Argument: Remittances reduce poverty

There has been a lot of concern that aid, particularly from governments and international organisations, does not always help reduce poverty; it might simply create dependence, or it prevents local enterprise. Dambisa Moyo points out that “Between 1970 and 1998, when aid flows to Africa were at their peak, poverty in Africa rose from 11% to a staggering 66%”. [1] Remittances on the other hand can be very beneficial; they provide the money needed to start enterprises, and they are showing that the community is not dependent as its members have taken the initiative to go and find work.

Remittances have a statistically significant impact on reducing poverty. In 2005 the World Bank suggested that a 10% increase in per capita international remittances will lead to a 3.5% decline in the share of people living in poverty. [2] Governments should therefore change from the method that is failing to one that is more successful at reducing poverty.

[1] Edemariam, Aida, ‘Everybody knows it doesn’t work’, The Guardian, 19 February 2009

[2] Adams, Richard H., Pagem John, ‘Do International Migration and Remittances Reduce Poverty in Developing Countries?’, World Development, Vol.33 No.10, 2005, pp.1645-1669, p.1660

Candidate 1: "The change to remittances may or may not benefit the countries themselves. It is likely that remittances will go directly to individuals. Rwanda may have managed to persuade Rwandans in foreign countries to put money into its sovereign wealth fund but this will often not be an option or individuals will not want to give to their government rather than their families. Most of the time the government will be less well off."
Candidate 2: "This creates freedom of choice for the donor, but at the same time takes it away from the recipient. Recipients, whether governments or NGOs, will no longer have the money to spend. They will no longer be able to target that funding towards those areas that need it most instead the money will bypass them."
Candidate 3: "Remittances are of course an excellent way of reducing poverty for those who receive them; more broadly however they are unlikely to be successful. Money sent back as remittances are unlikely to be used to target the development needs of the nation so it will not be creating the basis of sustainable growth in the future."

Remittances are of course an excellent way of reducing poverty for those who receive them; more broadly however they are unlikely to be successful. Money sent back as remittances are unlikely to be used to target the development needs of the nation so it will not be creating the basis of sustainable growth in the future.
