Study on improving the efficiency of workers’ remittances in Mediterranean countries

Remittance Market Analysis

Description

The European Investment Bank has asked ECORYS to come up with practical recommendations to improve the efficiency of workers’ remittance from Europe to eight Mediterranean Partner Countries (MPCs): Turkey, Morocco, Tunisia, Algeria, Egypt, Lebanon, Jordan, Syria.

In order to provide specific recommendations, this study focuses on eight corridors: the remittance flows from an EU country to one of the eight MPCs. For each corridor, information and data was gathered from the existing literature, Central Banks in the host and the home countries, and (telephone) interviews. In addition, mini-surveys and a money-transfer experiment were carried out.

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The objective of the study is to determine ways by which the efficiency of workers’ remittances in Mediterranean countries can be improved. The study results in recommendations that are feasible, can be implemented and that are based on a sound understanding of existing flows and channels of remittances, their usages and on the mechanisms in the financial markets in EU and Mediterranean countries.

The objective of the study is based on the assumption that workers’ remittances have a potential beneficial impact on the development of recipient countries and that this impact is reduced due to imperfections that hamper the flow of remittances and their productive usage.

The EIB has indicated that it could play a pro-active role in improving the efficiency of the financial markets. In addition, the EIB can play a role in building and sharing knowledge on remittances originating in Europe. The results of the study should therefore indicate areas for potential EIB involvement and an associated action plan.

The number of migrants from Mediterranean countries is increasing in Europe. They work and live there but send their earnings back to their homes for their families. The EIB aims at increasing the efficiency of the worker’s remittances to home countries by investigating the channels through which money is transferred and the different uses of the money by the receiving parties. The study aims also at looking at the states’ policies to encourage investment and reach recommendations on developing efficient ways to channel remittances into finance for investment in the Mediterranean countries. The study was designed to take place in 7 MEDA countries; Syria, Turkey, Tunisia, Jordan, Egypt Algeria and Morocco. ECORYS, a European group of multidisciplinary research and consulting companies, contracted NSCE in order to conduct the study in Egypt.

The study components included:

  • Data collection on regulations of the host country, remitters, money transfer channels, regulations in recipient
    country, usage and economic impact, foreign direct investment and donor aid.
  • Literature review of researches and studies that were carried out by research institutes, universities, and economic research forums on the good practices and facilities with positive effect on efficient usage of remittances.
  • Come up with recommendations on feasible needed actions to develop financial instruments in host and recipient
    countries to make workers’ remittances more efficient.

Services

  • Data collection on the workers’ remittances being transferred from the EU. The data also covers the total foreign direct investment from the EU to Egypt, number of emigrants abroad and inflow of EU aid.
  • Literature review of the researches, studies that were carried out concerning topics like informal remittances, banking system, investment climate, usage and attraction of workers’ remittances.
  • Interviewing 40 persons that receive workers’ remittances from relatives or friends living in the EU to investigate the efficiency of the channels they use and the usage pattern of the received money.
  • A practical test on the money transfer procedures through different channels such as the post office, banks or specialized money transfer offices.