7th ADB-ADBI-OECD-ILO Roundtable on Labor Migration in Asia:

Finance and technology to increase the positive impact of

migration on home countries

Mobilizing diaspora and increasing

the development impact of remittances

Ricardo Sanchez Mendez

The views expressed in this presentation are the views of the author and do not necessarily reflect the views or policies of the Asian Development Bank
Institute (ADBI), the Asian Development Bank (ADB), its Board of Directors, or the governments they represent. ADBI does not guarantee the accuracy of the
data included in this paper and accepts no responsibility for any consequences of their use. Terminology used may not necessarily be consistent with ADB 1
official terms.
 National Development Plan and the Special Migration
Program

In Mexico remittances contribute to reducing poverty and increasing the human

capital of households and receiving communities. The 90 % of the remittances
are used for the purchase of food, housing and other items, leaving less than 3%
for productive projects.

In the objective 5.4 of the National Development Plan (2013-2018) of the

government of Mexico, referred to Look after the interests of Mexicans abroad
and protect the rights of foreigners in the national territory it establishes the
line of action related to Encourage greater linkage between Mexican
communities abroad with their populations of origin and their families, which
promotes the sending and usage of remittances to our country.

In that sense, the Special Migration Program in its strategy 2.5 expects to
Reduce the cost and promote the productive usage of remittances looking for
decreasing commissions, financial education, financial inclusion, and productive
investment.

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 Top 20 remittance-receiving countries, 2015

During 2015, Mexico ranked as

the fourth remittance-receiving
country worldwide, with an
income of approximately $25
billion USD, accounting for 4.4%
of the world total, only after
India (12.3%), China (10.9%) and
Philippines (5.0%).

Likewise, the majority of top

remittance-receiving countries
are located in Asia and Europe.
Mexico is the main remittance-
receiving country in the
Americas and, together with the
U.S., one of the only two
American countries among the
top 20 receiving countries. Source: Yearbook of Migration and Remittances, Mexico 2016. p. 124

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 Top remittance-receiving countries in Latin America
and the Caribbean, 2015

In 2015, Mexico was the main

remittance-receiving country in
Latin America and the Caribbean,
accounting for 37.6% of the total.
Guatemala (9.4%) and the
Dominican Republic (7.3%) ranked
second and third respectively.

It is worth mentioning that the

amount of remittances received by
these two countries ($11,394
million USD) is less than half of that
received by Mexico, and of the
countries of South America
Colombia stands out with 6.6%.

Source: Yearbook of Migration and Remittances, Mexico 2016. p. 127

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 Income from family remittances to Mexico, 2015
(million USD and % share)

Nearly 97.5% of the remittances to Mexico were sent by electronic transfer while
36.3% were paid through a banking institution.

Source: Yearbook of Migration and Remittances, Mexico 2016. p. 131 5

 Income from family remittances from the U.S. to
Mexico, by state of origin, 2015

The main country of origin of remittances sent to Mexico was the U.S., accounting
for over 95.% of the total amount in 2015, equivalent to $23,683.8 billion USD. The
main states of origin of the flow of remittances into Mexico were California, Texas
and Illinois. Canada ranked second with $254.4 million USD.

Source: Yearbook of Migration and Remittances, Mexico 2016. p. 132 6

 Average cost of sending $300 USD from selected U.S.
cities to Mexico, 2015

The average cost per shipment of remittances from the United States varies in each
city, Chicago is the city with the lowest costs of sending $300 USD with average
rates of $5.8 USD and Houston and Indianapolis are the US cities with the highest
sending costs, with rates of $8.9 USD.

Source: Yearbook of Migration and Remittances, Mexico 2016. p. 140 7

 Uses of remittances sent to Mexico, 2014

The principal uses of

remittances sent by
both women and
men are food and
clothes, paying off
debts, and home
improvements.
Among men, 75.1%
specified that one of
the goals of the
remittances they
sent was for food
and clothing, while
among women, this
percentage was
59.2%.
Source: Yearbook of Migration and Remittances, Mexico 2016. p. 131
 Non-agricultural microenterprises of households
receiving remittances in Mexico, 2014

In 2014, 41.7% of the

384,000
microbusinesses
of households receiving
remittances were in the
service sector.

Moreover, 216,000
businesses were run by
households with a
female head of
household, mainly in
groceries and food retail,
and the food industry.

Source: Yearbook of Migration and Remittances, Mexico 2016. p. 138

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 Actions of the Mexican government
3X1 Program

The 3x1 for migrants is a federal government's

program for supporting migrant desire of
improving their hometowns through the
development of community social and productive
projects.
The objective of the Program 3x1 is to support
living abroad to develop social infrastructure and
productive projects in their hometown
communities, with the participation of the
federal, state and local government.
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 3X1 Program

Contributions (%)
Federal Government
State Government
Local Government
Migrants
Gobierno
Federal/Federal
Migrantes/Migrants Government
25% 25%

Gobierno
Gobierno
Estatal/State
Municipal/Local
Governmet
Government
25%
25%

Source: Ministry of Social Development of Mexico. 11

 Origin of contributions projects sponsored
by 3X1 Program (Millions Mexican
Pesos/USD)

Aportacin
Aportacin Aportacin Aportacin Total en Tipo de
Proyectos/ Migrantes/Mi Total en Dlares*/
Ao/Year Federal/Federal Estatal/State Municipal/Local Pesos/Total in cambio/
Projects grants Total in USD
Contribution Contribution Contribution Mexican pesos Exchange rate
Contribution

2013 2023 511.52 284.98 363.27 411.92 1,572.00 120.14 13.08

2014 2062 493.57 273.8 352.51 405.48 1,534.88 104.12 14.74
2015 1949 481.67 249.81 333.19 408.04 1,472.72 85.38 17.25
2016 2154 509.92 310.43 349.95 478.84 1,649.14 79.98 20.62

Total 1,996.68 1,119.02 1,398.92 1,704.28 6,228.74 389.63

* Tipo de cambio tomado del Banco de Mxico al 31 de diciembre de cada ao/ Exchange rate taken from the Mexican Bank to
December 31 of each year

Source: Ministry of Social Development of Mexico.

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 Actions of the Mexican government

Migrant housing program Costruye en tu Tierra

The objective of the Program is to support about 5 thousand Mexican migrants

who live in the United States and their families that live in Mexico. This program is
subsidized by the national and state government.

Financial and remittance services

L@Red de la Gente its a network of 184 Popular Savings and Credit Societies
together with the National Savings Bank and Financial Services of Mexico
(BANSEFI in Spanish). They are stablished in all around the country with the
objective to offer financial services as remittances, savings, credit and financial
education for Mexicans abroad.

TELECOMM - TELGRAFOS
This public organism offers payment service in Mexico of remittances, it is
operated by various companies such as Western Union, MoneyGram, Orlandi
Valuta, Vigo and Bancomer Transfer Services, among more than 60 options.
The payment in Mexico to the relatives of the migrants or beneficiaries is made in
cash quickly and safely through any of the country's more than 1,700 telegraphic
branches. 13
 Conclusions

One of the main causes of migration is the search of better living conditions for the life
of families; therefore this phenomenon is closely linked to remittances.

For Mexico, remittances are a significant source of currency income. Mexico is the 4th
country worldwide to receive remittances. Remittances are not only essential for
maintenance and welfare of families, but they also impulse the development of
communities.

For this reason, the Mexican government continues creating and supporting programs
to improve remittance transfers, facilitating financial education and stablishing projects
of social and productive investment for the benefit of the communities of origin.

The objective of the programs and actions of the Mexican government in migratory
matters are directed to promote the regional and local development, promoting a
connection between the nationals living abroad with their communities of origin.

In that sense, we continue to strengthen actions to increase options for remittance

transfers and reducing their costs. It is relevant that the financial institutions elaborate
funding programs focused on the development of migrant communities, as well as to
foster strategies and programs which promote social and productive investment to
achieve a greater impact of remittances in the local and national development.
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