that helping people migrate is also investing in development at home.
Secondly, if we believe in agency and empowerment, how can we judge someone else’s decision about where and in what type of job they want to work? No honest work is undignified. Because of the unprecedented need for workers in the Global North, we can now use our resources to give people in the Global South a real choice about where to work by helping them navigate and access the new pathways that exist. After all, more people may want to migrate than be micro-entrepreneurs.
Thirdly, remittances are only a small piece of the puzzle in terms of the benefits accruing to countries of origin when someone migrates. See for example, last month’s definitive study in Science, “Brain drain or brain gain?” It details the empirical evidence for how migration generates more local investment in education, beneficial knowledge transfers, and trade and investment. The latter is particularly enabled by circular or return migration, which is the focus of many new efforts to expand labor mobility. All these benefits are motivation for origin countries to develop diaspora growth strategies.
None of this should imply that migration, either as an individual choice or a development strategy, is an easy solution. For individuals, it requires great personal resilience and reliance on support networks both at home and abroad. For governments, it carries a burden of protection and regulatory vigilance, and sometimes political risk as the benefits take years to realize. But working to expand access to growing labor markets in the OECD is a better bet than watching migrants compete for a stagnant number of work visas in traditional labor destinations like the Gulf.
So let’s acknowledge the migrants who actually send these remittances, and the millions more sitting on the sidelines who are anxious to get in the game. Let’s not have another conference panel on remittances with no mention of labor migration. We can invest in the social enterprises and startups working on mobility, while also cheering on the remittance players.
Let’s support governments in Africa, in particular, to have a larger voice on global migration policies, as they will represent the only growing sources of workers in the world. Cooperation between government, youth, labor, business, and diaspora organizations can yield pro-labor migration policies and interventions that maximize opportunities, manage the risks, and steward the rewards of mobility.