Remittances: Drivers of Development – Interview with Paddy Siyanga Knudsen

Each year, the International Day of Family Remittances (IDFR) is celebrated on 16 June, recognizing the significant contribution to development made by millions of migrants through remittances. International remittances are financial or in-kind transfers made by migrants directly to families or communities in their countries of origin. Each year, migrants send money back home amidst economic insecurity, conflict, and increased natural and climate-related disasters. As indicated in the World Migration Report 2024, World Bank data shows an overall increase in remittances in recent decades, from $128 billion in 2000 to $831 billion in 2022, with Germany among the top five remittance-sending countries.  

To shed light on the importance of remittances and the role of migrant women and global diasporas in sending remittances, we spoke to Paddy Siyanga Knudsen, a Zambian development economist and diaspora engagement expert living in Bonn, Germany. Among other roles, she is the vice president of the Global Research Forum on Diaspora and Transnationalism, coordinator of the African Non-state Actors Platform on Global Migration Processes as well as a member of the BMZ/GIZ “Shaping development-oriented migration” (MEG) Diaspora Advisory Board. 

Why are remittances so important to migrants and their families?  

Migrants send money home to support with the expenses of their families and communities, the needs of which vary from one setting to another and cover a range of consumption and ​​social expenditures. It is not uncommon for this money to be channelled into local economic projects, or even micro-investments. The seemingly small funds received through remittances are often referred to as “personal SDGs”. They contribute to reducing poverty, improving health, achieving better education, improving housing and increasing savings, thus ensuring a more stable future for the families of migrants. Overall, remittances contribute to local development and are indeed a “lifeline”—not only for local communities, but also, in times of crisis, at the national level. Recently, with the climate change-induced flooding in East Africa, migrants and diaspora have played an active role in supporting their families and displaced communities. On a personal level, remittances provide migrants with a sense of connection and fulfilment of their duty of care towards their families.  

What can policymakers do to facilitate the sending of remittances? 

First, policymakers can establish frameworks that create “pre-remittance” conditions that enable migrants to send money. Such conditions include migration policies that define regular pathways, access to social services that underpin the health of migrants, living conditions and their impact on disposable income, access to financial services and the provision of decent work. In other words, policymakers should consider how migrants earn the money that gets sent home.  

Second, financial regulatory policies affect the dynamics of the remittance market, including channels, corridors and diversity of service providers. The key task at hand goes beyond reducing the cost of sending money through various remittance corridors. Instead, the focus should be on ensuring that cost reduction puts more money in the pockets of migrants and their families.  

Third, despite the increase in digital tools, informal cash-based remittances are still attractive to many migrants – partially due to exchange rates. This is especially the case in times of rising inflation, both in countries of residence and countries of origin. Digital solutions have helped to reduce recruitment costs, yet despite being a safe, fast and secure option, they cannot be considered an inclusive alternative. Such tools exclude migrants who do not have access to digital tools such as the elderly, as well as irregular or undocumented migrants, among others. With the growing use of mobile money tools for remittances, migrants and receiving families are still not spared from taxes and surcharges.   

Placing the needs of migrants and their families at the centre of the policy discourse on remittances remains crucial to understanding social patterns and being guided by evolving needs. 

The 2023 Global Forum on Remittances, Investment and Development also highlighted the limitations of digital technologies in terms of financial inclusion. The forum shed light on the need to improve financial literacy and education—not only on the sending side, but also on the receiving side. Many families, some of whom are in remote and rural areas, face significant limitations in this regard. Together with diverse migrant and diaspora actors and organizations, we must further explore how technology can facilitate the sending of remittances, as well as the use of remittances to effectively finance social spending and support local development. 

What is the role of migrant women and diasporas in sending remittances, as well as supporting and influencing this policy space? 

To answer this, I will rephrase a common saying: “Support a woman, empower a whole village and impact an entire generation”. In the hands of migrant women and their families, remittances influence effective spending decisions covering the wide array of family and community needs.  

Although this topic is under-researched, migrant women and diaspora communities are innovating with remittances, using them for more than consumption and social spending. By forming savings groups together with networks at home – comprising friends, businesses and community members – they gain access to innovative financing models. Such groups are empowered by technology, which enables increased access to non-bank financial services, especially for diaspora and migrant women. Notable examples of such models can be found in my home country of Zambia, as well as in Kenya and Zimbabwe. 

Data shows that a significant number of remittance senders are migrant women, which reflects the feminization of labour migration. This trend presents an opportunity for diaspora organizations to advocate for a wide range of non-bank financial services tailored specifically to migrant women, recognizing their significant role in the global economy. Diaspora organizations can also be supported to ensure that migrant women have greater access to financial information. This will empower and inspire women to engage in sound financial planning – at home and abroad – and encourage savings, while also meeting critical family financial needs.  

Diaspora and migrant women are often at the forefront of advocating for policy change in migration governance, labour migration and social inclusion, as well as for targeted support for migrants, such as for women, youth, children and vulnerable groups. The current focus on women in diaspora engagement and migration governance is therefore crucial and needs to be strengthened. 

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Additional resources

World Migration Report 2024 can be found at this link.  

Policy Brief on Growing Remittance Industry by Paddy Siyanga Knudsen can be found at this link.