The New Frontier: Linking Microfinance and Remittances

There is a natural strategic link between microfinance and remittances. Research data show that 40% of total remittances go to the rural areas where MFIs are present. However, most MFIs fail to recognize the opportunity in remittances as one of the means to achieve financial sustainability and social mission. Remittances as a fee-based product offer the opportunity to MFIs to achieve financial goals. At the same time, money from poor migrants in host countries send remittances to even poorer households in their countries of origin. MFIs could offer remittance receivers the opportunity to leverage remittances with pro-poor financial products, thus achieving their social mission. The course will present different remittance operations models where MFIs could participate. It will outline the advantages and disadvantages of the different remittance operations models as well as tools on how to negotiate with money transfer operators. The course will also provide guidelines for microfinance institutions on how to develop pro-poor financial products that are linked to remittances.