Memorandum submitted by the British Bangladeshi
International Development Group (BBIDG)
"The migrant worker is many things to
many people. For conservative politicians and Trade Union organisers
in industrial countries, he is the illegal migrant—who deserves
a one way ticket back to whatever country he came from. For immigration
advocates and business groups, he is a vital pillar of today's
globalized economic order, whether a legal resident of his new
country or not. For the political leaders of developing countries,
he is a modern day `hero' who sends home a hefty portion of his
paycheque to help support his family members and keep his old
community afloat"
Newsweek International, 19 January 2004
EXECUTIVE SUMMARY
The British Bangladeshi International Development
Group (BBIDG) welcomes this opportunity to make a submission to
the House of Commons International Development Committee inquiry
into Migration and Development.
BBIDG is a not for profit association of people
interested in promoting education and research on issues relating
to international development and Bangladesh and the British-Bangladeshi
community in the UK.[55]
We note that communities of minority origin
are often inadvertently excluded from policy making debates and
believe this is regrettable because it deprives decision makers
of the unique perspective that can be provided by such groups.
BBIDG believes that the British Bangladeshi community can provide
a helpful insight into the link between development and migration
by highlighting policies relating to migrant remittances.[56]
We believe that lessons drawn from the Bangladesh experience can
be applied to other diaspora communities and more broadly to help
inform and improve the UK's policies on Migration and Development.
In particular, we consider that much higher
priority should be devoted to enhancing and encouraging the development
benefits of migrant remittances sent by diaspora communities.
Remittance has traditionally been all too easily overlooked. The
total value of remittances sent by expatriates to the developing
world was conservatively estimated to exceed $80 billion last
year. As members of the largest overseas Bangladeshi community
in the developed world, we have a particularly poignant interest
in this topic because helping family and village with remittances
has been the highest priority for much of the first generation
that migrated to the United Kingdom during the 1960s and 70s.
The value of these remittances and their continuing
contribution to development goals has often failed to receive
the recognition it deserves both in the UK and Bangladesh. The
BBIDG would like to see this oversight rectified. In the long
run, many of us in the Bangladeshi community in the UK want to
ensure that the valuable hard currency remittances sent home by
expatriate Bangladeshis are not lost with succeeding generations
but are sustainably replaced by increased communication, trade
and investment.
The BBIDG's main recommendations call for more
pro-active use of DFID's new powers granted in 2002 in order to
facilitate:
— Further research into remittances
and economic development and integration of remittance by DFID
into its Poverty Reduction Strategies for individual countries.
— Supporting the feasibility of new
government development bonds for infrastructure investment within
developing countries by encouraging and/or providing guarantees.
— Encouraging pro-poor and long term
investments by diaspora communities.
— Incentives to reduce the risks of
establishing dedicated venture capital and other long term investment
funds for developing countries like Bangladesh.
— Supporting tax incentives for senders
of migrant remittances in their country of residence.
— Investigating collaboration with
groups such as Grameen & BRAC (leading Bangladeshi NGOs) to
make better use of the migrant remittance transfer process to
contribute towards development objectives.
The BB-IDG hopes that the Inquiry will recognise
the development benefits of migration and ensure that migration
concerns are not treated as an isolated international development
concern but are integral to all aspects of the governments policy
with the outside world.
1. BBIDG'S VIEWPOINT
1.1 The British Bangladeshi International
Development Group ("BBIDG") is a not for profit association
of people interested in promoting education and research on issues
relating to international development and Bangladesh and the British-Bangladeshi
community in the UK. BBIDG welcomes the House of Commons International
Development Committee inquiry into Migration and Development.
1.2 BBIDG has previously made representations
to DFID on aspects of this issue on two other relevant occasions.
The first was in our submission to the Government White Paper,
Globalisation and Helping the Poor in April 2001. As descendants
of migrants ourselves we are concerned that the sensationalised
context in which much discussion of migration issues takes place
encourages xenophobia and obscures appreciation of positive features
of migration.
1.3 In our view, policies on globalisation
are overly dominated by talk about the free movement of goods,
capital and ideas, even though for globalisation to work properly
for the benefit of all, these need to be integrated with consideration
of the free movement of people. For inevitable political reasons,
a can of beans has more rights of free movement across the globe
then someone in the developing world, even though in principle
both people living in absolute poverty and the makers of the can
of beans would prosper more if freedom of labour was dealt with
equally.
1.4 The second occasion was in our report
"What can DFID do better for Bangladesh?"[57]
submitted in response to DFID's Bangladesh Country Strategy Review
in January 2003. Under the chapter Encouraging Investment and
Trade, we link migrant remittances to economic development. Remittance
is crucial for Bangladesh's economy, constituting around one third
of foreign exchange earnings. It is driven by overseas Bangladeshi's
and appears steady whether it comes from the Middle East, the
UK or elsewhere.
2. THE VALUE
OF REMITTANCE
2.1 Remittance has traditionally been all
too easily overlooked. The total value of remittances sent by
expatriates to the developing world was conservatively estimated
to exceed $80 billion last year. On some estimates the value of
remittances is approximately double the amount of aid provided
by rich nations. As we noted in our Country strategy review response,
the importance of remittances to Bangladesh's economy ranks at
least on a par with earnings from the garment industry and foreign
aid loans/contributions. Despite this we observed that the topic
is often overlooked and remains an "unsexy" area of
research within the development field.
2.2 Without wishing to undervalue the important
contributions made by DFID and development NGOs to countries like
Bangladesh, we are obliged to observe that the constraints of
institutional interests and funding requirements can sometimes
prevent policy makers from paying attention to the bigger picture.
That is to say for many key developing countries remittance already
arguably plays a bigger role than foreign direct investment and
foreign aid to contributing to development. Enhancing and encouraging
the flow of remittances towards development goals can only potentially
achieve far more, including reducing the dependance of countries
such as Bangladesh on foreign aid.
2.3 There are fairly straightforward socio-economic
reasons why policymakers have generally failed to adequately interact
with many migrant communities. Factors include class barriers,
social exclusion and the political marginalisation that often
characterises migrant communities. An irony is that the very first
generation migrants who send the largest volume of remittances
are often highly engaged with politics "back home,"
but (and partly because of this engagement,) are in the main divorced
from processes influencing development policies in the UK. It
is therefore an uncomfortable political fact that despite decades
of rhetoric on development issues by Northern bureaucrats, bankers
and politicians, much of the development/aid/NGO sector appears
oblivious to the massive contributions being made day in day out
by millions of migrant workers from the South.
2.4 Conferences and summits on development
largely fail to acknowledge the millions of migrant cleaners,
restaurant workers and taxi drivers who on some estimates are
collectively sending back more than twice the combined total of
Western aid including private bank lending and IMF/ World Bank
"assistance." We note that DFID recently supported a
conference on migration and development in Bangladesh last summer
and hope this represents a larger new phenomenon within the development
world.[58]
We urge that recommendations from this conference are urgently
followed up and that more resources are devoted to enhancing the
use of remittances towards meeting development goals.
3. THE BANGLADESH
EXPERIENCE
3.1 Most emigration from Bangladesh has
been in the form of short-term contract labour to the Middle East.
At least 3 million Bangladeshis have migrated overseas for employment
in this way in the last 25 years, with Saudi Arabia and the Gulf
States taking the bulk of this number. Within Asia, Malaysia and
Singapore have increasingly emerged as major countries of destination.
By far, the largest overseas Bangladeshi communities that have
settled in the West are in the UK (and increasingly the US,) with
well over a quarter of a million people of Bangladeshi origin
living in Britain. On average, 225,000 Bangladeshis migrate annually
for short-term employment, with the dominant trend being more
towards semi-and unskilled labour migration. Recent research[59]
suggests that a typical such migrant remits around half of their
income.
3.2 Official figures from the Bangladesh
Bank record that remittances received from overseas Bangladeshis
grew from less than $25 million in 1976 to at least $2.6 billion
in 2002. Traditionally less than half of all remittances are channelled
through official sources. Until recent clampdowns on unofficial
money transfers, official figures recorded 40% of remittances
going through Hundi[60]
with the reminder transferred via friends and relatives. Given
the difficulty in estimating how much money is carried by workers
themselves, the evidence suggests that the level of overseas remittances
could easily be several times that recorded by official transactions.
3.3 Other forms of remittance that may not
be adequately recorded in official figures would be the large
flows into property investment made by expatriates including many
British Bangladeshis. This has a mixture of uses including providing
support for family members as well as second/retirement homes
for migrants themselves. Regular family visits also contribute
many tens of millions to the Bangladesh economy.[61]
Whilst much remittance is confined to family related investments
and consumption, its impact in freeing up resources for other
development/investment can be noticed in many parts of the country.
3.4 Remittances are conservatively estimated
to contribute at least 4% of Bangladesh's GDP and have directly
helped Bangladesh's balance of payments by contributing around
a third of its foreign exchange needs. In purely monetary terms,
remittance income is larger as a net gain than the near $5 billion
foreign exchange earnings earned by the ready-made garment (RMG)
sector, because the latter figure is significantly reduced when
adjusted for the cost of raw materials and tax breaks. (There
are however major job creation and other spin offs from the RMG
sector.)
3.5 As noted in our submission to DFID,
although barriers to investment such as bureaucracy and corruption
can deter overseas Bangladeshis from investing in Bangladesh,
there is evidence that these act as far less of a barrier for
diaspora communities than for other overseas investors. There
is undoubtedly still much untapped enthusiasm within diaspora
communities to increase investment in Bangladesh.
3.6 This potential should be tapped by both
working to enhance the development benefits of existing remittances
and by providing incentives for increased direct investment by
overseas Bangladeshis. The latter is especially important for
Bangladesh. Despite huge flows of international capital, from
the perspective of most developing countries, (many of which like
Bangladesh have attractive GDP growth rates), international investors
are over conservative. Even large pension funds that consider
themselves "long term global investors" put the vast
bulk of their funds into the stock markets of less than 10 different
countries. Most "emerging markets" funds direct their
attention to a handful of medium income countries such as Brazil
and Russia and with the exception of India and China, largely
ignore most poor developing countries. Only a limited amount of
existing global capital reaches most developing countries indirectly
via multinationals' foreign direct investments. Realistically
therefore the best option for many poorer countries to attract
new capital is to encourage funds from diaspora communities.
4. GLOBAL IMPORTANCE
OF LABOUR
MOBILITY AND
MIGRANT REMITTANCES
4.1 Migration is not a new phenomenon and
indeed moving with your feet has been one of the major responses
of human kind to poverty for millennia. Past experience of other
migrant diaspora groups from for example Ireland and Italy highlights
the multiple mutual benefits that can accrue to both "new"
and "old" countries alike from such movements. Given
that air travel and improved telecommunications have dramatically
increased the scope for migrants to make more frequent meaningful
two way interaction between their "old" and "new"
countries, it would be remiss for policymakers to ignore this
reality.
4.2 The biggest recipients of remittances
are India and Mexico with $10 billion each, followed by the Philippines
with $6.4 billion. Egypt, Morocco and Turkey each receive about
$3 billion a year, while Lebanon, Bangladesh, Jordan, El Salvador
and Colombia all get about $2 billion.[62]
4.3 Remittances can be a major factor in
development and poverty alleviation. As one can imagine, the impact
on smaller countries especially is huge. For example, 37% of Tonga's
and 26% of Lesotho's GDP is remitted by migrant workers. To take
three disparate examples, between 10-20% of the annual income
of Jamaica, Albania and Nicaragua is estimated to come from their
expatriates. Overall they form a greater share of GDP for low
income than for middle income countries (1.9% vs. 0.8%),[63],
but as we have noted above, it can be much more significant for
many key countries.
4.4 Except in specific cases, such as between
the US and Mexico, the political or social marginalisation of
many migrant communities, whether in their `new' country or nation
of origin—and often both—is such that banks and service
providers fail to cater for their needs, reducing the scope for
leveraging development benefits from remittances.
4.5 This is a major lost opportunity because
unlike other more fickle flows of international capital remittances
are demonstrably an important and stable source of external development
finance and hence poverty-reduction. For example, in the midst
of widespread publicity about Latin American financial investments,
the Banco de Brazil successfully issued a $300 million five year
bond using the future remittances of yens from Brazilian expatriates
in Japan.
4.6 Given the added development benefits that
flow from the exchange of skills, contacts and knowledge, (as
can be observed for example between Silicon Valley and Bangalore,)
and it is clearly long overdue for the great and the good in International
Development to give more credit to overlooked migrant workers
who are collectively providing more net aid for the poor in the
developing world than everyone else in the rich North put together.
4.7 BBIDG calls on DFID to better integrate
remittances within its strategies as outlined below. DFID's central
objective in this sphere should be to help remove existing barriers
to the productive use of remittances and diaspora capital. Two
critical categories of blockages to development commonly identified
by migrant communities are:
— Lack of secure vehicles and niches
into which their savings can profitably be invested.
— Lack of opportunities to invest in
infrastructural resources such as roads, bridges, electricity
and telephone connections, bond issues for which would be popular
owing to the tangible benefits provided.
5. RECOMMENDATIONS
BBIDG calls on the Committee to urge DFID with
its new powers to take a joined up approach with the Treasury
to help migrants in the UK get a better deal from their hard-earned
remittances by:
— Further research into remittances
and economic development and integration of remittance by DFID
into its Poverty Reduction Strategies for individual countries.
— Supporting the feasibility of new
government development bonds for infrastructure investment within
developing countries by encouraging and/or providing guarantees.
— Encouraging pro-poor and long term
investments by diaspora communities.
— Incentives to reduce the risks of
establishing dedicated venture capital and other long term investment
funds for developing countries like Bangladesh.
— Supporting tax incentives for senders
of migrant remittances in their country of residence.
— Investigating collaboration with
groups such as Grameen & BRAC (leading Bangladeshi NGOs) to
make better use of the migrant remittance transfer process to
contribute towards development objectives.
January 2004
55 BBIDG is established as a not for profit association
of people interested in promoting education and research on issues
relating to international development and Bangladesh and the British-Bangladeshi
community in the UK. The broad nature of this topic includes a
general interest in economic, environmental and human rights issues
both in Bangladesh and the UK. BBIDG was formed by a group of
British Bangladeshis with existing involvement in these issues,
who believe that added insight and value may sometimes be gained
by looking at these topics from a British-Bangladeshi perspective.
It builds on work formerly undertaken as a sub-committee of the
British Bangladesh Professional Association. It has no political
or religious affiliation and membership is open to anyone with
an interest in this area. see www.bb-idg.co.uk Back
56
Defined as monies transmitted from one place to another. Although
remittances can also be sent in-kind, the term remittances usually
refers to cash transfer, mainly to family back home. Back
57
Copy available at www.bb-idg.co.uk Back
58
Regional Conference on Migration, Development and Pro-Poor Policy
Choices in Asia, Refugee and Migratory Movements Research Unit
and DFID 22-24 June 2003 Dhaka, Bangladesh. Conference papers
are available from the website: www.livelihoods.org Back
59
Migrant Worker remittances and micro-finance in Bangladesh, ILO,
Dhaka (Feb 2001). Back
60
Hundi is a colloquial term for existing informal transfer systems.
Hundi agents act as foreign exchange dealers who charge 1 to 2%
more then official exchange rate but are used as they are seen
as quick and convenient. Back
61
Anecdotal evidence from UK travel agents suggests that at least
50,000 British Bangladeshis visit Bangladesh each year. Back
62
These figures are for formal remittances only and do not for
instance take account of the enormous amount of investment in
China by overseas Chinese communities. Back
63
Dilip Ratha, "Ch 7: Workers' Remittances: An Important and
Stable Source of External Development Finance", in "Global
Development Finance 2003-Striving for Stability in Development
Finance" World Bank (2003) p 158. Back
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