A Z M Anas
A new initiative designed to ensure “productive investments” of remittances gets a big boost this year as migrants’ money finds its better way to businesses or enterprise expansion, officials have said.
The Bangladesh Bank is pressing ahead with the plan to extend loans or provide business advisory services to as many as 2000 families linked to overseas migration in dozen-plus districts, allowing them to start new businesses or expand the existing ventures.
“This initiative is without any external aid. It would put no burden on the government either,” Robert Smith, a consultant with Bangladesh Bank’s Remittance and Payment Partnership, said.
“Still, remittances are robust. This money is contributing to the economy and will continue to do so. But it is important to make sure that this money is used more wisely and a returning migrant can utilise his savings the way he should,” he told the FE early this month.
The central bank’s move came after an authoritative study found that almost 80 per cent of the country’s annual remittances went to non-productive spending.
Over the years, money sent home by migrants has far dwarfed other flows of foreign currency, notably overseas aid and foreign investments, making it a vital lifeline for the economy. It is the country’s second biggest source of foreign exchange only after exports.
Bangladesh became one of top 10 remittance recipient countries in the developing world, according to the World Bank, after record 8.75 million overseas jobs in 2008.
Led by the central bank, the step is seen as timely in view of the worsening global economic crisis that has put jobs of millions of migrant workers in jeopardy.
Nearly 23000 Bangladeshi workers returned home during January-March period this year, official data show, exposing the vulnerability of migrants’ jobs amid the worst global recession in 75 years.
Officials at the state-run Manpower Bureau said Dubai deported the majority of Bangladeshi workers after having been hit hardest by the global recession.
Officials involved in the process are hopeful that the project would be “extremely helpful” for returnees from the districts, known as hubs for overseas migration. Dhaka, Chittagong, Comilla, Noakhali and Munshiganj are included in the initial list.
Mr Smith said the Bangladesh chapter of INAFI would be the implementing agency for the project, while other five microfinanciers would collaborate in the initiative.
“These partners will provide returning migrants and migrant families with advice on investment opportunities, entrepreneurship training, vocational training, access to loans and market linkage advisory services,” he said.
“These services can help a returning migrant to continue to support the family and meet other financial obligations through his own entrepreneurship,” the British-born consultant added.
It is difficult to assimilate returnees into the community, Mr Smith said, adding that only business link could fill that gap.
“A returnee may have saved Tk 0.2-0.5 million. But he may not be able to utilise this money because of lack of experience and knowledge. This project will address that.”
“I think, microlenders have experience in financing small enterprises. So they are well-placed to do so for migrants.”
Mr Atikunnabi, head of INAFI-Bangladesh, said nearly 2000 rural migrant families would be trained up under the project, enabling them to enter the world of business, may be for the first time.
He, however, said: “Loan is not important. What is important is the linkage under which a returned migrant can take out credits from banks or micro-lenders and more importantly, support for market linkage.”
Mr Smith said his team is now working for reaching out richer migrant families with similar services by involving Islami Bank Bangladesh Limited (IBBL).
“IBBL knows who migrant families are. So it can better serve the affluent segment of migrants than others can,” he said.
IBBL, the biggest private bank that handles US$1.6 billion in remittances, accounts for more than 23 per cent of the total annual remittances flowing into Bangladesh.
Some 6.3 million migrant workers and millions of others who lived abroad sent home $9.0 billion in remittances last year.
Source: The Financial Express, 17 April 2009