MIGRATION AND DEVELOPMENT BRIEF 29 APRIL 2018 MIGRATION AND REMITTANCES Recent Developments and Outlook TRANSIT MIGRATION Migration and Development Brief reports an update on migration and remittance flows as well as salient policy developments in the area of international migration and development. The Global Knowledge Partnership on Migration and Development (KNOMAD) is a global hub of knowledge and policy expertise on migration and development. It aims to create and synthesize multidisciplinary knowledge and evidence; generate a menu of policy options for migration policy makers; and provide technical assistance and capacity building for pilot projects, evaluation of policies, and data collection. KNOMAD is supported by a multi-donor trust fund established by the World Bank. Germany’s Federal Ministry of Economic Cooperation and Development (BMZ), Sweden’s Ministry of Justice, Migration and Asylum Policy, and the Swiss Agency for Development and Cooperation (SDC) are the contributors to the trust fund. The views expressed in this paper do not represent the views of the World Bank or the sponsoring organizations. All queries should be addressed to KNOMAD@worldbank.org. KNOMAD working papers, policy briefs, and a host of other resources on migration are available at www.KNOMAD.org. MIGRATION AND REMITTANCES Recent Developments and Outlook Special Topic: Transit Migration iii Contents Summary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . vii 1. TRENDS IN GLOBAL REMITTANCE FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.1 Remittances Rebounded to a Record Level in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 1.2 Outlook for Remittances, 2018–20 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 1.3 Trends in the Costs of Remittances (SDG Indicator 10.c.1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.4 De-risking by Commercial Banks Continues to Impact Remittance Costs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 6 1.5 Cryptocurrencies and Blockchain . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 2. MIGRATION FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.1 International Migration Data and Estimates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 2.2 Refugee Movements and Forced Displacements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 2.3 Recruitment Costs Paid by Low-Skilled Migrant Workers (SDG Indicator 10.7.1) . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 2.4 Global Compact on Migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15 2.5 Global Compact on Refugees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 3. SPECIAL TOPIC: TRANSIT MIGRATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.1 Not All Transit Migrants Want to Migrate to Europe or the United States . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19 3.2 Drivers: Transit, Because Direct Passage to Final Destination Is Not Possible . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 3.3 Impacts: A Global Loss . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 3.4 Policy Responses: Respect the Human Rights of Transit Migrants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 4. REGIONAL TRENDS IN MIGRATION AND REMITTANCE FLOWS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 4.1 Remittances to East Asia and the Pacific Rebounded in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25 4.2 Remittances to Europe and Central Asia Grew Rapidly in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26 4.3 Remittances Flows into Latin America and the Caribbean Are Strong and Continue to Rise . . . . . . . . . . . . . . . . . 28 4.4 Remittances to the Middle East and North Africa Bounced Back in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29 4.5 Remittances to South Asia Grew Moderately in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 4.6 Remittances to Sub-Saharan Africa Accelerated in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 References . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37 Endnotes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 39 iv M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K Boxes, Figures, and Tables Box 2.1  Objectives for safe, orderly, and regular migration . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16 Box 2.2  KNOMAD experts meeting on the Global Compact on Migration, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17 Box 4.1  Historical and Political Economy Antecedents of Transit Migration in Sub-Saharan Africa . . . . . . . . . . . . . . . . . . . . . . . 35 Figure 1.1  Remittance flows to low- and middle-income countries are larger than official development assistance and more stable than private capital flows, 1990–2019 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 3 Figure 1.2  Exchange rate effects: outbound remittances from the Russian Federation, 2014–17 . . . . . . . . . . . . . . . . . . . . . . . . . 5 Figure 1.3  Top remittance receivers in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5 Figure 1.4  The cost of sending $200 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 7 Figure 1.5  How much does it cost to send $200? A comparison of global regions in 2017 and 2018 . . . . . . . . . . . . . . . . . . . . . . 7 Figure 2.1  Top ten origin countries of international migrants, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11 Figure 2.2  Top ten destination countries for international migrants, 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12 Figure 2.3  Refugee stock worldwide and in EU-28, 1951–2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 2.4  First-time and pending asylum applications in the EU-28, 2014–2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13 Figure 2.5  Migrant workers who pay high recruitment costs are also likely to be paid irregularly and less than promised . . . 15 Figure 3.1  Major transit migration routes, 2014–17 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Figure 3.2  The intended next moves of temporary refugees in Sub-Saharan Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20 Figure 3.3  Payment for the journey by route (in U.S. dollar terms) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21 Figure 3.4  Push factors driving transit migrants from origin countries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22 Figure 3.5  Pull factors that attract transit migrants to intended destinations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23 Figure 4.1  China stands out as the top remittance recipient in the East Asia and Pacific region, 2017 . . . . . . . . . . . . . . . . . . . . 25 Figure 4.2  There is considerable variation in the costs of sending remittances to the East Asia and Pacific region . . . . . . . . . 26 Figure 4.3  Remittances to Europe and Central Asia bounced back in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27 Figure 4.4  Russia is the least expensive country from which to send money in ECA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28 Figure 4.5  Remittance inflows to Latin America and the Caribbean showed robust growth in 2017 . . . . . . . . . . . . . . . . . . . . . . 29 Figure 4.6  The five most and least expensive remittance corridors in North America and LAC . . . . . . . . . . . . . . . . . . . . . . . . . 30 Figure 4.7  Remittance inflows to the Middle East and North Africa grew rapidly in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31 Figure 4.8  Sending money within the MENA region Is less expensive than sending money from outside . . . . . . . . . . . . . . . . 31 Figure 4.9  Remittance inflows to South Asia grew moderately in 2017 . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32 Figure 4.10  The costs of sending remittances to South Asia varied widely across corridors . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33 Figure 4.11  Remittances to Sub-Saharan Africa rose in 2017, led by Nigeria . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34 Figure 4.12  The five most and least expensive remittance corridors in Sub-Saharan Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35 Table 1.1  Estimates and projections of remittance flows to low- and middle-income regions . . . . . . . . . . . . . . . . . . . . . . . . . . . . 4 Table 1.2  Top 10 cryptocurrencies by market capitalization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 8 Table 2.1  Recent forced displacements in Sub-Saharan Africa . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14 Summary T his Migration and Development Brief reports global $613 billion. Remittance flows rebounded in all regions in trends in migration and remittance flows, as well as 2017: in Europe and Central Asia by 20.9 percent, in Sub- developments related to the Global Compact on Saharan Africa by 11.4 percent, in the Middle East and North Migration (GCM), and the Sustainable Development Africa by 9.3 percent, in Latin America and the Caribbean by Goal (SDG) indicators for volume of remittances as percent- 8.7 percent, in East Asia and the Pacific by 5.8 percent, and in age of gross domestic product (GDP) (SDG indicator 17.3.2), South Asia by 5.8 percent. The trend is expected to continue reducing remittance costs (SDG indicator 10.c.1) and recruit- in 2018, with remittance flows to LMICs growing an estimated ment costs (SDG indicator 10.7.1). This Brief has a special 4.1 percent to reach $485 billion. focus on transit migration. The rebound of remittance flows is driven by economic Migration. According to the United Nations, in 2017, the growth in the European Union (EU), the Russian Federation, global stock of international migrants (including refugees) and the United States, alongside a firming up of oil prices was an estimated 258 million. An augmented dataset, includ- and (the valuation effects of) a strengthening of the euro and ing new data from several countries as well as data from the the ruble against the U.S. dollar. However, long-term risks Organisation for Economic Co-operation and Development remain. In many remittance-source countries, anti­ immigration (OECD) and the World Bank’s Factbook, puts this estimate at sentiments are on the rise. Immigration policies are becom- 266 million. ing stricter. Also, structural constraints, such as the de-risking behavior of international correspondent banks and increased In mid-2017, the number of refugees worldwide reached regulatory burdens on money transfer operators, continue to 18.5 million (about 7 percent of international migrants). While hinder the growth of formal remittances. the European migration crisis appears to be past its peak, low- and middle-income countries (LMICs) continue to bear Remittance costs. The global average cost of sending the brunt of forced displacement. Major receiving countries remittances has remained nearly stagnant, standing at of refugees during the first six months of 2017 included 7.1 percent in the first quarter of 2018, more than twice the Uganda, Turkey, Germany, Sudan, the Democratic Repub- SDG target of 3 percent. Factors contributing to high costs lic of Congo, and Ethiopia. In Sub-Saharan Africa, major include de-risking measures taken by commercial banks refugee and internal displacement hotspots included the and exclusive partnerships between national post office Central African Republic, the Democratic Republic of Congo, systems and a single money transfer operator. These fac- South Sudan, and Nigeria. Bangladesh has emerged as a tors are constraining the introduction of cheaper and more new hotspot owing to an influx of nearly a million Rohingya efficient technologies—such as Internet and smartphone refugees. Economic distress migration from Venezuela is apps, and blockchain—in remittance services. In two recent overwhelming Brazil and Colombia, as well as other countries reports, the Financial Stability Board (FSB) found that banks in Latin America. still perceive the remittance sector as high risk, and that the closing of bank accounts continued into the first half of Remittance trends. After two consecutive years of decline, 2017. The reports recommended (i) better dialogue between remittance flows to LMICs increased in 2017 by 8.5 per- stakeholders and better practices in the remittance sector; cent, rising to $466 billion. Globally, remittances reached (ii) improved implementation of international standards and v vi M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K oversight of the remittance sector; (iii) use of innovation to Addressing the adverse drivers of transit migration would facilitate remittance firms’ access to banking services; and involve policy efforts to create economic opportunities and (iv) technical assistance related to remittances. reduce conflict and fragility in migrants’ countries of origin. Opening more legal channels for migration to destination Recruitment costs. Analysis of migration cost surveys carried countries would also help reduce transit migration. Collab- out jointly by the Global Knowledge Partnership on Migra- orative efforts among the origin country, the transit country, tion and Development (KNOMAD) and the International and the final destination country to control transit migration, Labour Organization (ILO) shows that the recruitment cost however, should not violate free (intra-regional) movement indicator (RCI)—that is, the recruitment fees that workers of people under regional protocols. Respecting the human pay to secure an overseas job, expressed as a multiple of rights of transit migrants remains a policy priority. In situa- monthly foreign earnings—tends to be higher for relatively tions where transit migrants stay on for protracted periods, low-income migrant workers. Also, migrants incurring a there may be a need to provide access to education and high RCI receive less income than what was contractually health services, as well as to labor markets. For their part, promised, are more likely to be paid irregularly, and are less origin countries need to empower embassies in transit coun- likely to be compensated when injured on the job. Thus, tries to assist their nationals. Multilateral agencies can help vulnerable migrants experience both higher costs and more the global community through the collection of data and also adverse working conditions. Efforts to reduce recruitment analytical and technical assistance in addressing the driv- costs would require better monitoring of recruitment agents ers of transit migration. They can also act as honest brokers (and subagents) and facilitating direct recruitment by certi- to facilitate collaboration among the concerned parties. fied, bona fide overseas employers. Multilateral development banks can also provide innovative financing solutions to transit countries. Transit migration. The major transit routes in the world appear to be (i) Sub-Saharan Africa to North Africa to Global Compact on Migration. The Global Compact on Europe; (ii) West Asia/South Asia to Turkey to Europe; Migration (GCM)—a global agreement being negotiated (iii) Central America to Mexico to the United States; and by over 200 countries—lists 22 objectives to promote safe, (iv) West Asia-Thailand/Malaysia/Indonesia to Australia. orderly, and regular migration. Notably, the GCM also cov- Not all migrants and asylum seekers desire to go to Europe ers migration induced by environmental change, especially or North America or Australia. Transit migration is driven displacement due to natural disasters. But it will need to by the same drivers of voluntary or forced migration; only, address the challenges that migration poses to nonmigrants: transit migrants must transit through third countries because maintaining national identity in the face of large immigra- of immigration and border controls in the final destination tion flows, perceived (and actual) job competition impacting country. The transit country is chosen based on the relative native workers in host countries, and the difficulties faced ease of entering the country and securing passage to the by family members of migrants who are left behind in the final destination. country of origin. Transit migration has limited positive impacts and creates Currently, under negotiation for final adoption in Decem- few winners. It can benefit those transit migrants escaping ber 2018, the global compact proposes three International from poverty or persecution, and it can benefit local econo- Migration Review Forums in 2022, 2026, and 2030. The World mies, but transit migrants generally do not have the means Bank Group stands ready to contribute to the review, evalu- to send remittances back home. They may compete for ation, and formulation of relevant policies, and to associated jobs and access to health and public services in the transit data collection and knowledge sharing efforts. The GCM’s country. From the perspective of the final destination country, chances of success would improve if its objectives were transit migration may slow down the arrival of migrants, but formalized on the basis of existing international, regional, can also erode that country’s ability to control its national and bilateral agreements. A stocktaking of such agreements borders at significant financial and reputational costs. From for each of the GCM objectives is an essential next step. the perspective of the transit country—almost always an Operationalization of the GCM will also involve a mapping LMIC—transit migration puts pressure on already limited public resources. SUMMARY vii of institutions and their missions and capabilities. A high Bingying Wu helped with research support. Data on remit- probability of larger than anticipated movements of people tance prices worldwide were contributed by the Payments in the coming decades lends a greater sense of urgency to Systems Development Group of the Finance Competitive- member states to adopt and implement the GCM. ness and Innovation Global Practice, World Bank. Thanks are also due to Nuno Nunes of the International Organizaton *** for Migration (IOM) for useful discussions on IOM flow data. Useful comments and contributions were received from the This Brief was prepared by Dilip Ratha, Supriyo De, Kirsten World Bank’s regional chief economists, Global Practices, Schuettler, Ganesh Seshan, and Nadege Desiree Yameogo country teams, and others, in particular from T. Alexander of the Migration and Remittances Unit of the Jobs Group, Alenikoff, Xavier Devictor, Jesse Doyle, Poonam Gupta, Social Protection, and Jobs Global Practice; Sonia Plaza Bingjie Hu, Elena Ianchovichina, Gladys C. Lopez-Acevedo, of the Finance, Competitiveness, and Innovation Global Harry E. Moroz, Harish Natarajan, Maria Do Ceu Da Silva Practice; and Eung Ju Kim of the Development Prospects Pereira, Sudhir Shetty, Mauro Testaverde, and Soonhwa Yi. Group of the World Bank. Inputs on transit migration were Thanks to Michal J. Rutkowski, Alvaro S. Gonzalez, and David provided by Maria Davalos and Mohammed Abdel Jelil of A. Robalino for helpful comments and suggestions. Thanks the Poverty Global Practice, World Bank. Ismael Issifou and to Steven B. Kennedy and Fayre Makeig for copy editing. Migration and Remittances: Recent Developments and Outlook 1. Trends in Global Remittance Flows 1.1 Remittances Rebounded equity flows. These figures reflect only officially recorded data; the true size of remittances, including flows through to a Record Level in 2017 informal channels, is significantly larger. After two consecutive years of decline, remittance flows to The recovery of remittance flows in 2017 is significantly low- and middle-income countries (LMICs) increased by an stronger than the expectations set out six months ago estimated 8.5 percent in 2017, to reach $466 billion, a new in the Migration and Development Brief 28. Remittances record (table 1.1). Remittances are now more than three were larger than expected in Europe and Central Asia, times the size of official development assistance (figure 1.1). Sub-­Saharan Africa, and the Middle East and North Africa, Excluding China, remittance flows are also significantly larger driven by a cyclical economic upturn observed in Europe, than foreign direct investment (FDI) in LMICs. Remittances the Russian Federation, and the United States,1 and related are relatively more stable than cyclical private debt and to exchange rate movements. The valuation effects of a FIGURE 1.1  Remittance flows to low- and middle-income countries are larger than official development assistance and more stable than private capital flows, 1990–2019 (US$ billion) 700 600 FDI Remittances 500 400 300 Private debt and 200 portfolio equity 100 ODA 0 0 1 92 93 94 95 96 97 98 99 00 01 02 03 04 05 06 07 08 09 10 11 12 13 14 15 20 6 p 20 f f 18 19 9 9 1 17 20 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 Sources: World Bank staff estimates; World Development Indicators. Note: FDI = foreign direct investment; ODA = official development assistance. See appendix A in World Bank (2017b) for data and forecast methods. 3 4 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K TABLE 1.1  Estimates and projections of remittance flows to low- and middle-income regions 2010 2014 2015 2016 2017p 2018f 2019f ($ billions) Low and middle income 341 444 440 429 466 485 503 East Asia and Pacific  96 121 126 123 130 135 140 Europe and Central Asia  38  52  41  40  48  51  53 Latin America and Caribbean  57  65  68  74  80  83  87 Middle-East and North Africa  39  54  51  49  53  56  57 South Asia  82 116 118 110 117 120 123 Sub-Saharan Africa  30  37  36  34  38  41  43 World 468 598 582 573 613 642 667 Memo item: Developing countries (FY 2016 income classification)* 335 436 432 422 457 475 493 (Growth rate, percent) Low and middle income 11.2  3.8  –1.0 –2.4  8.5 4.1 3.7 East Asia and Pacific 19.4  4.9   3.9 –2.6  5.8 3.8 3.6 Europe and Central Asia  4.9 –5.2 –21.6 –2.4 20.9 6.0 4.8 Latin America and Caribbean  2.6  4.9   6.1 7.5  8.7 4.3 4.2 Middle-East and North Africa 18.2  7.2  –5.3 –4.8  9.3 4.4 3.3 South Asia  9.4  4.5   1.5 –6.1  5.8 2.5 2.6 Sub-Saharan Africa  9.7  5.0  –2.5 –4.6 11.4 7.0 5.6 World  8.4  3.7  –2.6 –1.5  7.0 4.6 3.9 Source: World Bank. See appendix A in World Bank (2017b) for data and forecast methods. Note: p = provisional; f = forecast. * Previous income classification: This group excludes Equatorial Guinea; the Russian Federation; República Bolivariana de Venezuela; and Argentina, which were classified as high-income countries earlier. These countries are included in the group of low- and middle-income countries in the table. See appendix A in World Bank 2017b for data and forecast methods. stronger euro and a stronger ruble against the U.S. dollar U.S. dollar and the difference between U.S. dollar- and ruble- further accentuated the growth of remittances in U.S. dollar denominated remittances is evident in the quarterly data terms. These effects more than compensated for the damp- since 2010. ening of outbound remittance flows from the Gulf Coopera- tion Council (GCC) countries, in particular Saudi Arabia, due In 2017, the top remittance receiving countries—in dollar to fiscal tightening and policies discouraging the recruitment terms—were India, China, the Philippines, Mexico, Nigeria, of foreign workers. (Greater details are given in the later sec- and Egypt (figure 1.3). As a share of gross domestic product tion, Regional Trends in Migration and Remittance Flows.) (GDP) for 2017, the top recipients were smaller countries— the Kyrgyz Republic, Tonga, Tajikistan, Haiti, Nepal, and Provisional estimates indicate that remittance flows to Liberia. Europe and Central Asia grew by 20.9 percent in 2017 (in U.S. dollar terms), after three consecutive years of decline. Compared with 2016, in the first three quarters of 2017, 1.2 Outlook for Remittances, 2018–20 the Russian ruble appreciated against the U.S. dollar (from Rub 68 to Rub 58 per dollar). As a result, outbound remit- The methodology used here to forecast remittance flows—a tances from Russia (the main source of remittances to Central process that is largely dependent on the global economic Asian countries) increased by 5 percent in ruble terms, outlook—is outlined elsewhere (see World Bank 2017b, and 21 percent in U.S. dollar terms (figure 1.2). The inverse appendix A). It is worth noting that economic growth relationship between a depreciation of the ruble against the in remittance-source countries of the global South (for T R E N D S I N G L O B A L R E M I T TA N C E F L O W S 5 FIGURE 1.2  Exchange rate effects: outbound remittances from the Russian Federation, 2014–17 Growth in US$ (%) 40 Growth in ruble (%) Change of ruble against US$ (%) 30 20 10 0 (10) (20) (30) (40) Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 Q1 Q2 Q3 Q4 2013 2014 2014 2014 2014 2015 2015 2015 2015 2016 2016 2016 2016 2017 2017 2017 2017 Source: IMF International Financial Statistics and Balance of Payments; World Bank staff estimates based on data from the Central Bank of the Russian Federation. FIGURE 1.3  Top remittance receivers in 2017 (Percentage of GDP, 2017) (US$ billion, 2017) 69 64 35 33 31 29 29 27 33 31 21 21 20 19 22 20 20 14 13 9 a a es o ia p. an m sh sia lic a an ti l Co ia os e va s a ra di in ng Th ai ic er ep r na Re ub in de do or st ist be ne du Ch ex H In ig To pp ki et N a, m ik p la ol Li do ab M on N Pa Re bi j Vi ng ili M Ta Ar In am H Ph Ba yz t, G rg yp Ky Eg Sources: International Monetary Fund; World Development Indicators; World Bank staff estimates. Note: The top recipient countries include several high-income countries such as France and Germany (not shown in the figure), but as a share of GDP, remittance flows to these countries are negligible. GDP = gross domestic product. 6 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K example, Côte d’Ivoire, India, Malaysia, Russia, South Africa) and Nicaragua, which over time would reduce remittance impacts the flow of remittances, as does the growth of top flows from the United States to these countries (Smith 2018; migrant destinations in the global North. CMS 2017). Some countries (for example, Kuwait) are consid- ering a tax on outbound remittances, which could not only The current, accelerated pace of global economic growth dampen remittance flows, but also encourage flows through may continue due to a cyclical recovery in global manufac- informal channels.2 turing and investment, propelled by trade in goods. This is likely to hold if commodity prices remain steady, and global financial conditions remain supportive despite some tighten- 1.3 Trends in the Costs of Remittances ing in monetary policy (World Bank, 2018a). The growth of advanced economies in 2018 is likely to continue at the (SDG Indicator 10.c.1) same accelerated pace experienced in 2017. Growth picked up in the United States in 2017, helped by the broad-based According to the World Bank’s Remittance Prices Worldwide strength of domestic demand, and the solid advance is Database, the cost of sending money to LMICs remained expected to continue into 2018. In the euro area, growth flat at 7.1 percent in the first quarter of 2018 (figure 1.4). This picked up as well in 2017 and has remained strong thus far is well above the Sustainable Development Goal target of into 2018, supported by robust consumer demand, strength- 3 percent sought to be attained by 2030 (SDG 10.c). The ening investment, and improved flow of bank credit. Russia’s cost in South Asia was the lowest, at 5.2 percent, while growth recovered in 2017. Growth in the Europe and Central Sub-Saharan Africa continued to have the highest average Asia region, as a whole, continues to benefit from better- cost, at 9.4 percent (figure 1.5; see World Bank [2018b] for than-expected growth in the euro area. Growth in the Middle details). Remittance costs across many African corridors and East and North Africa is likely to advance, thanks to an easing small islands in the Pacific remain above 10 percent, because fiscal stance and stronger non-oil sector momentum. Latin of the low volumes of formal flows, inadequate penetra- America saw a pickup in growth supported by a cyclical tion of new technologies, and lack of a competitive market recovery in Brazil and improving conditions in Chile, Colom- environment. bia, and Peru. Developing East Asian countries’ growth is set to moderate in 2018 after accelerating in 2017, supported by robust domestic demand. Robust growth in South Asia 1.4 De-risking by Commercial Banks mainly reflects strengthening growth in India as the effects of temporary policy driven disruptions (demonetization and Continues to Impact Remittance Costs a new tax on goods and services) fade. Regional growth During the past four years, commercial banks have been in Sub-Saharan Africa is also expected to increase in 2018, “de-risking,” and this includes closing the bank accounts of reflecting continued recovery in Nigeria and South Africa and customers in countries or sectors deemed to pose a high steady growth in the rest of the region. risk of money laundering or terrorist financing. In response to increasing international concern regarding the effects of Consistent with this global growth pattern, remittances to de-risking on remittance flows, the Financial Stability Board LMICs are expected to grow at about 4.1 percent in 2018, (FSB), an international body that monitors and makes recom- to $485 billion (table 1.1). However, there are downside mendations about the global financial system, coordinated risks to this outlook. Policy uncertainty and geopolitical risk, a four-point action plan on correspondent banking. The increased restrictions on trade, and a sharper than expected FSB presented two reports at the March 2018 G-20 Finance slowdown in potential growth may derail global growth. Ministers and Central Bank Governors meeting (FSB 2018a, Moreover, no solutions are yet in sight for the difficulties 2018b), and outlined the following points. posed by the de-risking practices of correspondent banks. Also, remittance flows are vulnerable to downside risks from Risk factors. Banks still perceive the remittance sector as high spreading anti-migration sentiments and restrictive migration risk. The risk factors of remittance service providers (RSPs) policies in most of the remittance-source countries in North include that the majority of operations are cash transactions; America, Europe, Russia, and the GCC. The United States, destinations include high-risk jurisdictions (where there is for example, has announced a termination of the Temporary violent conflict, including terrorism, and/or government Protected Status (TPS) for migrants from El Salvador, Haiti, T R E N D S I N G L O B A L R E M I T TA N C E F L O W S 7 FIGURE 1.4  The cost of sending $200 Percent 10 9 8 7 6 5 4 SDG target 3 2 1 0 10 Q 10 Q 11 Q 11 Q 12 Q 12 Q 13 Q 13 Q 13 Q 13 Q 14 Q 14 Q 14 Q 014 Q 15 Q 15 Q 15 Q 15 Q 16 Q 16 Q 16 Q 16 Q 17 Q 17 Q 17 Q 017 18 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 20 2 2 1 3 1 3 1 3 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 2 3 4 1 Q Q Source: World Bank 2018b. Note: SDG = Sustainable Development Goal. FIGURE 1.5  How much does it cost to send $200? A comparison of global regions in 2017 and 2018 Percent 12 9.8 10 9.4 8.2 8 7.5 7.6 7.4 7.1 7.3 6.5 6.7 6.0 5.9 6 5.4 5.2 4 2 0 Global average SAR LAC ECA EAP MENA SSA First quarter 2017 First quarter 2018 Source: World Bank 2018b. Note: EAP = East Asia and Pacific; ECA = Europe and Central Asia; LAC = Latin America and the Caribbean; MENA = Middle East and North Africa; SAR = South Asia; SSA = Sub-Saharan Africa. 8 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K oversight is weak or lacking); and operations are conducted Cryptocurrencies are digital or virtual currencies that use through agents (which makes it difficult to implement the an open, decentralized cryptography system to control the “know your customer” norms). In general, banks consider creation of additional units and to secure and verify their RSPs as entities that do not have adequate controls, do transactions. Cryptocurrencies can be used as a medium not implement the adequate customer due diligence, and of exchange to purchase certain goods and services or as lack the capacity to comply with AML/CFT regulations. But, an investment. Bitcoin, launched in early 2009, is the first importantly, the banking sector applies risk-based approach and largest cryptocurrency, with a market capitalization of to the entire remittance sector and does not differentiate $115 billion—representing about 44 percent of the total individual remittance service providers. As a result, RSPs who market—and about 17 million units in circulation (capped have good control systems may not get access to correspon- at 21 million). Since then, numerous other cryptocurrencies dent banking. have been created (over 1,500) with market capitalizations reaching approximately $258 billion (table 1.2) in April 2018. Supervision and compliance. While many countries have The pace of cryptocurrency development was especially the basic legal framework for RSPs, the supervision of RSPs rapid in 2017, when more than $2 billion was raised through (and in particular, of agents) remains weak. For example, the initial coin offerings (ICOs)—that is, the public sale of an implementation of the framework and data collection is fre- initial batch of cryptographic tokens—representing a huge quently lacking. Many jurisdictions appear to have taken few increase from the $295 million raised in 2014–16.6 About or no enforcement actions against noncompliant providers or 50 ICOs took place each month in 2017, fueling the general agents, and some do not examine RSPs for compliance. Also, enthusiasm around cryptocurrencies. licensing and registration processes require improvement, as do the data collection efforts that would enable monitoring. The majority of cryptocurrencies have been used for invest- ing or speculating, with transactions being dominated by The progress report on correspondent banking highlights individuals.7 However, initiatives to accept cryptocurrency in that the average number of active corridors per country (that the real (as against the virtual) economy are still nascent, due is, of direct transfers to and from other countries, measured mainly to the units’ high volatility as currency measures. The by the flow of Society for Worldwide Interbank Financial year 2017 also saw a drastic increase in cryptocurrency prices, Telecommunication [SWIFT] messages) increased in the first half of 2017 in Oceania, Eastern Europe, and North America, TABLE 1.2  Top 10 cryptocurrencies by market while it declined in the rest of Europe and Asia, and in all capitalization other major world regions.3 Market Share of The report includes 19 recommendations related to the Cryptocurrency capitalization total market following topics: (i) promoting dialogue and communication Rank name ($ billion) capitalization (%) between the banking and remittance sectors, (ii) international 1 Bitcoin 114.6 44 standards and oversight of the remittance sector,4 (iii) the 2 Ethereum 39.2 15 use of innovation, and (iv) technical assistance in remittance- 3 Ripple 19.0 7 related efforts. 4 Bitcoin cash 10.9 4 5 Litecoin 6.4 2 6 Cardano 4.6 2 1.5 Cryptocurrencies and Blockchain 7 NEO 3.9 2 8 Stellar 3.6 1 Even as cross-border money transfers are dominated by cash 9 IOATA 3.3 1 transactions, the use of the Internet and mobile phone tech- 10 Monero 2.7 1 nology has grown in recent years.5 More recently, remittance Total market 258.0 100 market players have shown growing interest in exploring capitalization of all the use of cryptocurrency (CC) and blockchain technologies cryptocurrencies (hereafter, simply blockchain) for value transfers and cus- Source: CoinMarketCap. tomer ID verification. Note: As of April 9, 2018. T R E N D S I N G L O B A L R E M I T TA N C E F L O W S 9 led by Bitcoin and Ethereum, driven by increased retail inves- reduce the need for central authorities such as banks, clear- tor interest in Asian countries such as Japan and the Republic inghouses, or other intermediaries—and improve efficiency of Korea as well as in the United States growing public and and perhaps security. media interest and increased institutional involvement that included the launch of Bitcoin derivative trading, among Although global banks have had limited direct involve- others. ment in cryptocurrencies, the industry has been very active in pursuing initiatives around the blockchain technology Blockchain is the underlying technology behind the majority that underpins most cryptocurrencies. The opportunity set of cryptocurrencies, most notably Bitcoin. It is a digital, dis- around direct cryptocurrency trading seems rather limited in tributed ledger database comprising a series of blocks that the face of anti-money laundering and know-your-customer contain records of all transactions that have ever occurred in concerns. Meanwhile, the blockchain is not yet industrial a given network. Each block within the system is generated grade in the view of many in the banking sector. In the near once multiple nodes reach a consensus and validate the to medium term, the technology may be applied to reduce transactions. Given the distributed element of the block- infrastructure costs attributable to securities trading, cross- chain, multiple copies of data exist across multiple systems, border payments, and regulatory compliance (Khanna 2018). which together create a peer-to-peer network. Thus, rather Smart contracts in the blockchain can help create a stream- than a single, centralized database, the blockchain captures lined payment system by eliminating physical documentation an entire decentralized network of systems, with each one and automating contract execution. This has the potential to functioning as a node within that specific network. This could significantly reduce remittance costs. 2. Migration Flows 2.1 International Migration Data and then comparing this against migration data published by the Organisation for Economic Co-operation and Develop- and Estimates ment (OECD) and corridor-specific data collected from past national censuses by the World Bank, it appears that the According to a new report from the United Nations Depart- 2017 stock of international migrants (including refugees) ment for Economic and Social Affairs (UNDESA 2017), the could be as high as 266 million. worldwide number of international migrants (including refugees) rose to 258 million in 2017, from 172 million in 2000. Syria is the new entry into the top ten origin country list The share of international migrants in the world’s total popu- (figure 2.1). Based on comparisons of revised estimates lation increased modestly, from 2.8 to 3.4 percent, in the against those presented in the Migration and Remittances same period. Three-quarters of the increased migration dur- Factbook (World Bank 2016a), of the top ten destinations, ing 2000–17 was to high-income countries, where the share the United States is still at the top; Germany (host to recent of international migrants among the population increased to refugee arrivals) takes second place, while Saudi Arabia 14 percent from 9.6 percent. (where there have been policy driven returns of migrants in recent months) takes third. The Russian Federation is fourth, Updating the UNDESA dataset with recent data from Aus- followed by the United Kindgom. Controlling for the size of tralia, Germany, the United Kingdom, and the United States population, smaller countries dominate the list of top origin FIGURE 2.1  Top ten origin countries of international migrants, 2017 Millions Percentage of population, 2017 18 16.4 78 16 69 14 59 11.9 12 11.0 10.1 47 47 10 44 43 42 41 41 7.8 7.8 8 6.1 6.0 6.0 6 5.1 4 2 0 a o n a h Pa c an e es an a oa Su na e a e on blic Pr o pe a i di in az in ni tio es in er am rd ic gr bl in st ist a m ci ex Ch v ba ra In G Ve ad ne pu pu uy ra pp go ki ín in Sa an Uk M Al d de G l te r Re Re ng bo ili ze an gh Ph Fe d Ba Ca ab ab Af nk an M H n Ar Ar Ba ia é d m ss an n n t ria ria To Ru es ia Sy Sy W sn o Sã Bo Sources: World Bank staff estimates based on UN Population Division (2017) and OECD (2017), the Australian Bureau Statistics, the German Federal Statistical Office, the UK Office of National Statistics, and the US Census Bureau. See World Bank (2016a) for definitions, data sources, and 2013 estimates. 11 12 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K FIGURE 2.2  Top ten destination countries for international migrants, 2017 Millions Percentage of population, 2017 88 50 47.5 80 79 45 68 65 40 35 57 54 54 30 46 45 25 20 15 12.6 12.2 11.7 9.2 8.3 8.1 8.0 10 6.9 6.3 5 0 es y a n m s da ce lia n s t ar n m a n m e g ai te te an bi in tio ai ei ai or ur do la ua at at ra an w na Sp Ch hr ira ira st ra ap bo m sa ra Q St Ku st G ng Fr en Ca Ba iA er Em Em us de ng Au m R, d Ki ht G ud ar xe ite SA Fe Si ec ab ab d D Sa Lu Un ite n Li ao Ar Ar ei ia Un un ac ss d d ite ite Ru Br M Un Un Sources: World Bank staff estimates based on UN Population Division (2017) and OECD (2017), the Australian Bureau Statistics, the German Federal Statistical Office, the UK Office of National Statistics, and the US Census Bureau. See World Bank (2016a) for definitions, data sources, and 2013 estimates. and destination countries. When migrants are measured as reached 18.5 million, surpassing the previous peak of 1992 a share of the population, the top three destinations are the (figure 2.3). (This figure does not include 5.3 million Palestin- United Arab Emirates, Kuwait, and Qatar; in these countries, ian refugees registered by the United Nations Relief and for every adult native person, there are more than eight Works Agency.) Low- and middle-income countries (LMICs) migrant workers (figure 2.2). continued to be the top hosts of refugees in mid-2017. The stock of refugees in EU-28 stabilized at around 1.9 million in The data also show a decline of Mexican emigrants. The 2017. The number of first-time asylum seekers in EU-28 con- number of Mexicans abroad fell from 13.2 million in 2013 tinued to drop, leading a moderate decline in the number of to around 11.9 million in 2017, mostly due to the voluntary pending asylum applications (figure 2.4). return of Mexicans from the United States. According to the Pew Hispanic Center, migration from Mexico to the As of mid-2017, the top host countries for refugees included United States between 2009 and 2014 averaged 870,000 Turkey (3.2 million), Pakistan (1.4 million), Uganda (1.3 mil- annually—a number smaller than returns, which averaged lion), Lebanon (1 million), and Iran (1 million). The top about a million per year (Gonzalez-Barrera 2015). The refugee origin countries were Syria (6 million), Afganistan apprehension rate at the United States’ southern border, (2.6 million), South Sudan (2 million), Somalia (1 million), an indicator of undocumented border crossings, reached a and Sudan (0.7 million) (as per UNHCR data). According to record low in 2016, considering data going back to the 1970s UNHCR, during the first six months of 2017, a significant (Gonzalez-Barrera 2016). increase in refugees was observed in several source countries that included South Sudan (521,967), Syria (468,524), Cen- tral African Republic (77,045), Afghanistan (60,204) and the Democratic Republic of Congo (49,394). The countries that 2.2 Refugee Movements received significantly higher numbers of refugees during the and Forced Displacements same period included Uganda (354,209), Turkey (344,627), Germany (196,791), Sudan (112,637), the Democratic Repub- By mid-2017, the global stock of refugees recorded by the lic of Congo (81,847), and Ethiopia (61,262). United Nations High Commissioner for Refugees (UNHCR) M I G R AT I O N F L O W S 13 FIGURE 2.3  Refugee stock worldwide and in EU-28, 1951–2017 Millions 18 16 World 14 12 10 8 6 4 EU 2 0 11 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99 01 03 05 07 09 13 15 17 20 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 19 20 20 20 20 20 20 20 20 Source: UNHCR 2017. Note: EU = European Union. FIGURE 2.4  First-time and pending asylum applications in the EU-28, 2014–2017 Thousands 1,200 1,000 Pending asylum applications 800 600 400 200 First-time asylum seekers 0 M 14 M 15 M 16 M 17 Ja 4 Ja 5 Ja 6 7 4 5 6 7 Se 4 Se 5 Se 6 Se 7 N 4 N 5 N 6 N 7 14 M 5 M 6 M 7 -1 -1 -1 -1 -1 -1 -1 -1 l-1 l-1 l-1 l-1 1 1 1 1 1 1 1 - - - - p- p- p- p- n- n- n- n- ar ar ar ar ov ov ov ov ay ay ay ay Ju Ju Ju Ju Ja M Source: Eurostat. In South Asia, Bangladesh is facing a rapidly growing to the UNHCR, since 2014, nearly 150,000 Venezuelans have Rohingya refugee crisis. A Joint Response Plan (JRP) for the applied for asylum in other countries. A number of countries Rohingya Humanitarian Crisis was launched by the Inter- in the region have made arrangements outside the asylum national Organization for Migration (IOM) to assist 884,000 system for Venezuelans to reside for an extended period Rohingya refugees (and 336,000 host community members).8 (one to two years), with access to work and social services. These arrangements include temporary residence permits, In Latin America, there is a significant flow of Venezuelans labor migration visas, humanitarian visas, and regional visa into Brazil, Colombia, Peru, and other countries. According agreements. 14 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K TABLE 2.1  Recent forced displacements in Sub-Saharan Africa Region/country New displacements Total forced displacements Main reason Central Africa   Congo, Dem. Rep.  46,000 Conflicts/insecurity Central African Republic 113,000 4,250,000 Conflicts/insecurity Chad 121,325 Conflicts/insecurity Cameroon 342,416 Conflicts/insecurity West Africa   Nigeria .. 1,782,490 Boko Haram Mali  47,706 Conflicts/insecurity Eastern and Southern Africa    South Sudan .. 2,441,244 Conflicts Burundi 175,936 Disasters, political instability Ethiopia .. 1,078,429 Conflicts    528,658 Climate events Mozambique 102,200 Climate events Madagascar  35,000 Climate events Mauritius   3,600 Climate events Source: Data from IOM and UNHCR for December 2017 and January 2018. In 2017, internal displacement increased due to conflict, the global goal of promoting safe, orderly, and regular violent extremism, and climate change–related disasters. In migration. Recently, the Global Knowledge Partnership on Sub-Saharan Africa, the major hotspots included the Central Migration and Development (KNOMAD) released datasets African Republic, the Democratic Republic of Congo, South for the KNOMAD-ILO Migration Costs Surveys (MCS), con- Sudan, and Nigeria (table 2.1). In West Africa, Nigeria saw ducted in partnership with the International Labor Organiza- forced displacements due to insecurity from Boko Haram tion (ILO). Over 5,500 migrants from 19 bilateral corridors and clashes over scarce water resources used by farmers and were interviewed between 2015 and 2017 to systematically herders. Eastern and southern Africa have also witnessed document the costs incurred by workers seeking jobs abroad forced displacements due to climate events such as droughts, and their working conditions in the destination countries.9 tropical depressions, cyclones, and heavy rains. Mozambique, Burundi, Mauritius, and Madagascar were particularly affected The survey data show that the recruitment cost indicator by climate disaster events in the past few months. (RCI)—that is, the worker-paid recruitment costs of securing an overseas job, expressed as a multiple of monthly foreign A new report from the World Bank, Groundswell—Preparing earnings—varies greatly both within and across migration for Internal Climate Migration, warns that over 100 million corridors (see World Bank 2017b). The RCI is particularly high people in Sub-Saharan Africa, South Asia, and Latin America for low-income migrant workers and for those recruited by could be forced to move within their own countries to escape brokers. Also, migrants utilizing broker services tend to bear water scarcity, crop failures, a rise in sea levels, and storm additional expenses—equivalent to over a month’s worth of surges (World Bank 2018c). Possible ways to stem the crisis income earned while abroad. All else equal, migrants incur- include cutting greenhouse gas emissions and embedding ring higher recruitment costs receive less income than what migration into development planning. was contractually promised, are more likely to be paid irregu- larly, and are less likely to be compensated when injured on the job (figure 2.5). 2.3 Recruitment Costs Paid by Low-Skilled While these results are tentative, they suggest a plausible Migrant Workers (SDG Indicator 10.7.1) pattern of exploitation whereby vulnerable migrants experi- ence both higher costs and more adverse working condi- Reducing the recruitment costs borne by employees, SDG tions. Efforts to reduce recruitment costs would require indicator 10.7.1, is an important measure of progress toward M I G R AT I O N F L O W S 15 FIGURE 2.5  Migrant workers who pay high recruitment costs are also likely to be paid irregularly and less than promised Paid promised salary Paid regularly 2,500 2,500 Recruitment costs (USD) 2,000 Recruitment costs (USD) 2,000 1,500 1,500 1,000 1,000 500 500 0 0 Yes No Yes No Source: World Bank staff estimates using KNOMAD-ILO Migration Costs Surveys (2015–16). better monitoring of recruitment agents (or subagents) and knowledge by analyzing data, and then building capac- allowing direct recruitment by certified, bona fide overseas ity, both financial and technical. Some others—such as employers. those related to migrant rights and return migration—will be debated. In particular, many countries may hesitate to cooperate with host countries in the return, readmission, and reintegration of migrants. 2.4 Global Compact on Migration Missing from the GCM—perhaps because they relate to Negotiations on the Global Compact on Migration (GCM) nonmigrants—are three themes that are critical to successful are in full swing, with a third round concluded on April 6, migration policy making. These are, in descending order of 2018. Negotiations will continue until July 2018. The Inter- difficulty, the challenges of maintaining national identity in governmental Conference to Adopt the Global Compact for the face of large immigration flows, perceived (or actual) job Safe, Orderly, and Regular Migration will be held in Morocco competition impacting native workers in host countries, and on December 10 and 11, 2018. the difficulties faced by migrants’ family members left behind in countries of origin (Ratha 2017). There are no simple Building on the New York Declaration for Refugees and answers, but these challenges should be acknowledged Migrants, and extensive consultations with all stakeholders, in the GCM, especially considering that they are likely to the GCM lists 22 objectives for the achievement of safe, become even more difficult in the coming decades. orderly, and regular migration along the migration cycle (box 2.1).10 These objectives are comprehensive in their In terms of implementation, the GCM proposes to repurpose coverage of the range of issues and stakeholders involved: and rename the High-Level Dialogue on International Migra- focusing on migrants’ well-being, progressing toward the tion and Development as the International Migration Review migration-related SDGs of reducing remittance and recruit- Forum (IMRF). The IMRF would convene in 2022, 2026, and ment costs, and improving policies and public perceptions 2030. Various existing global and regional forums and pro- based on data analysis, addressing adverse drivers of migra- cesses would contribute to the preparation of the IMRF. The tion, and improving migration’s impacts on both host and GCM calls on the IOM and various international agencies origin countries. The GCM also considers migration induced within and outside the UN to contribute data and knowledge by environmental change, especially displacement due to to shape the IMRF. natural disasters. The IMRF would benefit from establishing a formal review Many of these objectives—such as those to collect data mechanism similar to the G-20 Mutual Assessment Process and shape policy based on evidence and the evaluation (MAP). Through this process, G-20 countries identify objec- of past policy—are noncontroversial; the main challenges tives for the global economy, the policies needed to reach would relate to collecting relevant and reliable data, creating 16 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K BOX 2.1  Objectives for safe, orderly, and regular migration • Collect and utilize accurate and disaggregated data as a basis for evidence-based policies • Minimize the adverse drivers and structural factors that compel people to leave their country of origin • Provide adequate and timely information at all stages of migration • Provide all migrants with proof of legal identity, and proper identification and documentation • Enhance availability and flexibility of pathways for regular migration • Facilitate fair and ethical recruitment and safeguard conditions that ensure decent work • Address and reduce vulnerabilities in migration • Save lives and establish coordinated international efforts on missing migrants • Strengthen the transnational response to smuggling of migrants • Prevent and combat trafficking of persons in the context of international migration • Manage borders in an integrated, secure, and coordinated manner • Strengthen certainty and predictability in migration procedures • Use migration detention only as a measure of last resort and work toward alternatives • Enhance consular protection, assistance, and cooperation throughout the migration cycle • Provide access to basic services for migrants • Empower migrants and societies to realize full inclusion and social cohesion • Eliminate all forms of discrimination and promote fact-based public discourse to shape perceptions of migration • Invest in skills development and facilitate recognition of skills, qualifications, and competences • Create conditions for migrants and diasporas to fully contribute to sustainable development in all countries • Promote faster, safer, and cheaper transfer of remittances and foster financial inclusion of migrants • Cooperate in facilitating dignified and sustainable return, readmission, and reintegration • Establish mechanisms for the portability of social security entitlements and earned benefits Source: Global Compact on Migration, revised draft March 26, 2018. these shared objectives, and progress toward the objec- and categorizing them by their relevance to each GCM tives.11 At the request of the G-20, the International Monetary objective is an essential next step. Operationalizing the GCM Fund (in collaboration with the World Bank) provides techni- will also involve mapping institutions and their missions and cal analysis to evaluate key imbalances and how members’ capabilities. The Experts Meeting on the Global Compact policies fit together—and whether, collectively, they can on Migration, convened by KNOMAD in June 2017, made a achieve the G-20 goals. small contribution on this front (box 2.2). Currently, the UN Special Representative of the Secretary-General (SRSG) is The World Bank Group, through KNOMAD and the Global undertaking an exercise to map the missions and capabilities Remittances Working Group (GRWG), stands ready, on a of Global Migration Group agencies. demand basis, to contribute data and knowledge to the IMRF, as well as support the review, evaluation, and for- The GCM does not clearly mention how its implementation mulation of policy.12 Even though the GCM is nonbinding, would be financed. Many countries hosting migrants are its chances of success would improve if its objectives were likely to welcome financial assistance through a mechanism formalized on the basis of existing international, regional, similar to the Global Concessional Financing Facility cre- and bilateral agreements. Taking stock of such agreements ated to assist countries hosting refugees.13 However, such M I G R AT I O N F L O W S 17 BOX 2.2  KNOMAD experts meeting on the Global Compact on Migration, 2017 Published in April 2017, the Migration and Development Brief 27 suggested that, in light of negotiations on the Global Com- pact on Migration (GCM), the global community needs to: • Identify thematic priorities; • Suggest an institutional architecture to support the GCM, by mapping the current institutional arrangements and clarifying the missions of key organizations and how their work programs and budget allocations are aligned with those missions; and • Develop a normative framework, or guidelines, for governments and international organizations, building on existing global conventions and regional and bilateral agreements that address migration (see World Bank 2017a). In June 2017, KNOMAD brought together a small group of global migration experts to provide a concrete vision for the GCM from a global development perspective. Notes and papers prepared by experts addressed specific policy priorities; examined existing conventions, guidelines, practices, and databases; and identified gaps. They also addressed questions regarding operational architecture: Which actors must be strengthened to take responsibility for safe, orderly, regular, and responsible migration and mobility—and at which levels (global, regional, national, or subnational)? What kind of administrative structure is needed (linked to the question of leadership and lead organization)? What kind of technical capacity building might be needed to achieve safe, orderly, and regular migration and mobility? How can/should institutions and activities be financed? How should commitments under the GCM be monitored? Finally, these notes attempt to explore any overlap between the GCM and the Global Compact on Refugees in the context of mixed flows of refugees and migrants. Sources: World Bank (2017a); KNOMAD (2017). financing should be additional, not a diversion from existing 2.5 Global Compact on Refugees development programs. A controversial question, not explic- itly mentioned but indirectly implied in the GCM, relates to Formal consultations on the draft of the Global Compact the concept of achieving codevelopment (that is, the mutual on Refugees (GCR) are taking place between February and benefit of both migrant-sending and -receiving nations) July 2018. The final draft will be included in the High Com- through “conditionalities.” As mentioned earlier, a coopera- missioner’s 2018 annual report to the General Assembly.14 tion framework that links readmission and reintegration of Unlike the GCM, the GCR has standards, foundations, legal return migrants to aid, trade, and investment policies may frameworks, operational knowledge, and a lead implement- not be sustainable in countries with high unemployment. ing agency (the UNHCR) already in place. The GCR, as devel- oped in consultation with governments and stakeholders, will The working-age population in LMICs is projected to consist of two parts: the Comprehensive Refugee Response increase by over 2 billion by 2050 (according to UN popula- Framework (CRRF), and a Program of Action.15 The CRRF will tion projections), while employment levels (according to have four pillars: (i) reception and admission, (ii) support for ILO projections) are likely to fall short of this number by immediate and ongoing needs, (iii) support for host countries over 800 million (see World Bank 2016b). This shortfall is an and communities, and (iv) durable solutions. The Program of indicator of growing migration pressures in the next three Action will provide mechanisms for accomplishing the CRRF’s decades. If the GCM were to acknowledge the possibility goals; it will not impose any new obligations on states. that the flow of migration could accelerate by a significantly higher rate than currently anticipated, this would allow some The GCR proposes the establishment of stronger mecha- contingency framework for response, and also spur a search nisms for burden and responsibility sharing, including global for innovative solutions to the challenge of managing large summits at which states will make formal commitments and and unexpected movements of people. At the very least, to global support platforms for specific refugee situations. The acknowledge the enormity of the risk would lend a greater UNHCR-World Bank Group Joint Data Center could under- sense of urgency to member states’ adoption and implemen- take the measurement of the costs and impacts of hosting tation of the GCM. 18 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K refugees to inform such mechanisms. The GCR will be While the specific refugee focus of well-established norms governed by the 1951 Geneva Convention, its 1967 Protocol, and governance mechanisms has many benefits, the rather regional instruments, the principle of non-refoulement, and strict separation of the GCR from the GCM leaves a gap article 14 of the Universal Declaration of Human Rights. The in addressing the complex reality of mixed migration. A implementation of the GCR will include the specification of more comprehensive approach could include addressing measures to accomplish key objectives related to refugees’ the adverse drivers of migration; integrated border man- reception and admission, and international financial assis- agement; the special needs of vulnerable groups, such as tance to hosting states (particularly in the areas of education, women and children during journeys over sea or land; and health, and livelihoods). The GCR will focus on preven- reception and integration issues (World Bank 2017a). tion, including ways to address the root causes of refugee movements. 3. Special Topic: Transit Migration 3.1 Not All Transit Migrants Want to routes to track movements, estimate numbers, and collect impressions.16 Migrate to Europe or the United States Available data and reports indicate that the major transit Transit migration—the temporary stay of migrants in a coun- routes in the world are Sub-Saharan Africa–North Africa– try that is not their final, intended destination (and distinct Europe; West Asia/South Asia–Turkey–Europe; Central from stopovers during personal or business travel)—is a little America–Mexico–United States; West Asia–Thailand/ understood element of the migration cycle. Yet the recent Malaysia/–Indonesia–Australia (figure 3.1). refugee and migrant crisis in Europe drew increased policy attention to the topic. Many asylum seekers and migrants There is a common perception that most trans-Saharan seeking entry into Europe, North America, or Australia do migrants in the Maghreb (comprising the North African not arrive directly from their home countries; they transit nations of Algeria, Libya, Mauritania, Morocco, and Tunisia) through other countries (for example, Costa Rica, Ethiopia, are in transit to Europe (IOM 2006, 2016; Smith 2014; Molenaar Indonesia, Libya, Mexico, Morocco, Niger, Panama, Sudan, and Kamouni-Janssen 2017). However, according to Molenaar and Turkey). Basic data on transit migration are not easily and Kamouni-Janssen (2017), the majority of migrants travel- available, and, consequently, policy formulation remains ling the trans-Saharan route report Algeria or Libya as their ad hoc. The objective of this section is to briefly survey the final destination. This may carry an element of truth, because, literature and available data to offer a basic overview of the for almost half a century, people could travel freely from Sub- drivers and impacts of transit migration, along with prelimi- Saharan Africa to the Maghreb (see box 4.1) (Brachet 2018; De nary policy options. It covers migrants, asylum seekers, and Haas 2006). According to Smith (2014), in recent years, greater refugees who transit, and implications for countries of transit, numbers of West African migrants appear to be seeking origin, and final destination. opportunities in emerging economies on the continent (such as in Angola, Equatorial Guinea, and Côte d’Ivoire) rather than Of the scarce data available on transit migrants, that of taking the risk of crossing to Europe. border control agencies, such as Frontex, collected from an enforcement perspective, lack the details needed for the According to a survey of temporary refugees from South analysis of drivers and impacts. Importantly, border control Sudan, Somalia, Eritrea, and Sudan living in Sub-Saharan agencies tend to focus on routes of undocumented migra- Africa, only a quarter desired to go to Europe or the United tion, and as such, their data could lead to a mistaken infer- States. About 46 percent wanted to stay in their current ence that most transit migrants are undocumented. Frontex country of refuge, and about 28 percent sought to return data show that during 2009–17, undocumented transit to their country of origin (figure 3.2). In recent International migrants constituted only around 6 percent of all migrants Organization for Migration (IOM) and United Nations High coming into Europe. But the share of transit migrants among Commissioner for Refugees (UNHCR) surveys, too, only the undocumented migrants detected is 95 percent on about 20–35 percent of Sub-Saharan African migrants named average and as high as 99.6 percent for the Eastern Mediter- Europe as their final destination. ranean route. Static surveys of migrants at strategic points along known migratory routes are better at avoiding such In the survey of temporary refugees mentioned earlier, the mistakes and providing more analytical details, but few such percentage of those wanting to move to North America and surveys exist. A less onerous alternative is flow monitoring Europe varied by country of origin. Two-thirds of refugees data that use short questionnaires to collect data along 19 20 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K FIGURE 3.1  Major transit migration routes, 2014–17 Transit Routes Transit Migration Countries: IBRD 43606 | APRIL 2018 Origin This map was produced by the Cartography Unit of the World Bank Group. The Transit boundaries, colors, denominations and any other information shown on this map do not imply, on the part of the World Bank Group, Destination any judgment on the legal status of any territory, or any endorsement or acceptance Major Destination of such boundaries. Source: World Bank staff compilation based on data and surveys from Frontex, IOM, and the Mixed Migration Monitoring Mechanism Initiative (4Mi), supplemented by information from academic sources mentioned in the text. FIGURE 3.2  The intended next moves of temporary and migrants from Eritrea wanted to move to the United refugees in Sub-Saharan Africa States, Canada, and Europe and only 6 percent eventually Middle East, 0% hoped to return to their country of origin. By contrast, only one in ten respondents from South Sudan wanted to go to Europe, 8% the United States, Canada, and Europe, while 29 percent wanted to return. The desire to move to a new country (from the transit country) and not return home was linked to con- flict and fragility back home. Persons from states where fragil- Return, 28% US/Canada, 17% ity and governance and human rights issues had persisted over time were more likely to have a faraway destination than those displaced by short-term events.17 Transit migration is not a new phenomenon in Latin America, Other country Remain in current or not speci ed although it has become more prominent in public debates country, 46% country, 1% since 2013 when large inflows of unaccompanied children arrived in the United States through Mexico. In South Asia, Pakistan is a major transit country for Afghans. Both Afghan and Pakistani transit migrants tend to stop in Turkey on their way to Europe (IOM 2016). In the East Asia and Pacific region, Source: World Bank staff estimates using survey data from Sub-Saharan Africa. Indonesia, Thailand, and Malaysia are hosts to significant S P E C I A L T O P I C : T R A N S I T M I G R AT I O N 21 numbers of transit migrants. Thailand and Malaysia are also to enforce border controls and the return and deportation important destination countries.18 of transit migrants, with increased coordination between Mexico and Central American governments (Animal Político The costs of transit migration can be very high for migrants, 2014; Hiskey et al. 2016). 20 This was followed by a drop in especially those who employ the services of human smug- the numbers of Central American migrants crossing the glers. About 80 percent of recent crossings of the Mediterra- ­ U.S.-Mexico border. Instead of helping to manage migration, nean Sea from Africa were facilitated by smugglers (Reitano however, this regulation has encouraged smuggling, traffick- et al. 2014). Criminal networks involved in migrant smuggling ing, and the exploitation of migrant farmers (Rojas 2017). It to and within the European Union are estimated to have has also meant that many transit migrants remain in Mexico had a turnover of €3–6 billion in 2015 alone (Europol 2016). for longer than they otherwise intended. A World Bank survey found that asylum seekers in Italy and Greece traveled through one of three main migration cor- ridors, going through, on average, three transit points, and 3.2 Drivers: Transit, Because Direct spending roughly 26 days in each (World Bank 2018d).19 They paid a median amount of $1,863 per person (figure 3.3). A Passage to Final Destination Is Not significant share—43 percent—of those who travelled to Italy Possible and 17 percent of those who travelled to Greece also worked during transit. Many (for example, along the Tripoli/Agadez Transit migration is driven by the same push and pull fac- route) did unpaid work. The asylum seekers, particularly West tors that drive voluntary or forced migration. Only, transit Africans, endured other, nonmonetary costs: 46 percent of migrants must journey through intermediary countries—and survey respondents in Italy reported experiencing violence possibly stop in them, if blocked or slowed by immigra- during the journey. Anecdotally, asylum seekers pay between tion and border controls in the final destination country. $5,000 to $10,000 to smugglers to facilitate entry into Indone- The increase in, for example, the transit migration of North sia, en route to Australia (Hugo et al. 2014). Africans to Europe can be traced to the imposition of visa restrictions in some European countries in the early 1990s. Migrants from Central America crossing to Mexico face Maghrebians who were once welcomed by European labor similar challenges. In 2014, the program Frontera Sur started recruiters continued to seek entry into Europe, but now by FIGURE 3.3  Payment for the journey by route (in U.S. dollar terms) US$ 6,000 5,000 4,000 3,000 2,000 1,000 0 Payment for all family Payment per person Tripoli/Agadez Tripoli/Khartoum Other Italy Transit through Izmir Other Greece Source: World Bank 2018d. Note: The data were collected through a World Bank–led individual-level survey covering a representative sample of the adult population in asylum centers in Italy and Greece between January and May 2017. Through a two-stage stratified sample, the survey collected information from 2,446 (2,070 males and 287 females) respondents in Italy from the top nationalities of arrival at the time: Nigeria, the Gambia, Senegal, Eritrea, Mali, Côte d’Ivoire, Guinea, Somalia, and Sudan. Similarly, for Greece, it included 1,681 (1,101 males and 579 females) asylum seekers from Syria, Afghanistan, and Iraq. 22 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K illegally crossing the Mediterranean Sea (IOM 2006). Their Transit migration is driven by the same push factors that numbers grew as unemployment in North Africa increased. drive most migration in general: poverty and unemployment, Since about 2000, Sub-Saharan African migrants have been inequality, conflict, violence and general insecurity, environ- using the route, too, and in growing numbers. Countries mental degradation, and natural disasters. Data gathered surrounding the European Union have become transit from the Horn of Africa by the 4Mi initiative indicate that lack points amid decreasing possibilities for the legal immigra- of rights and violence are greater push factors than eco- tion of low-skilled workers to Europe. Before joining the nomic reasons (figure 3.4). Among pull factors, better living European Union, the Czech Republic, Poland, and Hungary standards and employment are significant but so is freedom were important transit countries. Today, Turkey, Ukraine, from oppression (figure 3.5). Similar findings are evident from and Moldova are important transit countries for migrants other surveys including those analyzed in IOM (2018a) and from the east and Morocco, Libya, and Egypt for migrants World Bank (2018d). from the south (Djaji´c 2017). Similarly, in 2014 Mexico started enforcing border controls through the program Frontera Sur to manage migration from Central America (Hiskey et al., 3.3 Impacts: A Global Loss 2016). Costa Rica, Peru, Ecuador, Bolivia, and Panama have recently emerged as transit countries. An Australian crack- The literature is silent on the impacts of transit migration on down appears to have led to growing numbers of refugees the migrants themselves; the families they leave behind; and and asylum seekers in Indonesia.21 the origin, transit, and final destination countries. Arguably, transit migration creates a few winners, largely brokers and The transit country is often chosen based on the relative smugglers. For the migrant, transit migration may provide ease of entering the country legally or illegally, and the ease the opportunity to escape poverty, conflict, or persecution. of crossing the border to the final destination country by Sometimes, the migrant may work in the transit country obtaining a proper visa (“document shopping”) or illegally to pay for onward travel. However, any protracted transit with the help of smugglers. The latter is easier in countries through a third country can only increase costs and suffering, suffering from conflict or weak governance. FIGURE 3.4  Push factors driving transit migrants from origin countries Percent of respondents 60 50 40 30 20 10 0 Lack of rights Violence and general insecurity Economic reasons Lack of social services Personal and/or family reasons Everybody around me was leaving Environmental and natural disaster Other Refused Source: Mixed Migration Monitoring Mechanism Initiative (4Mi) data (http://4mi.regionalmms.org). Note: “Refused” indicates surveys respondents’ refusal to respond. S P E C I A L T O P I C : T R A N S I T M I G R AT I O N 23 FIGURE 3.5  Pull factors that attract transit migrants to intended destinations Percent of respondents 60 50 40 30 20 10 0 Generally better living standards Better chances of getting a job Freedom from oppression Personal freedom Access to (better) education Access to (better) medical care Good social welfare system Reunite with my family Better chances of nding a partner Source: Mixed Migration Monitoring Mechanism Initiative (4Mi) data (http://4mi.regionalmms.org). Note: “Refused” indicates surveys respondents’ refusal to respond. compared with the alternative of migrating directly to the 3.4 Policy Responses: Respect the final destination. And if the transit countries include unsafe territories, migrants are left vulnerable to theft, sexual and Human Rights of Transit Migrants economic exploitation, slavery, and violence.22 Addressing the adverse drivers of transit migration would Transit migrants generally do not send remittances home; involve policy efforts to create economic opportunities and instead, they may seek financial help from home, receiving reduce conflict and fragility in the origin countries. Also, remittances instead.23 Local economies in the transit coun- opening more legal channels for migration to destination try may benefit from selling services to migrants. But local countries would help reduce stays in transit countries. Efforts workers may also face competition for (low-skilled) jobs. to control transit migration are likely to be most effective Unlawful activities, including those perpetrated by human when they involve collaboration among the origin country, smugglers and traffickers, may increase. The transit country the transit country, and the final destination country. may sometimes negotiate financial assistance from the final destination countries (e.g., the agreement between Turkey At times, however, such collaborations can lead to unantici- and the EU) to control the onward migration of third country pated consequences. Among members of the Economic nationals, but it is unlikely that the financial assistance fully Community of West African States (ECOWAS) for instance, compensates for the full cost of providing health and public an EU action to control migration from transit countries is services to transit migrants. Thus, from the perspective of undermining an ECOWAS free movement protocol.24 It is the transit country, transit migration puts pressure on already necessary to harmonize interventions in transit countries with limited public resources and may put stress on its relations existing regional protocols on the free movement of people with neighboring and other countries. From the perspective across countries, and make a clear distinction between intra- of the final destination country, transit migration might slow regional migration and migration to other places. down the arrival, but can also erode that country’s ability to control its national borders, at significant financial and repu- The criminalization of transit migrants may not only lead tational costs. to incarceration or exploitation by officials, employers, and 24 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K smugglers, but also to the prolonged stay of migrants. Alge- For their part, origin countries need to empower embassies/ ria and Tunisia, for example, criminalize irregular entry, stay, consulates in transit countries to deal with the issues of pro- and exit. Tunisia imposes a fine of 20 Tunisian dinars (around viding identification and protection to nationals, and allow- $8) to be paid for every week of illegal stay.25 The fine may ing their organized return. Multilateral agencies can help the prevent migrants who cannot pay from leaving Tunisia (Terre global community through the collection of data and also d’Asile Tunisie 2016). analytical and technical assistance. They can act as honest brokers to facilitate collaboration among all concerned par- Respecting the human rights of transit migrants remains a ties. Importantly, multilateral development banks can provide policy priority. In situations where transit migrants stay on for concessional financing to transit countries through innova- protracted periods, there may be a need to provide access tive financing solutions, such as the Global Concessional to education and health services, as well as to labor markets. Financing Facility for refugees (mentioned earlier). They can From time to time, there may be a need for the regulariza- also help address adverse drivers of transit migration through tion of irregular migrants. (For instance, Morocco recently diagnostics and financial assistance. conducted its second such regularization campaign.)26 4. Regional Trends in Migration and Remittance Flows 4.1 Remittances to East Asia from other key migrant destinations, particularly the United States and countries in the Middle East.  and the Pacific Rebounded in 2017 Remittance costs. The costs of sending remittances to the Remittance trends. Formal remittances to the East Asia and East Asia and Pacific region fell in the first quarter of 2018 to Pacific region rebounded by a healthy 5.8 percent in 2017, the lowest level documented over the past four years. The reversing their decline of 2.6 percent in 2016. In 2018 and cost of sending $200 averaged 7.6 percent in the first quarter 2019, growth of 3.8 percent and 3.6 percent is expected, of 2018. Remittance costs to the Pacific Islands averaged in respectively. the double digits, particularly for transfers from Australian and New Zealand banks. A World Bank report on Australia’s Remittances to the Philippines are expected to grow by Seasonal Worker Programme for Pacific Island nationals 5.3 percent between 2016 and 2017, to reach $32.6 billion, up found that nearly all workers in the program relied on Western from the 4.5 percent growth seen between 2015 and 2016. Union to remit, despite large cost differences between it and The impact on remittance inflows of a recent ban on deploy- the lowest cost option.27 The five lowest cost corridors in the ing Filipino workers to Kuwait is likely to be muted, given the region averaged 2.8 percent while the five highest cost cor- country’s relatively small exposure to the Gulf Cooperation ridors averaged 16.6 percent as of the fourth quarter of 2017. Council (GCC) country. After falling by almost 8.0 percent in 2016, remittance flows to Indonesia remained largely flat in Migration trends. A recent crackdown on illegal migrant work- 2017, at around $9 billion, growing at an annual rate of 1.2 ers in Thailand and Malaysia, initiated in 2017, has left local percent. Stronger growth in personal transfers from South- employers feeling the pinch.28 Thailand extended a January east Asian countries helped offset declining remittance flows FIGURE 4.1  China stands out as the top remittance recipient in the East Asia and Pacific region, 2017 (US$ billion, 2017) (Percentage of GDP, 2017) 63.9 33.4 32.8 16.9 14.8 10.8 10.2 9.9 13.8 7.3 6.4 9.0 6.7 3.1 2.5 1.6 0.7 0.4 0.3 0.1 ia lia a ga ar a m m a oa i nd e sia u sia . es es at s ts di ng in l t al nd a a nm go go es n m rib in in .S la ay ne bo tn Ch tn v To To Tu a pp pp -L Sa ai on on ya e e al ed Ki do Isl m Th Vi or Vi M ili ili M M M Ca ,F In ll m Ph Ph a sia Ti sh ar ne M ro ic M Sources: IMF; World Development Indicators; World Bank staff estimates. 25 26 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K FIGURE 4.2  There is considerable variation in the costs of sending remittances to the East Asia and Pacific region Percent 5 highest cost corridors 20 16 12 5 lowest cost corridors 8 4 0 Malaysia Singapore Malaysia Kuwait Canada Thailand Thailand Spain Thailand South to to to to to to to to to Africa to Myanmar Philippines Philippines Philippines Philippines Indonesia Vietnam China China China 2016 Q4 2017 Q4 Source: World Bank staff estimates using the Remittance Price Worldwide Database. 2018 deadline to register undocumented migrant w ­ orkers— manufacturing sector, with the rest in the farming, fish- under a controversial new law enacted in June 2017—to the ing, construction, and service sectors. Demand for migrant end of June 2018. The cabinet is also softening its stance by workers continues to increase, especially from small and drafting an amendment to reduce the law’s harsh penalties medium enterprises (SMEs). The country’s rapidly aging for employers and illegal workers.29 The 2017 annual report population and labor shortages have contributed to the of Malaysia’s central bank supported the reimposition of a growing demand for foreign workers. Yet, public opinion of foreign worker levy on employers (starting January 2018) and the admission of low-skilled migrant workers has become called for additional reforms to the levy system to reduce more negative in recent years amid concerns over workers’ native–foreign wage gaps, and endorsed higher levies for living and workplace conditions, and possible overstays.30 industries more dependent on foreign workers. In response, the Korean government has rolled out plans to improve the enforcement of regulations and enhance In Taiwan, China, in 2017, the number of undocumented services for EPS workers, including those that facilitate their migrant workers reached a low of 18,209, or 2.7 percent of timely departure. the migrant worker population. The economy’s Ministry of Labor attributes this fall—unprecedented since 2003—to an amendment of the Employment Services Act that removed 4.2 Remittances to Europe and Central a requirement that workers leave the territory every three years, as well as government efforts to go after undocu- Asia Grew Rapidly in 2017 mented workers. The Republic of Korea plans to admit 56,000 low-skilled foreign workers on a temporary basis Remittance trends. After three consecutive years of decline, under the Employment Permit System (EPS) in 2018. Over remittances sent to Europe and Central Asia (ECA) are esti- three-quarters of those admitted will be deployed in the mated to rise by 20.9 percent in 2017 compared with 2016. R E G I O N A L T R E N D S I N M I G R AT I O N A N D R E M I T TA N C E F L O W S 27 FIGURE 4.3  Remittances to Europe and Central Asia bounced back in 2017 (US$ billion, 2017) (Percentage of GDP, 2017) 8.0 7.9 35.2 30.7 4.9 20.6 3.6 16.7 13.9 2.8 11.8 11.5 10.6 2.5 2.2 2.2 9.7 2.0 1.8 9.1 ia n ne ia ia an ic ia na ia yz an va vo ia an na a o ia ni tio gr bl en rg an rb ar rg rb rg do st ist vi ist so vi ai ba ne pu lg eo Se eo Se ra go go m ki r m Ky ik jik Ko ol Uk Al Bu be de te Ro Ar Re aj G G ze ze M Ta T on Uz Fe er er yz M H H rg n ia d d Ky ss an an Ru ia ia sn sn Bo Bo Sources: IMF; World Development Indicators; World Bank staff estimates. The two largest remittance recipients in the ECA region in average. The average costs of sending remittances from Rus- 2017, Ukraine and the Russian Federation, saw robust growth sia decreased from 2.1 to 1.7 percent in the fourth quarter of in remittance inflows (28 percent and 20 percent, respectively, 2017 (both notably lower than the Sustainable Development in 2017 over 2016). Key reasons are the appreciation of the Goal (SDG) target of 3 percent). Russia is the least expensive euro and ruble against the dollar as well as a low base fol- G-8 and G-20 sending country and features in all the lowest lowing a nearly 22 percent decline in 2015 alone. Additional cost corridors in the ECA region (see figure 4.4). factors are stronger growth and employment prospects in source countries: output expanded by 1.7 percent and infla- Migration trends. Until September 2017, net migration to the tion declined notably in Russia, while recovery in Kazakhstan United Kingdom from other EU countries declined to 90,000 continued, and growth and employment picked up in the (putting it under 100,000 for the first time since 2013, accord- euro area economies since late 2016. Some ECA countries ing to the Office for National Statistics), while non-EU net are strongly dependent on remittances, which make up over migration increased to 205,000, mainly due to an increase in 100 percent of international reserves in Tajikistan, the Kyrgyz students from Asia.31 Republic, and Kosovo (figure 4.3). The number of illegal border crossings into the European The outlook for 2018–19 is positive, but remittance growth Union continued to decline in 2017 to 204,734, a significant is projected to be moderate due to stable gross domestic drop from the 282,933 crossings registered in 2014. This is product (GDP) growth in the euro area, Russia, and Kazakh- mainly due to a reduction in crossings along the Eastern stan. The ruble-dollar exchange rate remains a crucial factor Mediterranean via Greece and the Western Balkan routes, influencing the outlook. and also into Italy. Arrivals in Spain, however, more than dou- bled in 2017, reaching 23,564, but remained low compared Remittance costs. The average cost of sending $200 to with arrivals in Italy (118,962) and Greece (42,319). Discussions the ECA region increased slightly to 6.6 percent in the last within the European Union about responsibility and burden quarter of 2017, while the global average declined to 7.1 per- sharing for refugees and an overhaul of the Dublin system cent. If Russia is excluded, sending money to ECA costs are ongoing.32 7.2 percent of the amount sent, somewhat above the global 28 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K FIGURE 4.4  Russia is the least expensive country from which to send money in ECA Percent 12 5 highest cost corridors 10 8 6 5 lowest cost corridors 4 2 0 Russia Russia Russia Russia Russia United Germany United Czech Turkey to to to to to Kingdom to Kingdom Republic to Azerbaijan Kazakhstan Kyrgyz Moldova Uzbekistan to Kyrgyz to to Bulgaria Republic Bulgaria Republic Albania Ukraine 2016 Q4 2017 Q4 Source: World Bank staff estimates using the Remittance Price Worldwide Database. 4.3 Remittances Flows into Latin The robust growth of remittance flows to Latin America in 2017 was observed across the region, including in Mexico America and the Caribbean Are Strong (6.6 percent), El Salvador (9.7 percent), Colombia (15 per- and Continue to Rise cent), Guatemala (14.3), Honduras (12), Nicaragua (10 per- cent), and the Dominican Republic (12.4 percent).33 The Remittance trends. Remittance flows into Latin American pickup in growth was broad based, with a notable increase in and the Caribbean (LAC) increased by 8.6 percent in 2017, remittances from the United States and Spain. Many coun- reaching a record high of $80 billion. Recent trends in the tries in Central America, near the Andean region, and in the United States and the world economy were good news, and Caribbean would have suffered a current account deficit it is expected the momentum will continue in 2018. Growth is were it not for remittance inflows. expected to decelerate somewhat in 2019 owing to changes in migration policies in the United States. In 2017, intra-regional remittances also grew in the region. Outward remittance flows from Argentina (to Bolivia, Para- There are several specific factors behind the increase in guay, and Peru), Chile (to Bolivia and Peru), Costa Rica (to remittances to LAC in 2017; these include (i) positive eco- Nicaragua), and Ecuador (to Colombia and Peru) increased. nomic growth in the United States; (ii) a 17-year low unem- Remittance flows from Argentina to Paraguay surpassed ployment rate in that country, at 4.1 percent for all Americans flows from the United States due to the elimination of foreign and 4.9 percent for specifically Hispanics; and (iii) tighter exchange controls. enforcement of immigration rules in the United States, which prompted migrants to send home their savings in anticipa- In 2018, higher growth in the United States will most likely tion of deportation. continue to have a positive impact on remittance flows R E G I O N A L T R E N D S I N M I G R AT I O N A N D R E M I T TA N C E F L O W S 29 FIGURE 4.5  Remittance inflows to Latin America and the Caribbean showed robust growth in 2017 (US$ billion, 2017) (Percentage of GDP, 2017) 30.6 29.4 19.1 18.4 17.6 12.1 10.2 9.6 8.5 8.3 7.7 6.2 5.6 5.1 5.1 4.3 3.0 2.8 2.7 2.5 o a Co lic a or s ru r il ca ti s r ca a a a ic a s do do ra ra ne az al bi al gu ic an ai ic bl Pe ad b ai ai in m m du du ex H m Br di ua a pu u uy ra m m om lv lv te te p lo M na on on a Ja Ja Ec G Re e Sa Sa ua ua ic R re D H H N G G El El n an G a ic ic e in in th om om d an D D nt ce in .V St Sources: IMF; World Development Indicators; World Bank staff estimates. to Mexico, Central America, and South America. This is Mexico and Central America (partly due to the increased U.S. reflected in the H1-B visa applications for FY19, which immigration enforcement mentioned earlier); (ii) large flows reached the 65,000 global cap, including the 20,000 cap for of Venezuelans into neighboring countries; and (iii) increasing master’s degree holders by April 6, 2018.34 Growth in the flows of migrants from Haiti and the Dominican Republic into U.S. labor market will also continue to support remittance Chile. inflows, as will forecasted growth in Italy and Spain, which are also major sources of remittances to LAC. Given the large flow of Venezuelans crossing into Brazil and Colombia, both countries have implemented new measures Remittance costs. The average cost of sending money to to ensure more orderly migration from Venezuela.35 In Febru- LAC was 5.9 percent in the first quarter of 2018, up from ary, Colombia introduced a special passport for Venezuelans, 5.8 percent recorded in the previous quarter, according who may register for a special residency permit (Permiso to Remittance Prices Worldwide (RPW) data. The average Especial de Permanencia).36 Peru provides Venezuelans with cost of sending money from the United States, where most a Temporary Permit of Residency that allows them to work LAC migrants reside, was 5.8 percent in the fourth quarter, and pay taxes.37 significantly below the global average of 7.1 percent but well above the SDG target of 3 percent. The cost of send- The number of visas requested by Haitians for entry into ing money to LAC has stayed stagnant over the past few Chile more than tripled from 8,419 in 2015 to 35,277 in 2016.38 years. However, sending money from Canada to the Carib- Since 2010, Chile has also become the third largest country bean countries, from Japan to Brazil, and from the United of destination for labor migrants from the Dominican Repub- States to Cuba is above 10 percent. Despite the technologi- lic, after the United States and Spain.39 cal advances, remittances remain expensive, especially for countries in the Caribbean. This is due to de-risking and the closing of correspondent bank accounts and anti-money 4.4 Remittances to the Middle East laundering and countering the financing of terrorism (AML/ CFT) regulations that are impacting remittance service pro- and North Africa Bounced Back in 2017 viders. Also, continued de-risking in the banking sector could reverse the region’s downward trend in transfer costs. Remittance trends. Remittances to the Middle East and North Africa (MENA) region are estimated to have grown by Migration trends. New international migration patterns about 9 percent in 2017, after two years of decline. The high are emerging in LAC; these include (i) return migration to growth rate is driven by a rapid increase in remittances to 30 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K FIGURE 4.6  The five most and least expensive remittance corridors in North America and LAC Percent 14 5 highest cost corridors 12 10 5 lowest cost corridors 8 6 4 2 0 Costa Rica Spain United Spain United Canada Canada Canada Japan United to to States to States to to to to States Nicaragua Honduras to Brazil to Jamaica Guyana Haiti Brazil to Ecuador Honduras Cuba 2016 Q4 2017 Q4 Source: World Bank staff estimates using the Remittance Price Worldwide Database. Note: LAC = Latin America and the Caribbean. Egypt. After Egypt floated its currency in November 2016, draft law to impose taxes on the remittances of foreigners exchange rate expectations became more stable, the official living in Kuwait. Cuts in subsidies, increases in various fees, exchange rate converged with that of the informal market, and the introduction of a value added tax (VAT) of 5 percent and the Central Bank hiked interest rates twice in 2017. in Saudi Arabia and the United Arab Emirates also increased Improved economic and employment growth in Europe, the cost of living for expatriate workers. This may dampen as well as the depreciation of the dollar against the euro, remittances. increased remittances to the Maghreb in 2017 (Morocco by 5 percent until November 2017, Tunisia by 3 percent year-on- Remittance costs. The cost of sending $200 to the MENA year). Remittances to Jordan grew by 1 percent in the first region remained broadly stable in 2017; in the fourth quarter three quarters of 2017 and remittances to Lebanon remained of the year, it was about 7.4 percent of the total amount. This flat in the first part of 2017, as remittance outflows from Saudi is still a little higher than the global average, which declined Arabia declined, but those from the United Arab Emirates to 7.1 percent in the same quarter. Costs, however, vary increased. greatly across corridors: the cost of sending money from countries in the Organisation for Economic Co-operation Beyond 2017, the growth of remittances to the MENA region and Development (OECD) to Lebanon continues to be in the is expected to continue, albeit at a slower pace. A pickup double digits, while sending money from the GCC countries in growth in the GCC countries is expected from 2018 on, cost below 5 percent in some corridors. The cost in Saudi due to a more relaxed fiscal stance, more infrastructure Arabia is the third least expensive in the G-20, at 5.5 percent. investments, and reforms to promote non-oil private sector growth. Remittance outflows will be dampened by Saudi Migration trends. There is an increase in arrivals to the Euro- nationalization policies, notably in sectors banning foreign pean Union from the Maghreb over the Mediterranean. Tuni- workers as of 2018. Starting in June 2018, when women will sians were the second largest group of migrants detected be allowed to drive in Saudi Arabia, the need for foreign on the Central Mediterranean route in the first two months drivers might decrease. The Financial and Economic Affairs of 2018; Moroccans were the second largest group on the Committee of Kuwait’s National Assembly just approved a Western Mediterranean route. In 2017, Moroccans were R E G I O N A L T R E N D S I N M I G R AT I O N A N D R E M I T TA N C E F L O W S 31 FIGURE 4.7  Remittance inflows to the Middle East and North Africa grew rapidly in 2017 (US$ billion, 2017) (Percentage of GDP, 2017) 20.0 15.3 15.1 13.1 10.9 8.0 6.7 6.4 7.5 4.8 4.4 3.0 3.4 2.1 2.0 1.9 1.6 1.4 1.2 0.5 Le ep. n co an co en n Al . ria Tu a sia am lic p. Le za n Jo . Tu . sia ti ria q ep ep p az no a no ou Ira Re Re b a rd oc rd oc ge ge ni ni R ,R ,R G G pu ba ba jib Jo or or Al ab ic ab d d en Re D M M an an Ar Ar m m ab Isl k k Ye Ye t, t, an an Ar yp yp n, tB tB Ira Eg Eg n ria es es Sy W W Source: IMF; World Development Indicators; World Bank staff estimates. Note: Estimates for Syria and Yemen based on latest available data. FIGURE 4.8  Sending money within the MENA region is less expensive than sending money from outside Percent 5 highest cost corridors 18 16 14 5 lowest cost corridors 12 10 8 6 4 2 0 Jordan Kuwait United Bahrain Qatar United Germany Saudi Arabia Australia United to to Arab to to States to to to Kingdom Egypt, Egypt, Emirates Egypt, Jordan to Lebanon Syrian Lebanon to Arab Rep. Arab Rep. to Arab Rep. Lebanon Arab Lebanon Egypt, Republic Arab Rep. 2016 Q4 2017 Q4 Source: World Bank staff estimates using the Remittance Price Worldwide Database. among the top five nationalities to make an irregular border 5,000 to Algeria, and even less to Tunisia. These three nation- crossing into the EU. As their asylum claims are mostly alities are also among the top 20 nationalities deported from rejected, many remain in an irregular situation in Europe.40 the European Union.41 Readmission agreements have been signed between the EU and Maghreb countries, but returns are still low. Around In March 2017, the Saudi Ministry of Interior launched a cam- 10,000 migrants were returned to Morocco in 2016, less than paign called “A Nation without Violations,” giving migrant 32 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K workers 90 days to regularize their status or leave the country main source countries—Saudi Arabia, the United Arab Emir- without penalties. Since November 2017, there has been ates, the United States, Kuwait, and Malaysia. Sri Lanka, in an increase in deportations from Saudi Arabia as part of a contrast, saw a slowdown of –0.9 percent in 2017.  crackdown on irregular migrant workers. As of March 2018, over 670,000 people had been arrested and over 160,000 Remittance costs. South Asia had the lowest average remit- deported.42 According to statistics from the Ministry of Inte- tance costs of any world region (at 5.2 percent) in the first rior, 65 percent of those deported were Yemeni.43 quarter of 2018. Some of the lowest cost corridors (in 2017), originating in the GCC and the Association of Southeast Asian Nations (ASEAN) countries, had costs below the SDG target of 3 percent. But these rose to well over 10 percent 4.5 Remittances to South Asia Grew in the highest cost corridors. Banking regulations (related to Moderately in 2017 AML/CFT) raise the risk profile of remittance service provid- ers and thereby increase the costs of sending to countries Remittances to South Asia increased by 5.8 percent in 2017 such as Afghanistan. A market environment where competi- after a slowdown of –6.1 percent in 2016. In India, after a tion is hampered by the slow adoption and diffusion of new steep decline in 2016 (–8.9 percent), the remittance growth technologies also fosters high costs. rate picked up briskly to 9.9 percent in 2017 with total remit- tances of around $69 billion (up from $62.7 billion in 2016). Migration trends. India’s Union Cabinet approved a pro- The upsurge is likely to continue into 2018 on the back of posal to extend proxy voting to nonresident Indians (NRIs) stronger economic conditions in advanced economies (par- by amending electoral laws. NRIs and overseas Indians can ticularly the United States) and an increase in oil prices that already vote in constituencies where they are registered, but should have a positive impact on the GCC countries. they will now also be able to use a proxy, a privilege once available to only service personnel.44 In Pakistan, after slow growth in 2016 (2.4 percent), remit- tances remained nearly flat in 2017 largely due to significant Bangladesh may have avoided the impact of the Saudi labor declines in inflows from Saudi Arabia (the largest remittance market’s nationalization in 2017 due to an earlier agreement source) toward the end of the year. This may be due to labor to send 400,000 workers (half of them female). But, the pace market nationalization policies in Saudi Arabia. This trend of migrant worker deployments from Bangladesh slowed continued into early 2018, but remittance flows from the in February 2018, due to lower outflows to Saudi Arabia. United Arab Emirates, the United Kingdom, and the United Only about 59,382 workers went abroad that month, against States accelerated. In Bangladesh, after a steep decline in 85,038 in the corresponding month in 2017. A similar trend 2016 (–11.5 percent), remittances were flat in 2017. They now was observed in Pakistan in the previous year. Deployments show a promising uptick, driven by strong inflows from the of Pakistani workers to Saudi Arabia in the first six months of FIGURE 4.9  Remittance inflows to South Asia grew moderately in 2017 (US$ billion, 2017) (Percentage of GDP, 2017) 69.0 28.9 19.7 8.6 13.5 7.0 5.4 7.2 6.9 2.8 1.9 1.7 0.4 0.0 0.0 0.1 an an sh sh a ka es s an an n n al l a a ve k a e e a ta ist ist di di iv an an ep ep st ist ad ut ad di u d In In an an ki iL iL k Bh Bh N N al al l l ng ng Pa Pa gh gh M M Sr Sr Ba Ba Af Af Sources: IMF; World Development Indicators; World Bank staff estimates. R E G I O N A L T R E N D S I N M I G R AT I O N A N D R E M I T TA N C E F L O W S 33 FIGURE 4.10  The costs of sending remittances to South Asia varied widely across corridors Percent 18 5 highest cost corridors 16 14 5 lowest cost corridors 12 10 8 6 4 2 0 Kuwait India Singapore Malaysia Malaysia South Pakistan Pakistan Japan Thailand to to to to to Africa to to to to Pakistan Nepal India India Nepal to Afghanistan Bangladesh India India India 2016 Q4 2017 Q4 Source: World Bank staff estimates using the Remittance Price Worldwide Database. 2017 was just 17 percent of the total workers who went to the The largest remittance recipients in Sub-Saharan Africa in kingdom in 2016 (77,600 in January–June 2017 vs. 462,598 2017 included Nigeria ($22 billion), Senegal ($2.2 billion), in 2016).45 The Kingdom recently placed restrictions on the Ghana ($2.2 billion), Kenya ($2.0 billion), Uganda ($1.4 billion), recruitment of 12 categories of foreign workers.46 and Mali ($1.0 billion). These countries will likely remain the largest recipients in the region in 2018 and 2019. Remittances Bangladesh will send caregivers to 12 countries as part of represent a particularly large share of the GDP of Liberia efforts to promote skilled migration. The state-run Bureau of (27 percent), Comoros (21 percent), the Gambia (21 percent), Manpower Employment and Training signed a memorandum Lesotho (15 percent), Senegal (14 percent), and Cabo Verde of understanding with the Universal Medical and Technical (13 percent). Training Institute to train caregivers in needed skills.47 In many Sub-Saharan African economies, formal remittance inflows are large when considered as a share of GDP, exports, and reserves—but even these figures probably underesti- 4.6 Remittances to Sub-Saharan Africa mate the total amount received, since informal remittances Accelerated in 2017 are rarely included in official remittance data. In Nigeria, for instance, because of exchange rate fluctuations and the Remittance trends. Remittances to Sub-Saharan Africa grew existence of competitive options in the informal market, from $34 billion in 2016 to $38 billion in 2017, and is expected migrants have more incentives to use informal channels to to continue to grow into 2019. This increase is partly backed remit money back home. Improving central banks’ collec- by a pickup in global economic growth, especially in the tion of data on formal and informal remittances will improve high-income OECD countries. Also, a rebound in oil prices estimates of actual flows that Sub-Saharan Africa receives since July 2017 boosted economic activities in oil-producing from its emigrants. countries. Both OECD and oil-producing countries host many Sub-Saharan African migrants. 34 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K FIGURE 4.11  Remittances to Sub-Saharan Africa rose in 2017, led by Nigeria (US$ billion, 2017) (Percentage of GDP, 2017) 22.0 27.1 21.0 20.8 15.2 13.9 12.8 8.4 8.0 6.9 5.6 2.2 2.2 2.0 1.4 1.0 0.9 0.8 0.6 0.4 ria l na a a i a ia ria so ria os e o l e o au i ria ga al ga al ny nd ric Th rd th g op M M Fa or ha ss e be be e To ne ne so Ve Ke Af ig ig a Bi hi a, m G Ug Li Li a Se Se N N Le Et bi a- Co h in bo ut am ne rk Ca So Bu ui G G Sources: IMF; World Development Indicators; World Bank staff estimates. Remittance costs. In the first quarter of 2018, the average The Democratic Republic of Congo registered 46,000 new cost of remittance services in Sub-Saharan Africa declined displacements due to conflicts and insecurity.48 Chad had compared with a year earlier, from 9.8 to 9.4 percent. This about 121,325 internally displaced persons (IDPs) between is a declining trend compared with previous years. Yet, in November 2017 and January 2018, and 15,131 returnees Sub-Saharan Africa, remittance services remain the costli- from third countries. In Cameroon, 342,416 IDPs were regis- est in world, at 29 percent above the world average in 2017. tered in December 2017, and close to 90 percent were due Intra-regional corridors are the most expensive; the corridor to conflicts and insecurity. In West Africa, Nigeria is the most connecting Angola to Namibia remained the costliest in 2016 affected by forced displacements.49 Conflicts in northern Mali and 2017 (at 26.7 percent and 21.4 percent, respectively). The resulted in 47,706 IDPs being registered in January 2018 in cheapest intra-regional corridor in 2017 was Côte d’Ivoire to the region of Tombouctou. South Sudanese refugees and Mali, at 2.9 percent. This suggests that achieving the SDG asylum seekers numbered about 2,441,244 by the end of target (10.c) of lowering remittance costs by 3 percent by February 2018. In January 2018, about 175,936 new IDPs were 2030 is a possibility for the rest of the region’s corridors, but registered in Burundi compared with 179,901 in December significant efforts are needed to bring the costs down. 2017 and 187,626 in November 2017.50 In 2017, large internal displacements were observed in Ethiopia.51 Mozambique Migration trends. Inside the region, hundreds of thou- had about 29,000 people forcibly displaced by a tropical sands have been forcibly internally displaced either due to depression in the northern provinces of Cabo Delgado conflicts or climate-related disasters. The Central African and Nampula.52 In Madagascar, about 35,000 people were Republic registered about 113,000 new displacements displaced during the first half of January due to floods and between December 1, 2017, and January 9, 2018, and the landslides following the tropical cyclone Ava. total number of refugees was 567,886 in February 2018. R E G I O N A L T R E N D S I N M I G R AT I O N A N D R E M I T TA N C E F L O W S 35 FIGURE 4.12  The five most and least expensive remittance corridors in Sub-Saharan Africa Percent 30 5 highest cost corridors 25 5 lowest cost corridors 20 15 10 5 0 Saudi Côte United Senegal France South South South South Angola Arabia d’Ivoire Arab to to Africa Africa Africa Africa to to to Emirates Mali Cameroon to to to to Namibia Sudan Mali to Tanzania Zambia Botswana Angola Sudan 2016 Q4 2017 Q4 Source: World Bank staff estimates using the Remittance Price Worldwide Database. BOX 4.1  Historical and political economy antecedents of transit migration in Sub-Saharan Africa Throughout history, people crossed the Sahara Desert for the purposes of trans-Saharan (caravan) trade, conquest, pilgrim- age, and religious education (De Haas 2006). The advent of colonialism drew borders to create modern states that did not exist before, leading to the collapse of the trans-Saharan mobility of goods and people. But soon after these states’ independence, the foundations for contemporary trans-Saharan migration were laid out. In the 1970s and 1980s, the forced and voluntary settlement of nomads, wars in the Sahel, and droughts provoked migration and settlement in towns and cities in Libya, Algeria, Mauritania, and Egypt. Sub-Saharan African migrants were tacitly welcome in these countries, where they helped address local labor shortages. After the oil crisis in 1973, Libya and Algeria witnessed an increase of migrant workers in the oil fields, most of them Egyptians and Sudanese, and this set the stage for more large-scale trans-Saharan migration after 1990. The UN embargo imposed on Libya between 1992 and 2000 played a decisive role by increasing contemporaneous trans-Saharan migration flows and consolidating migration routes and networks. All these developments contributed to making the Maghreb region a desti- nation for Sub-Saharan African migrants. Following visa restrictions in some European countries in the early 1990s, Maghrebians started crossing the Mediterranean Sea without required papers (IOM 2006). Since 2000, Sub-Saharan African migrants have joined North Africans in these undocu- mented crossings and have overtaken them as the largest regional source of irregular migrants on Mediterranean routes. 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East Afri- National Assembly approved a draft law to impose taxes on remittances cans (Eritreans, Somalians, Sudanese, Ethiopians), who composed 18 per- (ranging 1–5 percent, depending on the amount) sent by foreigners living cent of individuals who had arrived in Italy, tended to transit through in Kuwait. The draft law needs to be approved by the National Assembly Khartoum, Sudan, and Tripoli. The rest of the population arriving in Italy and accepted by the government before it becomes legislation. transited through other cities such as Bamako, Gao, and Cairo. Afghans, 3. http://www.fsb.org/wp-content/uploads/P160318-2.pdf. Iraqis, and Syrians typically travelled to Izmir, Turkey, where they boarded 4. The report mentions the development of technical solutions for KYC boats to Greece. Those of Afghan origin usually took a route through Iran, (“know your customer”), including the use of the Wolfsberg Correspon- but 30 percent of these had settled in Iran two years or more prior to their dent Banking Due Diligence Questionnaire for discussions with industry. migration to Greece. 5. According to the GSM Association (GSMA 2018), mobile money transac- 20. First, Cubans entered Costa Rica with the objective of going to the United tions exceeded a billion dollars a day in 2017, covering 690 million regis- States. Immigrants from different African, Asian, and Latin American coun- tered accounts in over 90 countries. Mobile money is widely used in China, tries also entered Costa Rica and stayed there for a certain period. Peru Sub-Saharan Africa, and South Asia. For the most part, mobile money is is a transit country for Venezuelan migrants going to Argentina and Chile. used for domestic payments. The share of mobile money used for cross- Peru and Bolivia are also transit countries for Haitians on their way to Chile. border remittances is small, but growing. Panama recently became a country of transit for Cubans. Ecuador has also become a transit country for Colombians and immigrants who have gone 6. Investors in integrated community organization (ICOs) pay in cryptocurren- to Brazil (including Haitians and Africans) and want to go to the United cies, such as Bitcoin and Ethereum. States. Nationals from most countries do not require a visa to enter Ecua- 7. Cryptocurrencies are also used for cross-border wire transactions. In 2016, dor. In addition, the Human Mobility Act (Ley de Movilidad Humana) was it is estimated that as much as 20 percent of remittances from the Republic signed into law on January 28, 2017. These new regulations have attracted of Korea to the Philippines were via Bitcoin. immigrants from different countries that pass through Ecuador as a transit country on their way mainly to the United States. Haitians go through Pan- 8. “The Joint Response Plan for Rohingya Humanitarian Crisis: An Appeal for ama or Colombia, Ecuador, and Peru before reaching Brazil. $951 million to Assist 1.3 million people,” New Vision, March 17, 2018. 21. The number of asylum seekers and refugees registered with UNHCR in 9. The datasets and accompanying documentation can be accessed at Indonesia expanded exponentially from 353 asylum seekers and 369 refu- https://www.knomad.org/data/recruitment-costs. gees in mid-2008 to 6,539 asylum seekers and 7,819 refugees as of June 10. See the revised draft of the GCM released on March 26, 2018, at https:// 2016 (UNHCR website). refugeesmigrants.un.org/sites/default/files/180326_draft_rev1_final.pdf. 22. During their migration journey, Sub-Saharan African irregular transit 11. https://www.imf.org/external/np/exr/facts/pdf/g20map.pdf. migrants are at risk of being exploited, facing corruption and human rights abuse, and living in precarious conditions (OHCHR 2016). Some even 12. The World Bank and KNOMAD could be mentioned in the GCM in para- lose their lives: from May to June 2017, more than 50 migrants died in the graph 16 on data, and paragraph 48 on implementation. The World Bank Sahara Desert during their transit to North Africa. and the GRWG should be mentioned in paragraph 35 as a lead actor for reducing remittance costs. 23. See for example, Jacobsen et al. (2012) on the remittance behavior of Sudanese refugees and migrants transiting in Egypt. From a sample of 13. https://globalcff.org/. 404 Sudanese residing in Cairo, the authors found more than a third (37.8 14. http://www.unhcr.org/en-us/events/conferences/5aabe59b7/draft-1-global- percent) received remittances from Sudan or abroad while only 10 percent compact-refugees-9-march-2018-unofficial-spanish-version.html. reported sending remittances. 15. http://www.unhcr.org/58e625aa7. 24. According to the European Commission (2007), from 2002 to 2013, the European Union spent about €500 million to ensure the better manage- 16. Such as those collected by the IOM’s displacement tracking matrix and flow ment of migration flows in third countries, and to fight against illegal monitoring (see data details at: https://emergencymanual.iom.int/entry/ migration (Brachet 2018). As a result, ECOWAS has changed its orientation 24861/flow-monitoring) and those of the Mixed Migration Monitoring from facilitating the free movement of persons within the region to con- Mechanism Initiative (4Mi) (http://www.westafrica.regionalmms.org/index trolling its external borders (Brachet 2018). For the first time in the Sahel’s .php/4mi-page). history, irregular migration in the Sahel has become a political issue at 17. Report of the Commission of Inquiry on Human Rights in Eritrea, http://www both the national/state and ECOWAS levels (Kabbanji 2011). This shift is .ohchr.org/EN/HRBodies/HRC/CoIEritrea/Pages/ReportCoIEritrea.aspx. also motivated by the aid and foreign direct investment (FDI) conditionality 18. Several transit routes have been identified in the literature. Bangladeshi imposed by several European countries. migrant workers use the services of brokers to illegally enter Malaysia by 25. See Centre de Ressources sur la Migration: http://www.centresmigrants.tn/ transiting through Thailand (Ahsan Ullah 2013). Cambodians, mostly from fr/vivre-en-tant-que-migrant-en-tunisie/les-penalites-de-depassement- the ethnic Cham group, enter Malaysia via Thailand, though the majority de-sejour and http://www.legislation.tn/sites/default/files/news/ end up remaining in Thailand for an extended period. Indonesia is widely tf201710613.pdf. regarded as a transit country for refugees, asylum seekers, and irregular 26. A new anti-trafficking law has been enacted, and two draft bills regarding migrants. The number of asylum seekers and refugees registered with the immigration and asylum have been elaborated to replace the immigration UNHCR in Indonesia expanded exponentially from 353 asylum seekers and law of 2003; 28,400 applications for status regularization from 113 nationali- 369 refugees in mid-2008 to 6,539 asylum seekers and 7,819 refugees as of ties were submitted between December 15, 2016, and December 31, 2017. June 2016 (UNHCR website). 40 M I G R AT I O N A N D R E M I T TA N C E S : R E C E N T D E V E L O P M E N T S A N D O U T L O O K See also http://blogs.worldbank.org/peoplemove/second-regularization- nacional/217995-pdi-ingreso-de-haitianos-a-chile-aumenta-cerca-de-un- campaign-irregular-immigrants-morocco-when-emigration-countries- 50-en-2018.html). become. 39. In 2012, Chile requested that migrants from the Dominican Republic 27. For example, a World Bank report titled Maximizing the Development get a visa. Since then the number has increased from 560 visas in 2009 Impacts from Temporary Migration: Recommendation for Australia’s Sea- to 4,390 visas in 2012 (the peak). The number of visas then decreased to sonal Worker Program found a 11.5 percentage point difference in remit- 1,931 while the number of irregular crossings increased. According to ting A$500 using Western Union or KlickEx in Tonga. the National Institute of Migration of the Dominican Republic, there are 25,000 Dominicans residing in Chile out of the 1.8 million living abroad 28. Reported shortages of foreign manpower in the manufacturing and plan- (http://hoy.com.do/chile-el-nuevo-destino-escogido-por-dominicanos/). tation sector in Malaysia are stifling expansion plans and causing wage increases. In Thailand’s Samut Sakhon Province, a major fishing hub, less 40. Over the period 2008–16, among the top countries of origin of per- than 500 applications were received for 5,000 openings following the sons found to be unlawfully present on EU territory, Moroccans ranked announcement of tighter government regulations that prompted many fifth (nearly 300,000), Algerians eighth (160,000), and Tunisians thirteenth undocumented migrants to leave. (134,000). They are similarly ranked among the top nationalities ordered to leave. In 2016, among the top nationalities ordered to leave the European 29. The proposed amendment reduces employer fines per undocumented Union, Morocco ranked fourth (with nearly 35,000 cases), Algeria eighth worker from between 400,000 baht ($12,747) and a maximum of (with over 20,000 cases), and Tunisia thirteenth (with around 10,000 cases). 800,000 baht ($25,493) to between 10,000 baht ($319) and 100,000 baht See https://frontex.europa.eu/media-centre/news-release/migratory-flows- ($3,190), and eliminates workers’ jail terms. An estimated 700,000 undocu- in-february-drop-in-italy-stable-in-greece-and-spain-9OWuge. mented workers have yet to register, raising concerns that the process will not be completed by the new deadline. A total of 988,798 workers have 41. http://ec.europa.eu/eurostat/statistics-explained/index.php/File:Top_20_ registered since last year, which permits them to stay in the country for citizenships_of_non-EU_citizens_returned_to_their_country_of_origin_ another two years. from_the_EU,_2015-2016.png. 30. A survey of 820 residents in the Republic of Korea’s seven largest cities, 42. http://regionalmms.org/monthlymaps/RMMS%20Mixed%20Migration%20 conducted in August 2017, found 61.1 percent of the respondents agree- Monthly%20Map%20February%202018.pdf. ing that “it is hard to accept” foreign workers as members of Korean soci- 43. http://www.independent.co.uk/news/world/middle-east/yemen-civil-war- ety. This was up 3.6 percentage points from a 2013 survey. saudi-arabia-houthi-yemeni-workers-expel-deport-fighters-recruitment-al- 31. See https://www.ons.gov.uk/peoplepopulationandcommunity/population qaeda-a8248506.html. andmigration/internationalmigration/bulletins/migrationstatisticsquarterly 44. http://www.muscatdaily.com/Archive/Oman/Election-Commission-of-India- report/february2018. launches-portal-for-NRI-voters-52se#ixzz5AR23OeWL. 32. See, for example, http://www.europarl.europa.eu/news/en/press-room/ 45. https://www.dawn.com/news/1351745. 20171115IPR88120/ep-ready-to-start-talks-with-eu-governments-on- overhaul-of-dublin-system. 46. Financial Express, “Feb Overseas Jobs Fall on Lower Saudi Hiring,” Febru- ary 11, 2018. 33. An estimated 1.5 million Guatemalans reside and work in the United States and send back the equivalent of over 12 percent of Guatemalan GDP in 47. Financial Express, “Dhaka to Send Caregivers as 12 Countries Free Up remittances. Remittances are even more crucial for El Salvador (about Markets,” March 9, 2018. 17 percent of GDP) and Honduras (about 18 percent of GDP), with 2017 48. In addition, the country hosts more than 526,000 refugees from other Sub- flows rising by 9.6 percent and 12.5 percent, respectively. Saharan African countries, and more than 600,000 refugees from the Dem- 34. https://www.uscis.gov/news/alerts/uscis-reaches-fy-2019-h-1b-cap. ocratic Republic of Congo live in other Sub-Saharan African countries. 35. Brazil doubled the number of troops at the borders and relocated migrant 49. In January 2018, the country registered a total of 1,782,490 IDPs. The Venezuelans to the interior of the country (https://www.aljazeera.com/ majority of these (about 85 percent) had been displaced by Boko Haram’s news/2018/02/colombia-brazil-tighten-venezuela-border-control- insurgency. More than 80,000 new displacements were observed in Janu- 180209081826179.html). Some 40,000 refugees are reported to be in the ary 2018, as a result of clashes between farmers and herders in the state of Brazilian city of Boa Vista alone. Colombia is to stop issuing migration Adamawa. In Borno State, more than 4,000 people were displaced due to cards to Venezuelans, and only existing card or passport holders will be attacks and military operations. able to cross the border legally. Some 96,000 Venezuelans are reported to 50. The decline in IDP numbers is due to the rehabilitation of IDP homes, the have crossed the border legally in November alone. Meanwhile, Argentina achievement of sustainable solutions, the restoration of security in the granted residency to over 31,000 Venezuelans in 2017, while Peru reported country, and improved harvests in the communities of origin of IDPs who about 68,000 Venezuelan migrants in the first 11 months of 2017. had fled because of drought during the previous months (IOM 2018c). 36. More than 100,000 Venezuelans have applied to obtain this permit: http:// Between December and January 2018, about 4,270 IDPs returned to their www.semana.com/nacion/articulo/cuantos-venezolanos-entran-a-diario- communities of origin as the result of improvement in the sociopolitical al-pais-colombia/559438. conditions. In this country, 70 percent of internal displacements are due to disasters, and the remaining 30 percent due to conflicts and sociopolitical 37. There are more than 115,000 Venezuelans in Peru and only 31,000 have instability. requested the temporary permit: http://www.el-nacional.com/noticias/ mundo/peru-hay-mas-115000-venezolanos-31000-con-permiso- 51. About 1,078,429 IDPs were displaced by conflict and about 528,658 by temporal_226145. climate-related events. According to IOM (2018c), more and more people are being forcibly displaced by conflict, which is the primary cause of inter- 38. This new flow started in 2011 after the earthquake and has accelerated nal displacement in the country. in recent years. New arrivals are coming directly from Haiti or from Brazil, their initial destination. According to the Policy of Investigation (PDI), from 52. About 73,200 were affected by heavy rains in Nampula Province, January 1 to March 4, 2018, 28,038 passengers from Haiti crossed bor- where 10 people died and 14,400 houses were damaged. In Cabo Del- ders into Chile while in 2017 about 111,746 Haitians entered the country gado, 1,100 families were affected by heavy rains that destroyed about (about 9,312 per month) (http://www.extranjeria.gob.cl/media/2017/09/ 15,000 hectares of farm plots. RM_PoblacionMigranteChile1.pdf; http://www.ahoranoticias.cl/noticias/ MIGRATION AND REMITTANCES Recent Developments and Outlook This Migration and Development Brief reports global trends in migration and remittance flows, as well as developments related to the Global Compact on Migration (GCM), and the Sustainable Development Goal (SDG) indicators for volume of remittances as percentage of GDP (SDG indicator 17.3.2), reducing remittance costs (SDG indicator 10.c.1) and recruitment costs (SDG indicator 10.7.1). This Brief has a special focus on transit migration. 28281