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Remembering The Poor In Developing Countries

By Ashmead Ali, P.Eng.
Pride Guest Writer

With the season of giving for many Canadians at our doorstep, it might be worth taking a step back to consider how we should dispense with our hard-earned cash. I would like to discuss one aspect of aid to poor, developing countries – that of remittances from people who have immigrated to Canada.

It is felt by some that remittances from families (the diaspora) of poor people in developing countries will do a far better job than official aid to finance development and to reduce poverty. Although remittances are much higher than foreign aid – possibly by at least three times – it does not follow that this should translate into real benefits to poor countries. However, according to World Bank statistics for 2012, the 48 least developed countries (the poorest countries) received about $30 billion in diaspora funds, a little less than they received in Official Development Aid (foreign aid) – not the much-touted three times of ODA. In fact, even if all of the diaspora remittances were added to foreign aid, it will not be enough to bring the extremely poor countries out of poverty within the foreseeable future. Also, many of the countries that receive remittances from overseas are not in the extremely poor category; and we have to remember that we are not necessarily trying to eliminate all poverty, only extreme poverty.

Much of the annual diaspora amounts of over $150 billion and over $20 billion that go to East and South-East Asia and sub-Saharan Africa, respectively, that is, to both poor and not-so-poor countries, are assumed to be directed to poor people in poor countries. There is no doubt that diaspora funds from overseas have contributed considerably to lift poor people out of poverty. However, most of the diaspora funds are directed to those who are not poor but to the rich and not so rich populations in poor countries.

Francesca Marchetta’s paper in the Canadian Journal of Development Studies commented that the role of education is a prime determinant and that primary education is a key characteristic for people who are from remittance recipient households living in rural Northern Ghana being able to migrate out of their villages to seek employment in urban areas in Ghana. That is, because most poor people are not well educated, they do not have the opportunities to migrate to find work; so poor people generally remain poorer and are poorer than the broader population.

The paper also quotes Mendola, that poor people’s lower level education results in only low wages resulting in only small amounts of remittances being sent back to their families in rural villages. This argument is supported by the Cuban researcher, Maria del Carmen Zabala (Pride News Magazine, November 27, 2013). She points out that, because less than 20 percent of Cubans who leave Cuba are non-Whites, most of the remittances sent back by emigrants go to Whites families. Extrapolating these realities to poor people in other poor countries and to poor-country immigrants living and working in rich countries (if they can afford to muster the funds to migrate) will result in the same results.

I think that one can safely assume that poor people who have emigrated and the better-off migrants will very likely remit these monies to their families – to build better houses, to send their children or children of relatives to better schools, to spend on health care, to start a small business, and to buy some luxury goods. And it is very likely that because the population size of the poor migrants is much smaller than that of the better-off, smaller remittances will be sent to poor families. A possible spinoff will be that some of the poor will become secondary beneficiaries of the rich as they might be employed by the richer in homes or small businesses. But the poor in poor countries will, generally, remain poor.

Although research in this area is minimal, there is really no proof to suggest there is a meaningful number of poor migrants in rich countries that will result in a large majority of the poor in poor countries receiving remittances and thus improving their lives.

And let us assume that there is a substantial number of poor migrants overseas that remit funds to the poor in poor countries. So what. These monies will continue to alleviate those poor out of poverty, but only those poor. Most of the other poor will remain so for a long time.

To make diaspora funds work to alleviate poverty, one might ask how the diaspora can be mobilized to utilize their aid for development. Let us look at a few ways to do this. These funds can be pooled in each recipient country to be used by the government in its budget to pay down debts, or that can fund development aimed at poverty alleviation, to give a percentage of the funds to the remitters’ families, and for the remitters to buy bonds from the poor country. But this is not easy to accomplish.

The fact is that the diaspora funds are private funds of individuals and their remitting is voluntary. My conjecture is that, were any government to enact such ideas, no one will want to remit to his or her “back-home” country through transfer companies but will do so by unconventional means, and bonds might not sell for fear of buyers not being able to cash in the bonds for the expected return or even to have the face value return at a future date. In addition, with more and more vigilance being undertaken by OECD countries to cast a watchful eye on who are remitting, who receive remittances, and how much money is sent overseas by individuals, people will be hesitant to remit money.

The important thing to note is that poor, developing countries need as much financial and other assistance as possible in order to help them to improve the livelihood, health, education, and employment prospects of the poor. Diaspora funds are important and necessary, but so is aid from rich and not so rich countries. We need to continue to support our Canadian international non-governmental organizations (INGO) that carry out invaluable poverty alleviation work throughout the poor, developing world through donations we all make to these organizations.

This season of giving, I’m sure, will be like previous ones where Canadians will again remember the poor in places far away from home. And, hopefully, Canadians will also realize that, although remittances by the diaspora from poor, developing countries in Canada and other rich countries will improve the lives of a few in those poor countries, it will not do what aid from each one of us to our local INGOs can and will do for the majority of the poor. 

Ashmead A. Ali, P.Eng, Vice President, African Connections, Engineers Without Borders; Former Board Member, International Development & Relief Foundation.

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