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How Remittances Boost Global Education Levels

January 29th, 2020

Education is the most significant catalyst for change and all-round development. For any country to be able to achieve sustainable economic growth, its investment in human capital should gain priority. At a micro level, education can upgrade the financial status of individual households and significantly improve the quality of life and accessibility to social benefits. From an economic perspective, education fuels productivity promotes entrepreneurship and drives technological advancements.

Despite education being a fundamental human right, millions of children worldwide are denied this right along with the opportunity to progress. As per data from the World Bank, there are over 63 million children who are deprived of primary education because their families lack the funds to support their education. Remittances play an essential role in changing this status quo.

Remittances received by such families help them regain their financial autonomy. In addition to fulfilling the basic needs of these households, it also provides children with access to schooling, educational tools, learning aids, and ancillary materials that make learning an inspiring experience.

Statistics on the impact of remittance on education
A UNESCO report on education reveals that remittances form a valuable source of income – especially for developing economies – and play a critical role in elevating lifestyle, healthcare services, and education levels. There is, hence, no doubt that remittances helps raise the education levels, which in turn improves the quality of life in emerging economies. Remittances provide unprecedented opportunities by working as informal sources of foreign aid that helps fund education across age groups, from primary schooling to professional degrees. By enhancing the family income, remittances enable more children to enrol in schooling programmes and provide financial assistance to those who are already attending, to pursue further education. As more remittances flow into low- and middle-income (LMIC) countries (i.e. 76% of the total US$689 billion remitted globally in 2018), more children are likely to attend school. 

Changing the world one transaction at a time 
The positive correlation between remittance and education is cemented with statistics from around the globe. South America has seen the most incredible educational transformation due to remittances. The continent has witnessed a staggering 53% increase in educational spends on account of remittances. 

Coming to Africa, the Sub-Saharan and Central Africa regions have seen a 19% increase in educational spends. In Asia, Filipino families with members working in Korea have tripled their health and education budgets. In India, households that are channelling remittances to education have shown a 17% increase in educational spends compared to families that do not receive remittances. And in Sri Lanka, children from households that received remittances stayed in school longer too. 

Overarching impact of remittance on education                                       
For many impoverished families, sending children to school may not seem like an incentive at all. It is considered desirable to send children to work so that they can earn money for the family.

By channelling remittances to education, there is a possibility of significantly reducing the ills of child exploitation and unpaid labour. For example, according to a study by UNESCO a 10% increase in remittance income allowed Filipinos to reduce unpaid child labour by more than three hours each week and encouraged more children to return to schools. Similarly, teenagers from the Dominican Republic were more likely to attend school if the family was supported through remittance income.

Enabling education by making remittance affordable
International money transfers organisations like Xpress Money are working hard to bring down the cost of remittances in line with the UN’s Sustainable Development Goals (SDG), which recommends 3% for transfer fee and currency conversion.

Presently, the average global cost of sending money is about 6.82% as of Q4 2019, and it is much higher in the African region at around 9%. A gap of nearly 4% makes an enormous difference to the lives and community of expat workers. As per the UNESCO data, saving on transfer fees could amount to US$25 billion per year, allowing recipient families to spend an estimated US$1 billion more on education.

The interplay between remittance and education has a positive cascading effect on the national economy. Young individuals who complete their formal education have dynamic opportunities to develop their minds and their skill levels for community building, civic participation, and leadership. A better-educated population also contributes to economic growth, poverty reduction, improved consumer demand, and increased investment in human capital.

Last words
While some benefits of channelling remittances to education are quantifiable, many effects are intangible. Education undoubtedly makes a huge impact on people’s lives. The UN’s SDG has 17 agendas, and education is the most critical tool that can help achieve 5 out of these 17 goals; including the right to education for all, eradication of poverty, no hunger, decent work and economic growth, and reduced inequality.

So, every time an expat sends money home, they make a direct contribution to the agendas of the SDG. Every unit of currency remitted goes towards feeding a stomach, saving a life, or igniting a mind.

Also Read: Formal versus Informal Remittance Channels: An Overview