Remittance Costs Too High from Belgium: International Organization for Migration

Brussels (IOM)* —  The International Organization for Migration (IOM) on 14 June 2024 launched two new reports on Belgium’s remittances landscape and the impact of high transaction costs on remittance flows and development outcomes for 21 countries.

Kriticos who is originally from Zambia and Tanzania and Jason from Rwanda are two of the many diaspora members who have embraced a new life in Belgium as well as their roots. Photo: IOM/Moayad Zaghdani

In Belgium, where one third of the population has a migrant background, over USD 7 billion (EUR 6.5 billion) in remittances were sent in 2023, but the costs of sending are high.  

The findings were presented at IOM’s first-ever National Remittance Summit in Brussels, ahead of the International Day of Family Remittances (16 June).  

“Migrants often struggle with high transaction costs when they want to help their families or communities by sending a share of their earnings to their countries of origin,” said Marise Habib, Chief of Mission, IOM Belgium and Luxembourg.  

“IOM research shows that the average transaction cost from Belgium to 21 countries is currently at 4.3 per cent, which is very high considering the Sustainable Development Goal to reduce the transaction costs of migrant remittances to less than 3 per cent.”  

“Our data allows for a greater understanding of the complexities that contribute to higher costs and how to address them,” said Habib.  

The reports indicate that a 1 per cent reduction in transaction costs could lead to an increase in remittances of up to 1.078 per cent, underscoring the potential of cost reduction measures.

Lowering remittance fees to countries experiencing a humanitarian crisis, for example, would enable migrants and diaspora to send more funds to communities that need it the most.   

The studies also show that cash remittances are, on average, 51 per cent more expensive than digital remittances, while in-person money transfer operators are 83 per cent more expensive than online operators.

These findings highlight the importance of digital and financial inclusion of migrants, and the need for more transparency on remittance costs.  

The IOM Office for Belgium and Luxembourg, with support from the Government of Belgium, runs the “O-REMIT” project, which gathers insights into the costs, volume and impact of remittance flows from Belgium, barriers to cost-effective remittance transfers, motivations and behaviours of people sending remittances, and the challenges of collecting remittance data.  

By working jointly with remittance senders and focusing on selected remittance corridors, IOM is also helping to strengthen informed decision-making on remittance services and methods.    

“The aim is to create an environment which enables migrant and diaspora communities to fully realize their role as agents of change and development,” said Habib.  

IOM’s work under O-REMIT is based on data from the National Bank of Belgium, the Belgian Statistical Office (Statbel), KNOMAD/World Bank, and a detailed survey involving over 1,400 migrants and members of the diaspora in Belgium.  

“Although the O-REMIT studies focus on Belgium, the data offers insights into the way forward to achieving the Sustainable Development Goals, which would have a very positive impact on receiving communities worldwide,” said Ariana Naser, co-manager of the O-REMIT project.   

Download the reports:  

• 2023 Market Analysis of Remittance Transaction Costs in Belgium  
• Data Insights into Belgium’s Remittance Landscape: Trends and Drivers  

In 2023, migrants and diaspora sent home nearly USD 860 billion in remittances, according to data from the World Bank. The biggest share of these remittances is sent to low- and middle-income countries, where these personal transfers serve as the biggest source of capital inflow, exceeding foreign direct investment and overseas development assistance.    

O-REMIT is implemented by IOM Belgium and Luxembourg in partnership with Zidicircle, Entrepreneurs for Entrepreneurs (OVO), and the National Bank of Belgium. The project works towards the achievement of the Sustainable Development Goal 10c, which aims to reduce to less than 3 per cent the transaction costs of migrant remittances.

It also supports objectives 19 and 20 of the Global Compact for Migration which aim to create conditions for migrants and diasporas to fully contribute to sustainable development in all countries and promote faster, safer, and cheaper transfer of remittances to foster financial inclusion of migrants respectively.  

The O-REMIT project is co-managed by Ariana Naser, Krystel Sil Sikana and Mélissia Petesque.

 *SOURCE: IOM. Go to ORIGINAL: https://www.iom.int/news/lower-remittance-costs-belgium-would-boost-development-countries-origin-iom-reports

2024 Human Wrongs Watch