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MIGRATION DEVELOPMENT AND REMITTANCES IN THE LDCs CONTEXT. “MAINSTREAMING MIGRATION, DEVELOPMENT AND REMITTANCES AT THE COUNTRY LEVEL: CHALLENGE FOR LESOTHO AND OTHER LDCs UNHQ NEW YORK June 17, 2010 Dr. Mothae Anthony Maruping, Ambassador Lesotho in Geneva. LACK OF DATA: ESPECIALLY IN LDCs.
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MIGRATION DEVELOPMENT AND REMITTANCES IN THE LDCs CONTEXT “MAINSTREAMING MIGRATION, DEVELOPMENT AND REMITTANCES AT THE COUNTRY LEVEL: CHALLENGE FOR LESOTHO AND OTHER LDCs UNHQ NEW YORK June 17, 2010 Dr. Mothae Anthony Maruping, Ambassador Lesotho in Geneva Dr Mothae Anthony Maruping
LACK OF DATA:ESPECIALLY IN LDCs UP-TO-DATE, ADEQUATE & RELIABLE DATA: MAJOR CHALLENGE IN LDCs ANALYSTS , POLICY MAKERS & POLICY IMPLEMENTORS ARE “DRIVING IN THE DARK IN RUGGET TERRAIN” DATA ON MIGRATION & REMITTANCES IS OFTEN: - SCARCE OR UNAVAILABLE - INCOMPLETE - INACCURATE/UNRELIABLE FORCES RESORT TO: - interpolations - extrapolations - guestimates Dr Mothae Anthony Maruping
NEED TO RETURN TO PLANNING PROCESS:ESPECIALLY IN LDCs • Policy Framework Papers (PFPs) • Medium Term Public Expenditure Frameworks (MTEFs) • Poverty Reduction Strategies Papers (PRSP); etc All tended to replace Sound Planning Process in Most LDCs NEED TO RETURN TO: • STRATEGIC FRAMEWORK ( LONG TERM) • ACTION PLAN ( MEDIUM TERM), and • COMPREHENSIVE PROGRAMMES OF ACTION (AN EFFECTIVE IMPLEMENTATION TOOL) BUT CAN STILL CONTINUE WITH PFPs MTEFs PRSPs etc Dr Mothae Anthony Maruping
REVIVAL OF THE LEGITIMATE ROLE OF STATE GLOBAL FINANCIAL & ECONOMIC CRISES REVEALED • Vulnerability brought about by excessive liberalisation • Need for reinstating legitimate role of the State in the economy: - regulation & supervision - functional state institutions (with satisfactory service delivery) - credible enabling legal framework - forging partnerships with the private sector (PPPs) as partners in development Dr Mothae Anthony Maruping
HETEROGENEITY OF LDCs • LDCs ARE HETEROGENEOUS • CLASSIFICATION OF LDCs INTO AFRICAN, ASIAN, PACIFIC, SERVES NO USEFUL PURPOSE FOR UN LDCs IV • LDCs ECONOMIES DIFFER IN: - LEVEL OF DEVELOPMENT - STRUCTURE - RESOURCE ENDOWMENT - MODE OF FUNCTIONING - MOMENTUM/DYNAMISM LDCs CAN BE: - LANDLOCKED OR SEALOCKED - HAVING A LARGE OR VERY SMALL POPULATION - POST – CONFLICT BUT RESOURCE ENDOWED - PART OF DYNAMIC REGIONAL INTEGRATION GROUPING, ETC CLASSIFY LDCs ACCORDING TO THEIR CHARACTER NOT REGIONS! Dr Mothae Anthony Maruping
MULTIPLE CRISES FACED BY LDCs LDCs HAVE FACED MULTIPLE CRISES: • SOVEREIGN DEBT CRISIS • FUEL PRICES CRISIS • FOOD PRICES CRISIS • CLIMATE CHANGE CHALLENGES • GLOBAL FINANCIAL & ECONOMIC CRISES YET LDCs ARE THE LEAST EQUIPPED TO COPE WITH LONG LASTING ADVERSE EFFECTS OF THESE CRISES THESE CRISES WERE NOT INITIATED BY LDCs Dr Mothae Anthony Maruping
TYPE OF ECONOMIC GROWTH DESIRED BY LDCs LDCs YEARN FOR TYPE OF ECONOMIC GROWTH THAT IS: • JOB CREATING • ENSURING EQUITABLE DISTRIBUTION OF INCOME • BRINGING ABOUT FOOD SECURITY • FACTORING IN THE ENVIRONMENT • INCLUSIVE & PARTICIPATORY ESPECIALLY WITH REGARD TO: - YOUTH - GENDER - DISABLED IN SHORT: GROWTH THAT IS PRO-POOR Dr Mothae Anthony Maruping
IRREVERSIBLE GLOBALISATION PROCESS GLOBALISATION PROCESS SEEMS IRREVERSIBLE GLOBALISATION DYNAMICS ENTAIL INCREASING MOVEMENT OF PEOPLE (=MIGRATION) INTER ALIA • GLOBAL ECONOMIC INTEGRATION • MULTILATERAL TRADING SYSTEM (IN GOODS & SERVICES) • GROWING TRENDS IN OUTSOURCING AND PRODUCTION NETWORKING MODES OF OPERATION • TRANSPORT AND COMMUNICATIONS ADVANCES, etc ALL THESE BRING THE ISSUES OF MIGRATION, MIGRANT WORKERS, REMITTANCES & THEIR IMPLICATIONS ON SOCIO – ECONOMIC DEVELOPMENT TO THE FORE Dr Mothae Anthony Maruping
PARTIAL PICTURE OFTEN FIGURES ON MIGRANTS GIVE AN INCOMPLETE PICTURE THERE ARE: • RECORDED MIGRANTS • UNRECORDED BUT LEGITIMATE MIGRANTS • IRREGULAR MIGRANTS DEFINITION OR INTERPRETATION CAN ALSO LEAVE A BLURRED PICTURE Dr Mothae Anthony Maruping
REMITTANCES TRANSFERS: FIGURES CAN ALSO GIVE PARTIAL PICTURE TRANSFER OF REMITTANCES CAN BE: • RECORDED – ESP. IF VIA FORMAL CHANNELS • UNRECORDED – EVEN IF GOING VIA FORMAL CHANNELS (DUE TO IDENTIFICATION PROBLEMS) - IF GOING THROUGH INFORMAL CHANNELS USE OF INFORMAL CHANNELS CAN BE CAUSED BY: • EXCHANGE RATES CONSIDERED UNFAVOURABLE BY REMITTERS • TEDIOUS PROCEDURES ENTAILED IN FORMAL TRANSFERS • PERCEIVED HIGH RISK INVLOVED IN FORMAL CHANNELS • HIGH COST OF TRANSFERS THROUGH FORMAL CHANNELS • CHALLENGING ACCESS TO THE REMITTANCES BY THE RECEPIENTS WHEN THEY ARRIVE ESP IN RURAL AREAS Dr Mothae Anthony Maruping
GLOBAL REMITTANCES(2000 – 2009) AVAILABLE DATA SHOWS EXPONENTIAL INCREASE OF GLOBAL REMITTANCES OVER 2000 – 2009 PERIOD THIS HAS BEEN SO EVEN IN THE FACE OF GLOBAL FINANCIAL AND ECONOMIC CRISES • 2000 USD132bln • 2009 USD414bln DEVELOPING COUNTRIES DID EXPERIENCE A DECREASE OF 6% DUE TO THE FIN & ECON CRISES Dr Mothae Anthony Maruping
MIGRATION: PUSH FACTORS PUSH FACTORS IN COUNTRIES OF ORIGIN: • POPULATION GROWTH RATE OUTSTRIPPING ECONOMIC GROWTH • CLIMATE CHANGE & ENVIRONMENT DEGRADATION CHALLENGES • NATURAL DISASTERS • ARMED CONFLICTS ALL RESULT IN: • HIGH UNEMPLOYMENT RATE • POVERTY INTENSIFICATION • HIGH DEGREE OF INSECURITY • SEARCH FOR ALTERNATIVES Dr Mothae Anthony Maruping
MIGRATION: PULL FACTORS PULL FACTORS ABROAD (COUNTRIES OF DESTINATION FOR MIGRANTS): • UNFILLED JOB OPENINGS • LURE OF BETTER PAY • ATTRACTION OF PERCEIVED COMFORTABLE LIVING STANDARDS Dr Mothae Anthony Maruping
STOCK OF MIGRANTS(2005) WORLD DEVELOPING LDCs LESOTHO Migrants 190.6 145.0 21.8 0.26? (mlns) Migrants As % 3,0 2,7 2,9 14,4? Of Pop: NB: Figures on Lesotho seem inflated Source: World Bank Dr Mothae Anthony Maruping
RECORDED REMITTANCES INFLOWS(IN USD IN BILLIONS) WORLD DEVELOPING LDCs LESOTHO • 131.5 84.5 6.2 0.25 • 146.8 95.6 6.7 0.21 • 169.5 115.9 8.4 0.20 • 205.6 143,6 9.6 0.29 • 231.3 161.3 10.8 0.36 • 262.7 191.2 11.9 0.33 • 297.1 221.3 14,0 0.36 • 317.7 239.7 15.6 0.45 • - - 22.5 0.44 • - - 24.0 0.49 Source: World Bank Dr Mothae Anthony Maruping
RECORDED REMITTANCE INFLOWS:LDCs(as % of GDP) 2006 2009 Lesotho 24.5 27.3 Haiti 21.6 18.7 Nepal 18.0 21.6 The Gambia 12.5 - Cape Verde 12.0 - Kiribati 9.9 - Guinea Bissau 9.2 - Bangladesh 8.8 11.4 Uganda 8.7 - Togo 8.7 10.1 NB: Samoa (2009) 25.8% Senegal (2009) 9.8% Source: World Bank Dr Mothae Anthony Maruping
ECONOMIC IMPLICATIONS OF REMITTANCES TRANSFERS TO COUNTRY OF ORIGIN REMITTANCES TRANSFERS CAN TRIGGER BENEFICIAL CHAIN REACTIONS IN THE ECONOMY OF THE RECEIVING COUNTRY THROUGH: • FOREIGN EXCHANGE HOLDINGS • INCREASED DEMAND FOR CONSUMER GOODS & SERVICES • NATIONAL SAVINGS RATE • INVESTMENT Dr Mothae Anthony Maruping
IMPLICATIONS OF REMITTANCES VIA FOREIGN EXCHANGE INCREASE • FOREX INFLOWS CAN BOOST CONFIDENCE • ENHANCED CONFIDENCE CAN: - IMPROVE CREDIT RATING (CREDIT WORTHINESS) [EASIER ACCESS TO INTERNATIONAL CREDIT MARKETS] - GENERATE FDI INFLOWS ( INCREASED INVESTMENT LEADING TO CREATION OF JOBS) NB: The downside of it is that: - if not properly managed this can lead to appreciation of currency: > exports could lose competitiveness in international markets > imports would be cheaper > external current account balance could be adversely affected - pumping too much money into the system (excessive Money Supply) through loose monetary policy will tend to lead to higher inflation rate Dr Mothae Anthony Maruping
IMPLICATIONS OF REMITTANCES VIA DEMAND BOOST REMITTANCES INFLOWS WOULD TEND TO BOOST DEMAND FOR GOODS & SERVICES [ AS RECIPIENTS SEEK TO MEET BASIC HUMAN NEEDS: FOOD, CLOTHING, SHELTER, HEALTH, EDUCATION] THROUGH THE MULTIPLIER EFFECT: - BENEFICIAL EFFECTS WOULD SPREAD RIGHT THROUGH THE SYSTEM - PUBLIC REVENUE WOULD RISE (LDCs DEPEND HEAVILY ON INDIRECT TAXES TO RAISE PUBLIC REVENUE – MORE IS COLLECTED WHEN SPENDING IS HIGH) RISK: IF NOT PROPERLY MANAGED THIS CAN TRIGGER INFLATION Dr Mothae Anthony Maruping
IMPLICATIONS OF REMITTANCES VIA SAVINGS INCREASED SAVING: • AMOUNTS TO MOBILISATION OF DOMESTIC RESOURCES FOR INVESTMENT • IT WOULD BE A CUSHION AGAINST SHOCKS FOR INDIVIDUALS CONCERNED • FORMAL & INFORMAL DEPOSIT TAKING INSTITUTIONS WOULD TEND TO THRIVE Dr Mothae Anthony Maruping
IMPLICATIONS OF REMITTANCES VIA INVESTMENT IF REMITTANCES TRANSFERRED GO DIRECTLY INTO INVESTMENT: - BUYING TREASURY BILLS (TBs) AND BONDS - EQUITY MARKETS ( BUYING SHARES) - INVESTING DIRECTLY IN SMEs & OTHER Investments would : - generate employment - boost demand for capital products - through development of linkages benefits would permeate through the system REMITTANCES INFLOWS SEEN BY SOME ANALYSTS AS MORE STABLE THAN ODA & FDI Dr Mothae Anthony Maruping
IMPACT OF MIGRATION AT OTHER LEVELS • CONTRIBUTES TO HUMAN DEVELOPMENT • MIGRANTS THEMSELVES GET TO BE TRANSFORMED FOR THE BETTER (EXPOSURE). THIS IS IMPROVED HUMAN CAPITAL • ENCOURAGES TRANSFER AND DIFFUSION OF KNOW-HOW & TECHNOLOGY • GENERATION OF TRADE LINKS BETWEEN HOST AND ORIGIN COUNTRIES (identification of business opportunities, development of trade networks between countries of origin and destination) Dr Mothae Anthony Maruping
MAINSTREAMING MIGRATION INTO NATIONAL POLICIES FOR DEVELOPMENT GIVEN TREMENDOUS POSITIVE IMPACT THAT MIGRATION IS HAVING ON LDCs & DEVELOPING COUNTRIES IN GENERAL IT IS IMPERATIVE TO MAINSTREAM MIGRATION ISSUES IN NATIONAL & REGIONAL POLICIES, PLANS & PROGRAMMES MIGRATION SHOULD ALSO BE AN INTEGRAL PART OF THE UN LDC IV OUTCOME DOCUMENT & OF ADOPTED NEW PLAN/PROGRAMME BEST PRACTICES AMONG DEVELOPING COUNTRIES SHOULD BE SHARED AT THE NATIONAL & REGIONAL LEVELS LDCs SHOULD BE ASSISTED WITH THE TASK OF ADOPTING BEST PRACTICES IN THIS AREA Dr Mothae Anthony Maruping
POLICIES FOR MAINSTREAMING MIGRATION IN NATIONAL & REGIONAL ENDEAVOURS AGREE WITH AUTHORS OF BACKGROUND PAPER THAT: • MIGRATION SHOULD BE MAINSTREAMED IN NATIONAL & REGIONAL POLICIES, STRATEGIC FRAMEWORKS, ACTION PLANS & PROGRAMMES OF ACTION IN ORDER TO MAXIMISE ITS BENEFITS • IMPROVE INTERNATIONAL AGREEMENTS TO FACILITATE MIGRATION & REMITTANCES TRANSFERS (BILATERAL & MULTILATERAL) • INITIATIVES SUCH AS FINANCING FACILITY FOR REMITTANCES (FFR) SHOULD BE STRENGTHENED & THOSE SERVING THE URBAN COMMUNITIES NEED TO BE DEVELOPED IN LDCs Dr Mothae Anthony Maruping
LESOTHO: HISTORY OF MIGRANT LABOUR HAS BEEN DELIBERATE POLICY OF THE COLONIAL REGIME TO TURN & MAINTAIN LESOTHO ( ALONG WITH BOTSWANA, MALAWI, MOZAMBIQUE & SWAZILAND) AS RESERVOIRS OF CHEAP UNSKILLED LABOUR FOR SOUTH AFRICAN MINES & FARMS SINCE THE 19TH CENTURY • MIGRANTS SERVED SHORT TERM CONTRACTS • NO UNIONS & NO LABOUR RIGHTS • NOT ALLOWED TO BE ACCOMPANIED BY SPOUSES • VERY LOW WAGES & NO BENEFITS OR SOCIAL SECURITY IT WAS SOME FORM OF SLAVE LABOUR CONTINUATION WAS ENSURED BY NOT DEVELOPING THESE COUNTRIES. IT BECAME A TRADITION Dr Mothae Anthony Maruping
LESOTHO: CHANGING COMPOSITION OF MIGRANTS MIGRATION PRACTICE WAS CULTIVATED FOR OVER DECADES IN THE COLONIAL DAYS & IS ENTRENCHED WHILE STRUGGLING WITH THE DEVELOPMENT EFFORTS MIGRATION IN ONGOING DUE TO THE PULL AND PUSH FACTORS CATALOGUED EARLIER COMPOSITION OF MIGRANTS HAS BEEN CHANGING FROM UNSKILLED ( MINE-WORKERS & FARM WORKERS) TO INCREASINGLY SEMI-SKILLED & HIGHLY SKILLED (PROFESSIONALS) Dr Mothae Anthony Maruping
LESOTHO: CHANGING COMPOSITION OF MIGRANTS (CONT.) • THERE IS SYSTEMATIC RELATIVE DECLINE OF RECORDED UNSKILLED MIGRANTS (MINING, FARMS, FACTORIES, SERVICE SECTOR) • NOTICEABLE INCREASE OF ARTISANS, TECHNICIANS & PROFESSIONALS • SOME INCREASE OF IRREGULAR (UNRECORDED) MIGRANTS FOR REASONS LISTED EARLIER Dr Mothae Anthony Maruping
PREFERRED COUNTRY OF DESTINATION BY LESOTHO MIGRANTS SOUTH AFRICA IS BY FAR THE MOST PREFERRED COUNTRY OF DESTINATION: WHY SO? • ENTRENCHED TRADITION • PROXIMITY (IMMEDIATE & ONLY NEIGHBOUR) • EASE OF EFFECTING TRANSFERS ( COMMON MONETARY UNION & HAND-TO-HAND DELIVERY DUE TO PROXIMITY) • ETHNIC & CULTURAL TIES Dr Mothae Anthony Maruping
SIGNIFICANCE OF REMITTANCES IN LESOTHO’s ECONOMY:SOURCES OF FUNDING DEVELOPMENT IN LESOTHO (2000 – 2009) As % of GNI FDI ODA DS EB RR FX • 2.8 3.24 28.4 58.0 23.5 9 • 3.0 3.78 35.0 78.3 22.2 11.7 • 3.2 5.19 30.0 57.4 21.6 6.4 • 3.3 3.78 25.7 45.5 21.3 5.6 • 3.3 2.87 26.6 39.3 21.0 5.2 • 3.3 2.82 23.0 36.5 18.4 5.5 • 4.9 2.04 30.9 35.6 19.0 6.7 • 5.3 2.48 29.9 37.0 21.7 7.6 • 9.6 2.9 35.3 37.8 20.6 8.5 • 7.6 8.19 29.6 27.3 17.2 7.9 Source: Central Bank of Lesotho Notes: Foreign Direct Investment (FDI), Official Development Assistances (ODA) Domestic Savings (DS), External Borrowing (EB), Recorded Remittances (RR) Foreign Exchange Holdings in months of import cover (FX) Dr Mothae Anthony Maruping
SIGNIFICANCE OF REMITTANCES IN THE ECONOMY OF LESOTHO (CONT.) CLEARLY IN LESOTHO ODA & FDI PLAY RELATIVELY LESS ROLE. ODA PER CAPITA IS VERY LOW IN LESOTHO EVEN THOUGH AN LDC DOMESTIC SAVINGS (?), EXTERNAL BORROWING (MAINLY CONSESSIONAL FROM IDA & AFDF etc), REMITTANCES & EXPORT EARNINGS PLAY A RELATIVELY MAJOR ROLE IN FINANCING SOCIO - ECONOMIC DEVELOPMENT IN LESOTHO Dr Mothae Anthony Maruping
MAINSTREAMING OF MIGRATION IN NATIONAL DEVELOPMENT POLICY IN LESOTHO THOUGH MIGRATION & REMITTANCES PLAY SUCH A PIVOTAL ROLE IN THE ECONOMY OF LESOTHO THEY ARE NOT MAINSTREAMED IN THE NATIONAL DEVELOPMENT POLICY THERE IS URGENT NEED TO DO SO NATIONAL STRATEGIC PLAN (VISION 2020) DOES NOT ADDRESS IT PRSP MENTIONS IT EN PASSE DEVELOPMENT PLANNING PROCESS IS JUST BEING RESUSCITATED (HOPEFULLY WILL MAINSTREAM THE ISSUE) Dr Mothae Anthony Maruping
MIGRATION IN POLICY & PLANS MIGRATION AND REMITTANCES ISSUES OUGHT TO BE AN INTEGRAL PART OF: • NATIONAL POLICY • PLANS: - STRATEGIC FRAMEWORK - ACTION PLAN - PROGRAMMES OF ACTION ( INCLUDING PRSP) Dr Mothae Anthony Maruping
EFFORTS OF MIGRANTS & DIASPORA IN LESOTHO MIGRANTS WITH CO-OPERATION AND ASSISTANCE OF AUTHORITIES MEANTIME HAVE: • FORMED CO-OPERATIVES (RETAIL AND SMALL SCALE MANUFACTURING) • ENGAGED IN SOME AGRICULTURAL PROJECTS • FORMED AND MAINTAINED SAVINGS & LOANS ASSOCIATIONS & CREDIT UNIONS • UNDERTAKEN PPP PROJECTS (e.g. New Referral Hospital) • BOUGHT EQUITY IN SOME COMPANIES • BUILDING DECENT SOLID MODERN HOMES MUCH MORE CAN & NEEDS TO BE DONE WITH ASSISTANCE AND CO-OPERATION OF THE AUTHORITIES LESSONS CAN BE LEARNED FROM BEST PRACTICE CASES Dr Mothae Anthony Maruping
WAY FORWARD FOR LESOTHO • INTENSIFY DEVELOPMENT EFFORTS ON ALL FRONTS (WITH CLEAR OBJECTIVES & STRATEGIES) • BORROW LEAF FROM BEST PRACTICE CASES IN MAINSTREAMING MIGRATION [e.g. DRC (2006), Rwanda (2007), Senegal (2006), Sierra Leone (2005) & Bangladesh (2005) Ghana (2005) though not an LDC] • EXPEDITE: - FORMATION OF EFFECTIVE DIASPORA ASSOCIATIONS (AUTHORITIES SHOULD KEEP IN CLOSE TOUCH WITH THEM) - ADOPTING POLICIES THAT RESPECT RIGHTS AND CHOICES OF MIGRANTS AND DIASPORA - FORMULATING POLICIES THAT FACILITATES QUALITY MIGRATION - PROVIDING GUIDANCE AND SUPPORT TO MIGRANTS - ENCOURAGING & NURTURING HIGHER SAVINGS, MORE INVESTMENT, FOR MIGRANTS AND DIASPORA (PARTNERSHIPS & NETWORKING) - IMPROVING ARRANGEMENTS WITH DESTINATION COUNTRIES • REGIONAL STRATEGIES IN THIS REGARD ARE NECESSARY Dr Mothae Anthony Maruping
WAY FORWARD FOR LESOTHO (CONT.) • CREATE RELEVANT INSTITUTIONS & REORGANISE EXISITING STATE INSTITUTIONS IN A WAY THAT ACCOMMODATES & ADDRESSES MIGRATION & DIASPORA ISSUES e.g. focal point, inclusive national steering committee, relevant national implementation unit, • DEVISE EFFECTIVE MONITORING & EVALUATION MECHANISM & A CLEAR ACCOUNTABILITY FRAMEWORK Dr Mothae Anthony Maruping
CONCLUSION • MIGRATION, REMITTANCES WILL CONTINUE GLOBALLY • FINDING WAYS OF MAXIMISING IMPACT OF REMITTANCES ON DEVELOPMENT IN DEVELOPING COUNTRIES, ESPECIALLY LDCs, IS A CHALLENGE • SOME COUNTRIES, INCLUDING LDCs, HAVE STARTED WORKING HARD TO ENSURE MAXIMISATION OF BENEFITS EMANATING FROM MIGRATION • MAINSTREAMING MIGRATION IN NATIONAL & REGIONAL POLICIES, PLANS & PROGRAMMES IS IMPERATIVE • EXPERIENCE SHARING SHOULD BE ENCOURAGED • NEW UN LDCs (2011) OUTCOME DOCUMENT SHOULD ADDRESS MIGRATION AND RELATED ISSUES ADEQUATELY Dr Mothae Anthony Maruping
THANK YOU FOR YOUR KIND ATTENTION Dr Mothae Anthony Maruping