Shafal – Improving remittance management for migrants and their families in Bangladesh

Switzerland, represented by the Embassy of Switzerland in Bangladesh, and the UN Capital Development Fund (UNCDF) signed an agreement to implement the Shafal - Remittance Management for Socio-economic Stability of Migrant Families programme aiming to improve services for the efficient management of migrants’ remittances and to strengthen the resilience of migrant families. The signing took place in the presence of Ms. Corinne Henchoz Pignani, Head of Cooperation, Embassy of Switzerland in Bangladesh and Ms. Maria Perdomo, UNCDF Regional Coordinator for Asia.

With an initial budget of US$8 million, co-funded by Switzerland and UNCDF, the four-year inaugural phase of the Shafal programme is set to work in five migration-prone districts, mainly in the Chattogram and Dhaka divisions. By enabling productive investment, providing entrepreneurial capacity to low-income migrant families and improving the systems for better remittance management, Shafal will directly benefit more than 9,000 individuals from migrant families. Additionally, 800,000 people from these migration-prone districts will be reached through awareness campaigns.

Speaking at the signing ceremony, Ms. Corinne Henchoz Pignani said, Migrant workers and their families can improve their socio-economic well-being and resilience by making informed decisions and accessing opportunities to improve their financial situation. We are excited to partner with UNCDF as the cofounder and implementing agency of this programme to bring these opportunities to reality.

Bangladesh has around 14 million migrants working globally, who remitted around $99 billion in the last five years. Remittances have played a major role in transforming the socio-economic dynamics of rural Bangladesh and hence contributing towards poverty reduction. According to the World Bank, without remittances, 48 percent of Bangladeshi households with at least one migrant would be poor, increasing Bangladesh's poverty rate by 5 percent. However, the utilisation of remittances remains a challenge. Two-thirds of the remittance-receiving households do not have any savings and more than half do not have investments due to lack of access to information about the proper utilisation of remittances. This makes them more vulnerable to economic shocks that can potentially push them back into poverty. On the other hand, financial institutions are mostly unaware of this potential clientele and there is a general lack of coordination among various service providers and duty-bearers.

Against this backdrop, the Shafal programme will address three challenges that prevent migrant workers and their families from fully benefiting from the positive impacts of remittances. About the first challenge, Maria Perdomo, UNCDF Regional Coordinator for Asia stated,Migrant workers and their family members need access to the necessary knowledge to build a feasible strategy to accumulate assets and invest them in income-generating activities. Operational financial and entrepreneurial knowledge is key in this context, and the programme strives to provide both migrants and their families with information and adequate services.

The second challenge pertains to the availability and accessibility of financial products and services. Once the migrant workers and their families have developed their strategy, they need suitable financial instruments for asset accumulation and investment. Collaboration with interested financial institutions will enable demand-driven product development, offering vital services for asset management. Advancements in digitalisation will allow the delivery of high-quality products to low-income migrant families at reasonable costs. The programme focuses on creating a basic banking offer for migrant workers and their families, including transfers, savings and insurance to cover major risks.

Lastly, the third challenge is embedded in the regulatory framework and the necessary dialogue with the Government and non-governmental institutions providing services to migrants. The Government of Bangladesh places a strong emphasis on bolstering support for migrant workers. Policy dialogues with the authorities will help improve legal and regulatory frameworks to secure the rights of migrant workers and the security of their assets in financial institutions. Cooperation with public services for migrant workers will ensure that the Shafal programme aligns with the Government’s efforts to provide better support to migrants.