Leveraging Remittances for Socioeconomic Development in Sri Lanka

8/8/2019 Leveraging Remittances for Socioeconomic Development in Sri Lanka

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Presented by

Project Consultancy Unit Of

Sarvodaya Economic EnterpriseDevelopment Services (Guarantee)

Limited ² SEEDS

Cheryl de Jonk, B.Sc (London), PMP

Project Coordinator-Financial Sector

Consultancies for developmental sectorprojects of governmental, non-governmentaland private organizations

PCU is the focal point of expertise of alldivisions/ units of SEEDS

Implements diverse array of projects in linewith great philosophy of Sarvodaya Movement

FOCAL AREAS:

Microfinance Enterprise Development

Livelihood Development

Competency Building

Business Development Services

Leveraging Remittances

forSocioeconomic Development in Sri

(Funded by the UN-EC Joint Migration for Development Initiative)

Total foreign revenue generated by Sri Lankanmigrant workers US $ 3.3 billion in 2009

14 % increase in inward worker remittances toSri Lanka between 2008 to 2009

(Source: Sri Lanka Bureau of Foreign Employment)

In 2009 average per capita remittance to SriLanka US $ 164 compared to South Asia·saverage of about US $ 35.

(Source: Ministry of Finance and Planning)

Income Quintile (Q) Income Range (US $per month)

Region

Q1 Less than 150 Middle East

Q2 150 ² 299

Q3 300 ² 544 Middle East and Asia

Q4 550 ² 1,000 Europe and Asia

Q5 More than 1,000 Europe, Asia, America

Q4 and Q5 subdivided into 03 Remittance Socioeconomic Groups

Based on social and remitting behaviour

Purposes of use Income Groups (remittance from Europe)

Remi-1 Remi-2 Remi-3

Consumption 62.3%2%

Housing and

household assets

26.3%6%

Business investment 1%7%

Savings 4.4%82.2%

Other expenditure 6% 2.8% 5.8%

Remittance from Europe represents the highestvalue in per capita terms

- approx 400 Euros/ Rs. 60,000 per month

- (approx 48,000 Euros/ Rs. 7.2 lakhs per

annum)(Source: SEEDS field survey data)

Usual poverty parameter- Monthly income

Remittance Receivers of Remi-1 Overall monthly cash balance is minus

Low level of social development

Remittance Receivers of Remi-2 Save money on simple financial instruments

Opportunity cost ² forego investment income

Work and earn inEurope

Start a business orinvest

All forConsumption

Bankruptcy or lossof investment

Promote socioeconomic development in Sri Lankaby;

- encouraging senders to shift from informalto formal channels

- creating incentives for recipients andreturnee migrants to invest remittances on SME

development, financial and capital marketinstruments

(instead of over-spending on consumption)

(3) PolicyLevel

(2) FinancialSector

(1) Beneficiaries

Sender side ² Sri Lankan migrants in Italy,Germany, France, Netherlands and Cyprus

Fall into 3 categories:1. Legal migrants remitting through formal

channels

2. Legal migrants remitting through informal

channels3. Illegal migrants remitting through informal

channels

Create (indirect) incentives for legal migrantsusing informal channels to shift to formal(induce financial sector and policy bodies)

Provide recipients/ returnees with remittanceliteracy, SME and technical training

Facilitate direct linkages to financial institutesfor investment and business developmentpurposes

Remittance is end product

Need to add marketable features to remittances

Provision of preferential treatments for remittancereceivers· families

Policy level and financial sector interventions

In Sri Lanka, there is no problem indisbursement of remittances

Microfinance institutions are required to Develop SME development financial products

Educate receivers to invest on sustainablebusinesses

Link receivers with banks to invest on advancedfinancial instruments

Provide pre-departure remittance literacy

Sri Lankan migrant in Europe Europe(Exporter)

Remittance receiver tends tobuy imported goods

Increase the aggregatedemand for imports

Increase deficit of BOP

Sri Lanka Bureau of Foreign Employment

integrate migrant returnees to

Sri Lanka·s Society

Liquidate skills & knowledge Educate for next

Thank You

Leveraging Remittances for Socioeconomic Development in Sri Lanka

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