Competing for Remittances

1
Competing for Remittances

• Dhaka, November 24

2
Objective of the study

• The objective of this study is to provide the
  Government of Albania input to the National
  Strategy on Migration and the subsequent National
  Action Plan.
• Two broad areas of inquiry
• the extent and scope of remittance flows, and
  their transfer process
• the potential of enhancing the impact of
  remittances on economic growth and development

3
Quantitative Methodologies

• A survey of Albanian emigrants, legal and
  illegal, April-May 2005 Greece, Italy and the UK
  (representing 94 of Albanian emigrants).
• Family surveys of 1004 households with at least
  one member working abroad (rural and urban areas
  of Korca, Kukes, Elbasani, Gjirokaster and
  Shkoder).
• Combination allowed for comparison and contrast
  of the remittance and savings behavior of both
  the senders and recipients.

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Qualitative Approaches.

• Desktop review of emigration, delivery of
  remittances and their use at the household level
• In-depth interviews and Focus Groups, with
  short-term and long-term emigrants in Greece and
  Italy emigrant households and returnees in
  Albania

5
Characteristics of Albanian Emigrants

• In the previous fifteen years more than 20 of
  the Albanian populated emigrated
• The years 1991-1998 were particularly
  characterized by high migration intensities

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Characteristics Cont

• Primarily to Greece and Italy and more latterly
  to the United Kingdom and North America
• Most emigrants were young, male and relatively
  well educated
• Many emigrants chose to reunify their families in
  their host countries (for instance, 55.6 percent
  in Italy, 53 in Greece)

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Sectors of Employment - Males

• The main sectors of emigrant employment in Greece
  are
• - construction (49 percent) and
• agriculture (21 percent)
• While in Italy the primary sectors are
• - construction (43 percent),
• industry (19 percent) and services (16 percent)
  for men
• United Kingdom, construction and services are the
  two main sectors of occupations for men (33
  percent and 32 percent respectively)

8
Sector of Employment - Females

• Italy and Greece - women are primarily occupied
  by domestic work
• In UK (women) the services sector seems the most
  preferred (66 percent).

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Scale of Remittances

• According to our survey 68.6 percent of emigrants
  send remittances to Albania..
• The most common recipients are the parents of the
  sender, then spouse and children, then brothers
  and sisters, etc.

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Scale of Remittances Cont.

• Top-20 Developing Country Recipients of
  Remittances, 2001

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Impact of Remittances
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Impact of Remittances Cont
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Macro Impact of Remittances

• Remittances have been a major factor in the
  financial survival of Albania
• - macro indicators show that there is a high
  dependence of Albania on remittances
• - remittances represent about 14 of Gross
  Domestic Product
• remittance flows are substantially higher than
  Foreign Direct Investment, Foreign Economic Aid
  and Exports
• nonetheless, remittances have not been able to
  fuel substantial growth in the country

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Micro Impact of Remittances

• Our study confirms that remittances play a key
  role in alleviating poverty

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Channels of Remittance

• Contrary to the literature, the majority of
  Albanian emigrants enjoy banking facilities in
  their place of residence
• Nonetheless, emigrants prefer to send remittances
  through informal channels (77.4 percent) -
  primarily hand-carry
• The banking system remains the least preferred
  formal channel

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Channels of Remittance Cont
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Channels of Remittance Cont

• The lack of breadth and depth of formal
  intermediation channels in Albania
• The convenient proximity of the host countries
• Close family ties and regular visits home by the
  emigrants themselves
• ..make formal channels unattractive to the
  emigrant

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Forecast

• Other studies predict that, as part of maturing
  of the migration process, including family
  reunification and integration in the host
  country, migrants can be expected to remit less,
  even though their income levels may have
  increased
• Our survey provides evidence of this trend, with
• -37.9 of emigrants expecting to remit less in
  the following years
• 37.3 expecting to remit the same amount and
• only 24.8 expecting to remit more

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Use of Remittances

• For the overwhelming majority of our sample
• financing of family daily needs is the primary
  use of remittances
• building, upgrading and furnishing the home,
  follows
• with investment in real estate as the next
  primary category
• this implies a very limited role in
  sustainable job creation

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Emigration Cycle

• 56 percent of long-term emigrants have a stated
  wish to return to Albania
• Our survey data indicates an average emigration
  cycle of
• 17.6 years from the first experience of
  migration
• 14.6 years from the point of obtaining regular
  status

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Emigration Cycle

• Emigrants intending to return permanently to
  Albania, by number of years to projected return

22
Emigration Cycle Cont.

• . a 14 to 18 year emigration cycle, implies
  that long-term Albanians emigrants wishing to
  return will begin to exercise that option in the
  following years
• .this return trend will continue to build
  through the period 2010 2015 before tapering
  off again.

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Retained Savings

• According to our survey, average annual savings
  are estimated at 5,390 Euro per household
• there is significant variance in the savings
  levels of Albanian households
• The level of household savings depends on
• the duration of stay in migration
• legal status
• number of household members
• number of dependents
• type and time of employment
• wage level
• expenses related to daily needs etc

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Indicative pool of retained savings by estimated
emigrant population (s)

• Represents some 86.9 to 98.5 of the Albanias
  Gross Domestic Product for 2003
• Applying an average multiplier of 1.8, these
  retained savings (or migrant transfers)
  represent a potential and additional (remittance
  generated) GDP of between Euro 8.55 Billion to
  Euro 9.68 Billion or between 156 and 177 of
  GDP for 2004.

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Conclusions

• Given the logic of the emigration cycle, and the
  factors that influence remittance behavior,
  current remittances, now at record levels, can be
  expected to diminish steadily over the medium to
  long-term
• This negative trend can be balanced and even
  reversed by introducing appropriate policies and
  measures specifically designed to increase the
  managed return of both current remittances and
  retained savings (migrant transfers).
• Our in depth interviews clearly reveal that
  emigrants believe that much would have to change
  in Albania before return and investment could be
  contemplated as a feasible option.

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Conclusions Cont

• Given the five-year window of opportunity open to
  it, the Government of Albania has every
  motivation to prioritize and implement those
  policies and measures establishing a viable
  remittance management framework

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Plan of Action

• These conclusions have been translated into
  series of related policy recommendations and
  other measures within Plan of Action
• In this regard, supporting the legalization of
  Albanian emigrants merits particular attention.
  As this will directly support their income
  levels their savings rates and savings behavior,
  and their use of formal remittance channels
• The Plan also provides remittance-related
  recommendations for the broadening and deepening
  of the financial intermediation institutions and
  processes as well as measures promoting more
  effective direct investment by the emigrants,
  should they wish to do so

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Map of Albania
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Map of Albania