The deep impact of the slowdown in the US economy has already started showing its ugly face as the amount of money sent back home last year by millions of Latin Americans grew at the slowest rate in nearly a decade. Take for instance the fact that for the first time since the Inter-American Development Bank (IDB) started to study remittances in 2000, the increase is less than 10%. The slowdown has had the most profound impact on Brazil and Mexico where it fell by 4% and 1% respectively. Despite the decline however, the total amount sent back home by the Latin Americans is quite huge, that is, $66.5 billion. But the huge decline can not be ignored too.

Asia outnumbers Latin America when it comes to receiving money from the overseas workers but on a per capita basis remittances are more important to Latin America than any other region in the world. At least 20 million Latin American families are estimated to receive regular funds from their relatives abroad. Mexicans sent back nearly $24bn last year, almost entirely from the US – roughly the same as foreign investment and the second source of foreign exchange after oil. Yet IDB officials are alarmed by the situation in Mexico. The bank estimates that about 600,000 Mexicans did not receive remittances as a result of the turndown last year. Despite not having any drastic or dramatic impact on the Mexican economy the trend is expected to affect the economy to a large extent if no corrective measures are taken. Especially when the construction industry which employs a large number of Mexicans is not faring too well.

The SOS-SMS service started out in 2006 with the objective of serving the distressed overseas Filipino workers (OFWs). Today it has given way to new partnerships, linking assistance seekers with assistant providers and even tying up technology with the work for human rights.

The Manila-based Center for Migrant Advocacy (CMA) which is the coordinating center for the helpline has played a big part in this success story. What started off as a loose network of individual OFWs in Saudi Arabia is now a boon for millions of OFWs. Not only does it serve the OFWs in distress it also connects them to the network of OFWs who wish to offer their help to the distressed OFWs. The service has helped several OFWs facing inhuman atrocities in foreign lands and has played a big part in their deportation. Thanks to this a number of embassies have also come to accept the role of the service in recent times. The project has also become a venue for partnership with individuals in the IT sector in making innovations in harnessing technology for the advancement human rights work. Through partnerships with media the service is going places and is expected to emerge as a winner in other parts of the world as well.

UAE remains one of the top sources for the Philippines when it comes to receiving remittances from the overseas Filipino workers (OFW) living there. In terms of percentage jump in the amount of money sent through banks and fifth in real value the country comes as the fourth host country. In an estimate, At least 450,000 UAE-based Overseas Filipino Workers (OFWs) sent home a total of Dh383.1 million (US$104.3 million) for January and February, up 26.5 per cent from Dh302.6 million (US$82.4 million) a year ago. UAE follows Singapore, Australia and the UK in having the biggest percentage rise in remittances. The Philippine central bank, Bangko Sentral ng Pilipinas (BSP), has said the data do not reflect the true amount of remittances because most exchange bureaux in host-countries course the money through correspondent banks in the US.

One of the interesting results thrown up by the data is that there has been a rise in the number of highly skilled workers working in the foreign countries. This is directly linked to another phenomenon that is, the growing interest among the workers in sending money back home for investment. OFWs in the UAE, Saudi Arabia and Kuwait sent home a total of Dh1.4 billion (US$389.9 million) in the first two months, an 11. 2-per cent rise from the Dh1.3 billion (US$350.5 million) posted during the same months last year. The World Bank said in a recent report that last year the Philippines received Dh47.7 billion (US$13 billion) worth of remittances from both formal and informal channels, making the country of 86 million people the world’s fourth-biggest recipient of remittances after India, China and Mexico.

Dominican Republic received a whopping US$ 2.980 million in 2007 as remittances which has broken all records and has again indicated at the dependence of the country on the foreign remittances. According to an Immigration Department estimate nearly 14 percent of the population is living abroad and the numbers are expected to swell in the coming years. But it is also true that the remittances have been a little low in the recent past which is a worrisome trait in some way. The country has been benefited to a great extent by the remittances over the years as the remittance business has helped in reducing poverty in the country. The rural areas have received around 40 per cent of the remittances while the urban regions have also received nearly the same amount. The low income groups in particular have benefited the most because the remittances have helped them to raise the bar of their lifestyle to a great extent. In the Latin America and the Caribbean, Dominican Republic is the fourth country to receive most remittances in the past few years, lagging behind Mexico, Brazil and Colombia, according to the Inter-American Development Bank (I.D.B.).

Following the economic slump that the United States is facing at the moment, the World Bank has urged governments and remittance service providers to put in place a new set of measures to facilitate to the Latin American countries. It has recommended measures like increasing competition and transparency among service providers to reduce the cost of remittance transfers and increasing access to banking services among the migrants and the beneficiaries.

According to a new World Bank report the money that overseas workers remit back home is linked to lower poverty levels and improvements in education and health indicators. Remittances are also contributors to higher growth and investment. In this regard it becomes important to see how the developing countries cope with the present scenario. Remittances to Latin America grew only 6 percent in 2007, compared to an annual average growth rate of 19 percent between 2000 and 2006 this is a clear indicator of the impact of the US recession fears in the Latin American countries.

The World Bank is putting emphasis on improving the banking system and keeping the remittances as hassle free as possible. Economists feel that remittances may lead to an appreciation of the exchange rate, potentially reducing the international competitiveness of the respective economies. It is thus important to ensure that the remittances are put to practice more effectively.

The United Nation’s International Fund for Agricultural Development is looking for innovative remittance schemes to invest $13 mn into. The initiative called Financial Facility for Remittances (FFR) 2008 is looking at proposals that would focus on promoting innovative remittance systems and investment channels for migrants. The FFR facility aims at reducing rural poverty and promote development.  This in turn would support innovative and cost effective remittance services.

The FFR will promote collaborations between non profit organisations with formal financial intermediaries, money transfer channels, NGOs, and postal networks. Through a four phase competitive process the FFR will grant financing of up to US $250,000 per project to the eligible institutions to be implemented within a two year period.

A partnership between Emirates Post and India Post materialised into the introduction of a low cost instant money transfer service for just Dh 11 per transaction. Express Money Order (EMO) was also launched simultaneously. It will be a new remittance service to India. The Express Money Order will provide a low cost option for people sending regular remittances through the postal network. The fact that the Indian postal service has the world’s largest network of post offices has obviously worked in its favour. The customers will get to transfer money from any Emirates Post office and the money will be delivered to any of the 97 head post offices and 2,400 sub post offices currently linked to the EMO service in India.

For the benefit of the customers there will be two options on offer. They can either ask the addressee to collect money from the selected post office in India through the postal service or have the money delivered to the addressee’s residence. Under the system a single money order issued by the Emirates Post for payment in India will not exceed $2500 or its equivalent. A maximum of 12 money orders addressed to one beneficiary will be allowed in a year. Amounts less than Rs 50,000 will be paid in cash, and those exceeding Rs 50,000 will be payable by cheque. The charges have been fixed with the objective to ensure that thousands of UAE residents get to avail the Express Money Order.

The remittance market is a growing one. With over 150 million people regularly sending remittances to relatives in their home countries, the business is on a roll and if trade forecasts are to be believed the number of immigrants worldwide is expected to increase to 280 million by 2050. The remittance in the last decade or so has shown a great demand driven dynamics. With the number of remitters swelling everyday, the consumers have been demanding better technology for themselves and given the kind of advancement one has got to see in the last decade or so, this is certainly no surprise.

A new Celent report, The Would be Disruptors: New technologies in the Remittance space has examined the application of technology that is going to make remittances all the more cost effective and convenient. The focus has been on the evolving technologies that are promising to make cross border remittance less expensive. The report states that the mobile account based solutions is where the future lies. It says the solution is a gateway to the formal financial sector and microcredit. It would be interesting to see how the current cash to cash model sustains itself in the midst of these new technolgies.

The wait is almost over. Dubai based Etisalat is going to offer mobile remittance services starting this June to help millions of expatriates send money back home more conveniently. Etisalat has already started a mobile remittance pilot project in India in partnership with mashreq, Tata Communications, Idea Cellular and HSBC India. It is expecting 350,000 users to avail the services in the next three years. The UAE is the second largest remittance source in the Gulf after Saudi Arabia, in 2005 the remittance formal remittance flow crossed $7 billion which got the attention of Etisalat which based on its market research found that the overseas workers in the UAE are demanding better remittance facilities these days. The company is going to primarily focus on the micro transactions which take place through unofficial channels. The company is also going to provide a roaming service that would enable the registered users to transfer money and access it abroad. The electronic remittance service charges start from Dh3 onwards. The company is trying to provide a cost effective, convenient and secure service which would have low transaction costs. The feedback it receives is expected to help it in upgrading its services.

Etisalat is working with several banks, financial institutions and telecom operators to expand its network. The service in its initial phase is going to help the remitters sending money to countries like India, Pakistan, Bangladesh, Philippines Egypt, Jordan, Sri-Lanka, and Nepal.

The Middle Eastern carriers are charging astronomical fares which are making it really difficult for the Overseas Filipino Workers (OFWs). A severe shortage in the airline seats has now caused the black marketing of available slots for departing contract workers. It now stands that flying to the United States is cheaper than travelling to the Emirates. The Federated Association of Manpower Exporters (FAME) said that the recruiters have been incurring huge financial losses because the new fares are not covered by the quoted price approved by the employers before the rate adjustments. It has been common for the highly skilled workers to take business class accommodation while the ordinary workers waited for more than two months to get their economy class tickets. Many OFWs are forced to take flights that make three-four stop over in various countries. FAME has appealed to the Arroyo government to help the OFWs by approving new applicants for the Middle East routes. Meanwhile Aminah F. Jadid, Saveway International Manpower Services president, called on Labor Secretary Marianito Roque Jr. to immediately resolve the flight shortage which also affects the income of OFWs.