Transcript Ghenadie Cretu - MigraceOnline.cz

Migrant Remittances and Development
Republic of Moldova - country
experience
Seminar
Remittance flows from the Czech Republic and
their development impact
Prague, 24 February 2009
Ghenadie Cretu, International Organization for
Migration, Mission to Moldova
Outline
1. Basic facts
2. Migration. Impact on development
3. Remittances: an Overview
4. Remittances: Impact on Economic Growth
4.1. Positive Impact on Economic Growth
4.2. Negative Impact on Economic Growth
5. Knowing remittances. Putting them to use
6. Policy Recommendations
7. Policy Instruments
Basic facts – International
Organization for Migration, 1951


Managing Migration for the
Benefit of All
IOM – principal International
Organization in the field of
management of migration:
– Assists in meeting the
growing operational
challenges in the field of
managing migration
– In-depth research and
understanding of migration
issues
– Harnessing the economic
and social development
potential of migration
– Upholding the dignity and
well-being of the migrants
GROWTH
1998
2008
Member States
67
122
Operational
Budget (USD,
mln)
242,2
750
Field locations
119
400
Projects
686
1770
Operational staff 1100
5600
IOM Moldova
country strategy

The IOM Mission in Moldova operates in supporting the country in
managing migration for the benefit of all.
IOM Moldova acts with its partners to:

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Encourage the country’s social and economic development for effective
management and more effective use of the benefits of migration;
Advance understanding of migration issues;
Protect the rights and dignity, as well as the prosperity of migrants.
Main areas of activity:
 Migration management;
 Prevention of human trafficking;
 Rehabilitation and reintegration of victims of human trafficking;
 Labour migration and remittances;
 Assisted voluntary return;
 Migration and health.
Basic facts - Moldova

Area, sq. km - 33 843

Capital – Chisinau
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Population 2008, millions - 4.3

Urban/rural distribution – 46 % / 54 %

Total aid as proportion of GDP, 2004 (per cent) - 4.5 %

Adult literacy (per cent) - 99.1 %

Life expectancy at birth (years) - 70.5

GDP per capita, PPP (2008) - 2,502 USD (compare with Czech
Republic – 26,800 USD)
Geographic location of Moldova
Main economic indicators
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
Inflation (2008)- 13,8%
Export - $1.79 billion f.o.b. (2008)
Import - $ 5 billion (2008); trade deficit – over 3 billion (Jan’09)
Trade partners – EU – 51 %, CIS – 39 %
Remittances (2008) - $ 1,65 billion (37,7% ratio to GDP)
Unemployment (2007) – 5,1 %, 25% labor force is abroad
GDP by sector: agriculture: (17,3%) industry: (21,5%) services:
(43,3%) (est. 2008)
Labor force:1.327 million (2008)
Economy growth rates: 2.1% in 2000, 6.1% in 2001, 6.7% in 2002,
6.2% in 2003, 7.3% in 2004, 7.9% in 2005, 3.1% in 2006, 7.3% in
2007 and 7.5% (est.) in 2008.
GDP in real terms in 1996 constituted 36,0% compared to 1989. In
1999 GDP was only 33 % compared to 1989
The population income decreased to USD 318 per year in 1999
Migration realities in Moldova
Russia
Italy
Turkey
Spain
Greece
Portugal
Ukraine
Israel
Male
Romania
Female
Other countries
France
Cyprus
Belgium
Germany
In Moldova, total number of
emigrants grew from fewer than
100,000 in 1999 to around 400,000
by the end of 2006. The total
number of labor emigrants is now
estimated at around 345,000 (IOM’s
survey).
Czechia
Great Britaine
0
20000
40000
60000
80000
100000
120000
140000
160000
Moldova, 1999-2005: Migrants abroad
(LFS estimates)
450
400
350
All Migrants
Men
Women
Rural
Urban
300
250
200
150
100
50
1
Q
1
20
05
20
04
Q
1
20
03
Q
1
Q
1
20
02
20
01
Q
1
Q
20
00
19
99
Q
1
0
Driving forces:
• Pull factors: saving for household
investments
• Push factors: absence of a job;
need to cover daily consumption
• Inter-country networks:
developed over time, facilitating
migration
Distinction of major migrant groups
by destination country and economic
sector
1. CIS construction: workers in the construction industry in CIS
countries (mainly Russia, Ukraine); Predominantly male, from rural
areas, relatively low levels of education
2. CIS other: other workers in CIS countries (mainly Russia, Ukraine);
Half are women, mainly from rural areas, considerably higher level of
education
3. EU (=EU25): main countries: (Italy, Portugal); More than half are
female, higher share of urban migrants, high level of education;
Moldovan migrants in Czech Republic: ~10,000; permanent
residents: ~2,000; other status: ~8,000; female-3,500, male-6,500
4. Other: main countries: (Turkey, Romania); Predominantly female, half
from urban areas.
Main migrant groups
•Labour migration profoundly
affects the economic and social
development of Moldova.
•As of mid-2008, approximately
one quarter of the economically
active population was occupied
abroad.
2006
•About 100,000 individuals have
left Moldova permanently since
2006
2008
0%
20%
CIS construction
40%
60%
CIS other
80%
EU
100%
Other
• Of these, approximately
60,000 individuals belonged to
households that completely
relocated from Moldova to
another country
Legal and illegal migration
Illegal residence status has
become more widespread in CIS
countries while the situation has
improved in the EU and other
host countries
Migrants with illegal residence status
Total
CIS construction
CIS other
EU
Other
0%
10%
2006
20%
30%
40%
2008
Illegality reduces benefits from migration, but also the
incentives for remaining abroad permanently.
50%
Illegal residence status puts
migrants at greater risk of
arbitrary treatment by local
authorities, swindlers,
exploitative working conditions,
etc.
Migrants who stay in their host
country for an extended period
often manage to obtain legal
status: 65% of illegal migrants
in 2006 became legalized by
2008
Migration: Impact on Development
Positives:
 Economic gain - remittances, investment etc.
 Labor market and employment opportunities abroad
(enhanced mobility of labor force)
 Migration can empower women/other groups
 Impacts on social institutions - origin & destination countries
 Migrants as development agents (human, social capital, skills,
fostering innovation, progress and advancement)
 Diaspora as a source for economic and social development
 Return (brain circulation) can maximize developmental
impacts of migration by transfer of skills
 Equalizing effects on income of origin countries
Migration: Impact on Development
Negatives:
 Brain-drain (loss of human capital, including highly qualified
specialists);
 Social: torn families, children left behind, weakening the social
protection system
 Inflation impact on economy/pressure on currency exchange
rate
 Increased inequality/disparity in incomes
 Creation of a “tradition of migration”
 Irregular migration harms inter-state relations
Remedy: a comprehensive migration policy needed at the
national level, supported by appropriate legislations and
implementing mechanisms
Remittances: broad trends
Level of remittances (NBM, 2008 estimated)
In Moldova, remittances reached US
$ 1.2 billion in 2007 and $ 1.65
billion in 2008 (National Bank of
Moldova data on formal transfers
data); ratio to GDP–37.7%, one of
the highest in the world.
2500
million US$
2000
1500
1000
500
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
Total remittances NBM US$ million
Electronic transfers
Money transfer operators
Remittances (percent of GDP)
Total sum of remittances (including
via informal channels) is estimated
at $ 2 billion in 2008.
40%
Remittances have exceeded total
exports and exceeded by 50 % the
merchandise exports (NBM, 2008,
QIII).
30%
20%
10%
0%
2000 2001 2002 2003 2004 2005 2006 2007 2008
Remittances: data collection
•National Bank of Moldova: aggregate estimates of remittances are based on balance
of payments
•Balance of payments must add up to zero - plausibility check of estimates,
particulary of remittances transmitted to Moldova as cash foreign exchange
•Remittances are calculated by adding two posts in the balance of payment:
compensation of Moldovan residents employed abroad + transfers from migrants
permanently residing abroad.
•Surveys that ask respondents about their income or remittances typically
underestimate income flows (e.g. income and expenditures surveys like the NSB
Household Budget Survey – HBS).
•Understandably, people are reluctant to talk to strangers about their personal
finances.
•Ex. in the 2006 IOM survey, of 1,020 households that said they received remittances,
only about 600 indicated an amount.
Remittances: Average remittances
per remitting migrant (IOM Survey)
•Average remittances in
nominal US$ terms as
indicated by respondents
increased slightly.
Remittances in US$
Total
CIS construction
•US$ 1,296 in 2006; US$
1848 in 2008
CIS other
EU
Other
0
500
1000
2006
1500
2008
2000
2500
•However, inflation in Moldova
and the appreciation of the
Leu have eroded most of
these gains.
•Remittance levels strongly depend on the country the migrant is working in.
They are highest for migrants in Europe and lowest for migrants in Russia or
Ukraine
Remittances: transfer channels
•The use of formal transfer channels (money
transfer operators, bank transfers) has grown
further.
Use of formal transfer channels
CIS construction
CIS other
EU
Other
0%
20%
2006
40%
60%
80%
2008
•The share of migrants using primarily
informal services (maxi taxi drivers,
etc.) declined from 20.4 percent in
2006 to 11.8 percent in 2008.
Main transfer channel
2006
2008
0%
20%
40%
60%
•Lack of information, complicated procedures,
lack of trust in formal systems, lack of
outreach in rural areas
80%
Formal (bank transfer/money transfer
operator)
Personal
Informal services (maxi taxi drivers, etc.)
100%
•Furthermore, a large proportion of informal
transfers involve migrants taking money home
personally, rather than using informal thirdparty services (maxi taxi drivers, etc.).
Remittances: households
dependence
1.3 million people (35 percent of
the population) live in
households that receive
remittances.
In 56,2 % of households
receiving remittances, the
transfers account for more than
50% of the household budget (in
rural areas the share is 58,3%).
Remittances take a big share in the overall income composition, 18 per
cent.
Remittances use
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Most remittances are used for consumption needs
Yet, there are also signs that households with remittances invest
more: Whereas only 15% of households without migrants have
savings which exceed US$ 500, this share is 29% for migrant
households
There are also signs that remittances promote financial sector
development as more migrant households have a current account
with a Moldovan bank (13 versus 8%)
Most of the households receiving remittances are saving, yet only
18.5 % of these are saved in bank accounts and less than 7
percent, are used to finance business investment.
Poverty impact of
migration/remittances
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Migrant households are considerably
less poor than non-migrant
households
The poverty impact strongly
depends on the area of destination
(largest for EU, smallest for CIS con)
Remittances reduced the national
absolute poverty rates by 11.3
percentage points
The impact is higher in rural areas, lowering the
poverty rates by about 13.6 percentage points.
On macro level, remittances produced a decrease in
poverty rates, as well as contributed to wages
growth
Remittances: Impact on development
Beyond poverty reduction
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The effect of remittances on development remains a widely debated issue:
– Positive : foster poverty alleviation, increase productivity and
investments, promote economic development, augment national savings,
ease foreign exchange constraints, improves the country credit rating and
access to financial markets, covering the foreign trade negative balance,
creation of new jobs, small business developed, bank deposits increased
ease the credit crunch, multiplier effects simply by increasing households
income, secondary demand effects (real estate)
– Negative: create dependency, wealth disparities, currency appreciation,
inflation, displace local jobs, higher import content of consumption,
encourage further migration and may cause labour shortages, forced
consumption because of lack of investment opportunities.
Remittances alone do not lead to development and economic growth, and
their impact depends on micro- and macro-level factors of the economies of
host and home countries.
–
Therefore, migration cannot be considered to be a universal solution for
addressing all developmental problems.
Remittances. Policy issues
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Key Problems:
- Private nature of remittances
- Entrenched policy environment poses a problem, esp. in countries of origin
- many remittance senders and receivers remain outside the formal financial system
- Financial access and financial literacy
Guiding Principles:
- Be cognizant of the importance of ending the dependence on migration and
remittances
- Do not regard remittances as the key instrument on par with traditional forces like
exports and FDI
Main Policy Directions:
–
–
–
–
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Create a sound policy environment
Reduce transaction costs
Encourage productive use
Improve data collection on remittances
Because of the large role of remittances in reducing poverty at the household level,
policies should not focus on migration prevention, but rather on helping migrants to
maximise the gains from migration.
Policy Recommendations by IOM.
Moldova’s experience
Main policy directions of the Government:
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To create effective mechanisms for management and monitoring of
migration flows
To improve the reliability of migration and remittance data and the
capacity of the government to collect, share and apply such data
To improve the knowledge and capacity of migrant workers and their
families to channel and use their remittances for productive
investments
To improve the linkages of the Government with Diaspora
To improve remuneration of labour and a continued increase of state
guaranties in this area
To promote voluntary return migration and reintegration programs
To create an enabling environment for SME growth
To promote mobility of labour force/circular migration
Policy Recommendations by IOM.
Moldova’s experience
Conclude circular migration agreements with the main destination
countries, similar to the one that was recently reached between the EU
and Moldova:
-
Certain professionals of Moldova to be offered facilitated access to labor
market of interested EU member states;
-
Migrant’s return to Moldova upon the end of legal stay will facilitate his/her
subsequent migration to interested member states; and
-
Circular migration can augment the positive effect remittances have on
economic growth.
Main challenge for Moldovan government: advocating for policies that
benefit migrants and Moldovan society as whole, while taking into account
sensitivities in host countries
Policies required to enhance the
productive use of remittances.
Moldova’s experience
1.
Encouraging the use of official transfer channels and increasing trust in
banking institutions by improving financial literacy through public-private
partnerships; consumers need to be educated about existing remittances
services
2.
Reducing informality, improving competition and reducing transactions costs
by: i) expanding the intermediation of banks, microfinancing agencies, credit
and savings associations, post offices, in the remittances area and by ii)
adopting new remittances-transfer technologies
3.
Improving the terms of the payment and settlement system for money
transfers to reduce the remittances transaction costs
4.
Engaging diaspora in homeland development by supporting business
investment plans and partnerships with Diaspora
5.
Facilitating linkages between remittances and financial services (loan
products linked to remittances e.g. mortgages; savings products with
attractive interest rates, easing of credit policies)
Policies required to enhance the
productive use of remittances.
Moldova’s experience
5.
Implementing migrant outreach policy, stimulating confidence about
homeland and building migrant partnerships
6.
Matching remittances with other funding sources and orienting them on
community development
7.
Creating favorable regulatory and macroeconomic environment
8.
Facilitating increased investment of migrant resources in SMEs by
improving the SME regulatory and institutional framework, offering tax
incentives, one stop shops, entrepreneurship training
9.
Improving data on remittances by expanding and improving remittance
data collection practices, research, analysis, policies, and procedures
10.
Improving the remittance providers services to the poor, including via new
products and technology
National Strategy Documents
adopted following IOM policy advice
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EU – Moldova Action Plan (cooperation in justice and
home affairs: migration issues) – implemented; new
instrument being developed
National Return Action Plan
National Strategy for Support and Development of
SMEs for 2008-2011
Mobility Partnership EU-Moldova
National Return Action Plan
Creation of incentives for return of Moldovan migrant workers.
Main objectives:
1.
Provision of information on the job/business/social reintegration
opportunities in Republic of Moldova; economic empowerment progr.
2.
Strengthening the links with Moldovan nationals abroad
3.
Provision of socio-economic reintegration services to returnees
4.
Developing entrepreneurship culture so as to attract remittances into the
productive areas: a) referring the beneficiaries of remittances towards the
opportunities of launching a business; b) providing assistance and
consultancy on launching and managing small businesses.
5.
Enhancing the business environment and opportunities in rural areas: a)
granting methodological support and contributing to attracting remittances
for setting of up small, poultry and livestock farms; b) developing pilotprojects in rural tourism development, as well as other sectors, including
projects for social infrastructure support (matching funds 1+1); privatepublic partnership mechanisms for funding infrastructure objects
6.
Concluding agreements with post-office administrations from the countries
of destination so as to facilitate the implementation of the “Electronic
International Money Orders” service; developing and implementing the
normative framework regarding monetary payment of the international
money orders also in foreign currency (USD or EURO);
National Strategy for Support and
Development of SMEs for 2008-2011
Overall: improvement of the legislative and normative framework that
would be favorable for small and medium enterprises’ establishment
and development
Specifically on remittances:
Enhancing financial mediation within remittances transfer
options:
 Training migrants-users of financial-banking services regarding the
provided services;
 Building capacity of the micro-financing organizations and of the
Savings and Credit Associations with respect to provision of
remittances’ transfer services;
 Involving the “Post of Moldova” in the system of remittances’ transfer
and payment in national and foreign currency;

Setting up a scheme for loans’ guarantee based on remittances.
National Strategy for Support and
Development of SMEs for 2008-2011
Adopting new technologies for remittances’ transfer:
 Setting up legal framework for facilitating and securing the
remittances’ transfers through new technologies.
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Implementing a pilot project on money transfer banking services via
cell phones;
Diversifying and improving financial services, increasing
competitiveness and reducing the costs of these services (promoting
‘account on account’ system, ATM machine – remittances, internet
payments e.g. PayPal)
Developing and implementing the 2+1 Program for Remittances’
Investment
Improving accuracy of statistics and studies regarding migrants and
remittances; harmonizing and adjusting migration study methods
used by different involved institutions
Mobility Partnership EU-Moldova
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Council of EU for JHA from 6-7 December 2007 - initiating the
dialogue with the Republic of Moldova to launch a pilot mobility
partnership
Concept of “mobility” is becoming a key element for the development
of the EU migration management strategies
Mobility partnership represents an overall political framework
Aim: develop a balanced partnership with third countries adapted to
specific EU Member States' labour market needs
Broad, tailor-made and balanced agreement and include elements of
mutual interest for Moldova and EU: legal migration, fight against
illegal migration, migration and development, circular migration
The parties to a mobility partnership, on the EU side, include both
the European Community and Member States willing to participate in
and contribute to it. Czech Republic is part to the MP
Mobility Partnership EU-Moldova
Specifically on remittances:
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Enhancing the cooperation with Moldovan communities abroad, strengthening
the links with the diaspora and reaching out for its support;
Working on the financial sector to create the conditions for boosting the
diaspora's investment in their home country through twinning projects, loan
and transfer facilitation and targeted remittance schemes enhancing the
development impact of migrant workers' money transfers;
Proposal by Romania together with the Veneto Region in Italy to design a
Financial Instrument for Self-Employment and Small Business Development
with a view to encouraging migrants to invest remittances, particularly in local
communities, and to return to the Republic of Moldova.
Proposal by Germany to extend the remittances website www.geldtransfer.de.
launched as part of the G8 Conference on Remittances in late November 2007
in Berlin.
Proposal by Sweden to facilitate exchange of experience and study visits on
development policy (including policy training on remittances).
EC Aeneas Remittances Project
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1.
2.
3.
4.
5.
6.
EC Aeneas Project “Beyond Poverty Alleviation: Developing a Legal,
Regulatory and Institutional Framework for Leveraging Migrant
Remittances for Entrepreneurial Growth in Moldova”
Main activities, aimed at enhancing the impact of remittances on
economic development by facilitating increased investment of
migrant resources in SMEs:
Development of a National Remittances Programme
Capacity Building for the Ministry of Economy and Trade
Improving Remittances Data Collection
Improving Financial Literacy of Migrant Workers and their Families
Facilitation of Linkages of Remittances with Financial Services
Building Bridges with Diasporas
Thank you!
Ghenadie Cretu – [email protected]