by the MicroCapital Team - Latin America & Caribbean, Trends/Challenges -

Latin America and the Caribbean to Receive $55 Billion in Remittances in 2006 – Ripe for MicroFinance Investment

According to the Inter-American Development Bank (IDB), 2005 remittances to Latin America and the Caribbean will reach $55 billion—$10 billion more than remittances in 2004. As Mexico is projected to receive $20 billion in remittances this year, Central America and the Dominican Republic about $12 billion, and Bolivia, Colombia, Ecuador, and Peru (collectively) about $11 billion, it is clear that remittances have become a major source of income for millions of families.

While typical remittances, usually sent by workers in the U.S., Europe, and Japan, total no more than $300, increasingly larger amounts are being sent between Latin American countries—creating a greater and more immediate need for more cost-effective money transfers to unbanked customers.

Since last year the cost of sending a $250 remittance to Latin America or the Caribbean has decreased from $31.25 to $17.50 or about 12.5% of the total remittance amount to about 7% of the remittance amount; however, with increasing competition, costs will continue to decrease as demonstrated in the below exhibit provided by Pablo Halkyard of the Private Sector development blog.

Additional Resources

1) Main article discussed in entry, USINFO: “2005 Remittances to Latin America, Caribbean to Reach $55 Billion.”
2) “The Future of Money Transfers.”
3) “Remittances: falling cost, growing volume.”

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