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I live in Washington, D.C.

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But I grew up in Sindhekela, a village in Orissa
in India.

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My father was a government worker.

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My mother could not read or write, but she

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would say to me, "A king is worshiped only in his

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own kingdom. A poet is respected everywhere."

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So I wanted to be a poet when I grew up.

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But I almost didn't go to college

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until an aunt offered financial help.

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I went to study in ___,

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the largest town in the region,

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where, already in college, I saw a
television for the first time.

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I had dreams of going to the United States

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for higher studies.

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When the opportunity came,

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I crossed two oceans, with borrowed money

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for airfare, and only a 20 dollar bill in my pocket.

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In the U.S., I worked in a research center,

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part-time, while taking graduate classes in economics

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and with the little I earned, I would

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finance myself and then I would send

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money home to my brother and mother.

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My story is not unique.

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There are millions of people who migrate each year.

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With the help of the family, they cross oceans,

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they cross deserts, they cross rivers, they cross mountains.

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They risk their lives to realize a dream,

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that dream is as simple as having a

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decent job so they can send money home

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and help the family,

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which has helped them before.

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There are 232 million international migrants in the world.

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These are people who live in a country

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other than their country of birth.

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If there was a country made up of

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only international migrants,

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that would be larger in population

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than Brazil.

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That would be larger in its size

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of the economy than France.

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Some 180 million of them, from poor countries,

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send money home regularly.

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Those sums of money are called remittences.

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Here is a fact that might surprise you:

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413 billion dollars, 413 billion dollars

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was the amount of remittences sent last year

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by migrants to developing countries.

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Migrants from developing countries,

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money sent to developing countries--

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413 billion dollars.

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That's a remarkable number

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that is three times the size of

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the total of development aid money.

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And yet, you and I,

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my colleagues in Washington,

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we endlessly debate and

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discuss about development aid

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while we ignore remittences as small change.

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True, people send 200 dollars per month

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on average, but repeated month after month,

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by millions of people,

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sums of money add up to rivers 
of foreign currency.

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So, India last year received 72 billion dollars, larger than

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its IT exports.

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Egypt, in Egypt remittences are three times

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the size of revenues from the Suez Canal.

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In Tajikistan, remittences are forty-two percent of GDP.

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In poorer countries, smaller countries, conflict

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afflicted countries, remittences are a lifeline,

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as in Somalia or in Haiti.

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No wonder these flows have huge

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impacts on economies and on poor people.

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Remittences, unlike private investment money,

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they don't flow back at the first

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sign of trouble in the country.

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They actually act like an insurance.

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When the family is in trouble,

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facing hardship, facing hard times,

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remittences increase, they act like an insurance.

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Migrants send more money then.

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Unlike development aid money,

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that must go through official agencies

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and governments, remittences

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directly reach the poor,

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reach the family,

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and often with business advice.

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So, in Nepal, the share of poor

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people was forty-two percent in 1995,

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the share of poor people in the population.

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By 2005, it declined later, at a

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time of political crisis, economic crisis.

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The share of poor people went down to thirty-one percent.

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That decline in poverty, most of it,

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about half of it, is believed to be

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because of remittences from India,

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a poor country.

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In El Salvador, the school dropout

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rate among children is lower

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in families that receive remittences.

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In Mexico and Sri Lanka,

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the birth weight of children is higher

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among families that receive remittences.

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Remittences are dollars wrapped with care.

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Migrants send money home for food,

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for buying necessities, for building houses,

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for funding education, for funding

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healthcare for the elderly, for business

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investments for friends and family.

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Migrants send even more money home

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for special occasions like a surgery

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or a wedding. And migrants also send

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money, perhaps far too many times,

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for unexpected funerals that

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they cannot attend.

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Much as these flows do all that good,

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there are barriers to these

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flows of remittences, these

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400 billion dollars of remittences.

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Foremost among them is

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the exorbitant costs of sending money home.

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Money transfer companies structure

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their fees to milk the poor.

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They will say, "up to 500 dollars

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that you want to send, we will charge you

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30 dollars fixed."

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If you are poor and have only 200 dollars to send,

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you have to pay that 30 dollar fee.

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The global average cost of sending

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money is eight percent.

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That means you send 100 dollars,

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the family on the other side receives only

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92 dollars.

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To send money to Africa,

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the cost is even higher:

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twelve percent.

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To send money within Africa,

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the cost is even higher:

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over twenty percent.

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For example, sending money from Benin 
to Nigeria.

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And then there is the case of Venezuela, where,

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because of exchange controls,

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you send 100 dollars and you

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are lucky if the family on the other side

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receives even 10 dollars.

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Of course, nobody sends money to Venezuela

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through the official channel.

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It all goes in suitcases.

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Whereever costs are high,

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money goes underground.

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And what is worse,

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many developing countries actually

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have a blanket ban on sending money

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out of the country.

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Many rich nations also have a

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blanket-ban on sending money 
to specific countries.

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So, is it that there are no options,

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no better options to send money?

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There are.

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Mpesa in Kenya enables people to send money

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and receive money at a fixed cost of only

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60 cents per transaction.

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U.S. Fed started a program with Mexico

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to enable money service businesses

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to send money to Mexico

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for a fixed cost of only 67 cents per transaction.

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And yet, these faster, cheaper, better options

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can't be applied internationally

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because of the fear of money laundering,

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even though there is little data

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to support any connection, any significant

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connection between money laundering

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and these small remittence transactions.

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Many international banks now

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are weary of hosting bank accounts of

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money service businesses, especially

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those serving Somalia.

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Somalia, a country where the

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part-time income is only 250 dollars per year, 250 dollars per year.

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Monthly remittences, on average, to Somalia

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is larger than that amount.

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Remittences are the lifeblood of Somalia.

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And yet, this is an example of the right

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hand getting a lot of aid,

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while the left is cutting the lifeblood

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to that economy, through regulations.

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Then there is the case of poor people
from villages, like me.

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In the villages, the only place where you can

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get money is through the Post Office.

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Most of the governments in the world

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have allowed their post offices to have

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exclusive partnership with money transfer companies.

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So, if I have to send money to my

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father in the village, I must send money

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through that particular money transfer company,

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even if the cost is high.

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I cannot go to a cheaper option.

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This has to go.

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So, what can international organizations,

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social entrepreneurs do to reduce [the] cost

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of sending money home?

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First, relax regulations on small remittances
under 1000 dollars.

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Governments should recognize that

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small remittances are not money laundering.

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Second, governments should abolish exclusive partnerships

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between their post office and the money 
transfer company.

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For that matter, between the Post Office

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and any national banking system that

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has a large network that serves the poor.

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In fact, they should promote competition,

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open up the partnership so that

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we will bring down costs like we did,

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they did, in the telecommunications industry.

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You have seen what has happened there.

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Third, large non-profit philanthropic organizations

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should create a remittance platform

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on a non-profit basis.

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They should create a non-profit

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remittance platform to serve the money transfer

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companies so that they can send money at a low cost,

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while complying with all the complex

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regulations all over the world.

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The development community should

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set a goal of reducing remittance costs

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to one percent from the current eight percent.

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If we reduce costs to one percent,

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that would release a saving of 30 billion per year.

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30 billion dollars, that's larger than the entire

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bilateral aid budget going to Africa per year.

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That is larger than, or almost similar to,

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the total aid budget of the United States government,

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the largest donor in the planet.

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