Remittances for Development phase II

The following update is a slightly edited version of the results summary of UNCDFs annual program report for 2023 (the report in its full will be available on https://migrantmoney.uncdf.org). The Switzerland and Sweden contribute to the program. Since the start of the Migrant Money Program in September 2020, through its nine private sector partners as financial intermediaries, a large number of low-income customers, including migrants and their families, have been reached through digital channels, of which 27.4% were women, by the end of 2023. The focus has been on leveraging public- and private-sector stakeholders to enhance the financial resilience and economic inclusion of migrants and their families, particularly through low-cost digital remittance services and remittance-linked financial products, thereby contributing to the sustainable development of countries of origin in the Global South. The Program employed a market development approach, particularly considering the role of enabling a regulatory environment and conducive payment and financial market infrastructure, to identify constraints in existing market systems where low-income migrants and their families reside. Efforts have been directed at systematically addressing these constraints and inducing institutional and behavioral changes, especially in gender mainstreaming and data-driven consumer insights, considering the local, regional, and corridor contexts. Recognizing the impact and its effects on end beneficiaries is a gradual process beyond direct program control, the UNCDF took a facilitative approach. Equally acknowledging that the efforts pursued by UNCDF can only be scaled if they are advocated widely and pursued by multilateral and international development partners across countries and regions. This led to proactive engagement and consultations with over 1,420 technical experts from the private sector, 614 from the public sector, and 221 from research and academia. UNCDF efforts have also received interest from 749 regulators across 97 Central Banks, 544 professionals across 227 unique line ministries and public sector institutions, 516 professionals across 43 unique multilateral organizations, 148 professionals across 87 academic and research institutions, 2356 private sector professionals across 1030 unique organizations, and 82 development professionals from 14 donors and development partners representing 163 countries (including 41 Least Developed Countries) who have registered/joined UNCDF across a range of workshops and webinars on development challenges spanning across the four workstreams. Following its theory of change, the Migrant Money Program contributed to three outcomes: Customer Outcome: Since the start of the program, 251,000 women and 665,000 men have accessed low-cost digital remittance services and financial products thanks to partner institutions supported by UNCDF. Over 185,500 customers, of whom around 83,000 were women, attended digital and financial literacy training. Stakeholder Outcome: UNDCF successfully facilitated five critical partnerships between the supported Financial Service Providers (FSPs) and other private sector stakeholders, enhancing the outreach of digital remittance channels and expanding the range of financial products available for migrants. Collaboration between UNCDF and the nine FSPs resulted in the pilot launch of 14 new or improved services focused on digital remittance channels, with four of these services successfully scaled for broader implementation. Additionally, UNCDF-supported partner institutions facilitated a cumulative amount of over US$ 1.37 billion in digital remittances.??Twenty-one laws and regulations were amended or initiated, leading to more competition and innovation towards improving digital remittances to and within Africa. Sector Outcome: Reduction in remittance transaction costs in selected corridors and increased flow of remittances into productive investments (access to clean energy, water, education, and health) through a range of providers connected through the digital remittance ecosystem. The global average transaction cost for cash remittances is currently 6.9 percent, as per the World Bank Remittance Prices Worldwide (RPW) report for Q1 2023, whereas the average remittance cost for digital channels is 4.6 percent. The ongoing trend toward the increased digitization of remittances is crucial in reducing transaction costs for migrants, with an average saving of 2.3 percentage points observed for a digital remittance of US$200. Given the significant volume of digitally remitted transactions facilitated by UNCDF-supported partner institutions in 2023, totaling US$1.37 billion, there is an estimated overall savings of US$27 million in transaction costs attributed to digitization efforts. Challenges and lessons learned Although, significant progress has been made, the program does not lack challenges. For example, the project aimed to boost digital remittance access and adoption in the Congo, supporting an efficient, local, and interoperable payment infrastructure. Initiated with expectations of increasing remittances and reducing costs by promoting digital payments, the project faced challenges, including stakeholder disengagement and a lack of private public sector dialogue. Regrettably, these obstacles led to the discontinuation of UNCDF's technical assistance to this sub-project. Examples of lessons learned during implementation include that UNCDF's private sector engagement strategy demands flexibility and adaptability, recognizing the diversity of business models and varying market conditions in different countries. UNCDF collaborates with partners at different organizational stages, taking into account their specific challenges and opportunities. For early stage partners, the focus may be on product design and regulatory compliance. Simultaneously, larger organizations work to achieve scale or expand to new markets to align with UNCDF's technical assistance. Therefore, UNCDF technical assistance offerings need to be standardized to achieve scalability and also emphasize the need for tailored approaches that suit the unique requirements of each partner. While a certain product strategy may work for a bank, it may not be suitable for more flexible fintech. Gender-specific insights and results have led to a compelling business case addressing gender-related remittance issues. Nevertheless, affecting organizational change takes time and requires consistent buy-in from stakeholders. As a proactive measure, gender assessments are now integrated into the initial stages of partner engagement, helping to gauge their commitment and allowing tailored support from the start. This approach ensures that gender-related considerations are embedded in the partnership's core values and practices, promoting inclusivity and equity in the remittance industry.

The Goal of the Programme is to contribute to regional harmonization of remittance policies and availability of affordable, accessible, reliable, and tailored digital remittances and financial products to female and male migrants towards their economic inclusion, financial resilience, and reduced inequality. Expected results of the Programme are as follows: 1. Regional Stakeholders: - Building on existing projects and engagements on migration and development, provided technical assistance and advocacy to the Secretariat of Regional Economic Communities (RECs) towards harmonization of mobilization of remittances flows. - Supporting RECs with the implementation of regional harmonization through the National Working Group on Remittance (NWG-R) in each Member State under the existing National Coordination Mechanism on Migration and Regional Steering Committee on Remittance (RSC-R). - Collaborate with regional technical institutions AfricaNenda, Pan Africa Payments and Settlements Systems (PAPPS), AU Statistics Commission and African Institute of Remittances with an aim to strengthen its regional and country capacity on remittance data and statistics, enabling laws and regulations and open digital payment ecosystem. 2.National Policy makers and Regulators: - Strengthened data capacity of the regulator to monitor accurate and meaningful data on remittances for evidence-based policy making. - Contribution towards regional harmonization of risk-based remittance policies and regulations. - Promotion and development of digital channels for migrants to send and receive remittances at cheaper transaction costs, improving the agent network and access points, and designing and testing migrant-centric and gender-smart financial products linked to remittances.