The Remittance & Payments Partnership (RPP) is a high profile DFID-Bangladesh project designed to produce measurable impacts on the price, speed and growth of remittances in Bangladesh with an overall goal to “promote pro-poor economic growth in order to increase the incomes and employment for the poor”. Remittances are very important to Bangladesh at around 7% of GDP and growing at around 10% per annum. The Government of Bangladesh has an on-going strategy to strengthen the flow of formal sector remittances as one pillar in it’s Poverty Reduction Strategy, recognition that remittance flows are the leading source of external financing and their potential for stimulating economic growth and reducing poverty. The RPP Program is a 7.5 million GBP grant funding a three-year multi-level project. Bangladesh Bank is the Government of Bangladesh’s implementing agency providing overall project direction through the establishment of a RPP Project Oversight Board.
RPP’s goal is to encourage the flow of remittances, through formal channels, to poor and rural Bangladeshi households and private micro enterprise development, and to enhance the impact of remittances on growth and poverty reduction. With a higher level of involvement of banks and other financial institutions in the remittances market, remittance recipients can benefit from access to other financial services such as savings facilities, thus being able to use remittances more ‘productively,’ and increasing rates of financial inclusion.
The programme will improve remittances for more than 1 million migrants, as well as receiving households, directly benefiting up to 4.5 million people. A component is included to directly interface with migrants to the Middle East, in providing them with information on remitting and on their rights as workers. If successful, the programme will reduce the cost of remittances by 20%, and speed up processes by 20% - significant in terms of these flows annually being worth around $3.8 billion (2004). Given the sheer volume of remittances, they play a much greater role than readymade garments sector in terms of sustaining the economy, and to some extent reflect the success of policies pursued by GOB since 2000. In addition, much of this money appears to be channelled to the rural poor, and this brings direct economic benefits to where they are needed, thus this programme seeks to facilitate such flows.
The project is comprised of three interrelated outputs which are focused on: improving the enabling environment and modernization of the payment systems infrastructure; generating new and better remittance products through a “Challenge Fund”: and providing more information on remittances to migrants through higher quality information collection, outreach and analysis. The three outputs are interdependent in supporting the overall goal of increasing formal sector remittance flows.
Output 1 Objectives
Output 1’s overall objective is the introduction of a modern payments system through the implementation of the National Payment System Strategy, supported by a range of private and public stakeholders and led by the National Payment System Council. Increasing regulation of capital flows, following newly introduced anti-terrorism and money laundering, are reducing the viability of informal remittance systems for international migrant workers and inducing a shift to formal systems that need to be strengthened, and computerised. Output 1 will also support the development of an Automated Clearing House (ACH) for Bangladesh. Implementing an ACH for Bangladesh Bank is an integral part of modernizing the country’s payments environment and the first deliverable of this project. The approach is to build on existing institutions, in particular Bangladesh Bank, and to build sustainability into all aspects of the work in Output 1.
Output 2 Objectives
Output 2 will improve the range of remittance products through the operation of a challenge fund that will provide grants for innovation and infrastructure investment. The Remittances and Payments Challenge Fund (RPCF) is a key RPP component that complements work on Output 1, especially in giving market based information to inform the legal and regulatory activities and Output 3, where projects funded by the RPCF can provide additional reinforcement to support the migrant education process.
Ouput 3 Objectives
Output 3 of the project will provide better information to migrants on their rights and better understand migrants’ needs. The activities of Output 3 are diverse and wide-ranging and will be jointly implemented by the International Organisation for Migration (IOM) and the Refugee and Migratory Movements research Unit (RMMRU).
The different activities under Output 3 will help to address the challenges faced in encouraging migrants to use formal remittance products rather than the informal routes that many still prefer. Study evidence suggests that informal channels are often favoured by migrants and their families as they provide a level of familiarity and accessibility those formal channels cannot match, and they are generally perceived as being easier to use for a significant number of Bangladeshis who are not familiar with banking facilities. The activities under Output 3 will support better information and more choice in the use of remittance products and providers. They will also create valuable “business case” information for service providers and policy makers, encouraging service providers to invest in products and services that respond to market opportunities, and providing policy makers with better quality data to inform, prioritize and sequence reforms in the policy environment. All activities under output three will be aimed both at male and female migrant workers. It is a mandate of both IOM and RMMRU that all their activities be gender sensitive.
There are broadly three components under Output 3: improved utilization of remittances, better understanding and better tracking. The aims of this Output and their associated activities and the results that are intended to be achieved are outlined and further explained below.
Component A: Improved Utilisation of Remittances
This component aims at four specific outcomes:
1. Targeting migrants with better information on how to remit safely and ensure fast and efficient remittance transfer – aiming to achieve this through large scale Non Government Organisations (NGOs), the media and through pre-departure MoEWOE briefings.
2. Providing workers with information on their rights as workers in information on their rights as workers in the destination countries – especially for women migrants- and routes for pursuing in the case of problems.
3. Providing information on the use of remittances for productive activities and local economic development- pilot to using remittance transfers for community level development, better access to saving products, links with MFIs etc.
4. Training for bank officials in the needs of migrants in remitting to Bangladesh and link made with migrant groups.
The changes and upheaval experienced by migrants leaving Bangladesh to take up work abroad, or relocating internally to take up work in Bangladesh, present opportunities to bundle education in financial products with other information such migrants will require. In a population with such a high proportion of people unbanked, and where migration and associated remittances touches the lives of so many, the potential for linking broader education on financial products and services with information on remittances is clear.
Migrants often lack basic access to information as regards their rights as workers and may not know where to obtain such information once in their country of destination. Information campaigns and awareness raising initiatives will have to address both those migrants about to emigrate, as well as those already in destination countries.
Components B and C: Better Understanding and Better Tracking
These components aim at six specific outcomes
• Research on a number of key issues related to remittance such as understanding the poverty profile and geographic base for migrant workers in Bangladesh; better understanding of the needs of intern migrants in terms of remittance and transfer products;
• Research taken forward and used to innovate 5 new remittance transfer products within the RPCF;
• Capacity building of the Bureau of Manpower Employment and Training (BMET) in creating more information on migrants; such as socio economic background poverty level;
• Robust remittance indicators formulated to measure access, poverty profile, costs, efficiency etc. in inception phase baseline contracted during Y1
• Capacity building of statistics institutions responsible for drawing up remittance statistics – Bangladesh Banks, BMET, Bangladesh Bureau of Statistics (BBS);
• Impact assessment commissioned to measure impact of the project (not part of the project description as it will be commissioned by DFID, as per Memorandum of Understanding (MoU))
