When foreign nationals send money to their home countries, saving does not rank high on their priority list. Remittances are primarily funds to help loved ones with basic needs such as food, education, health and housing. However, not every penny sent as remittance needs to be absorbed for immediate needs. It would be a wise move to keep aside some part of the remittance amount towards savings and investments.
The adage every penny counts holds true in the case of remittances too. A small amount saved regularly can help reap benefits in the long term, especially if your goal is to build funds to buy land or a property in your home country. However many remitters are not sure on the best ways to save as they fear their money won’t be safe in investment schemes. As a result, they tend to adopt an ‘under the mattress’ approach rather than look around for alternatives that will give them a return on their hard-earned capital.
Thanks to international money transfer organizations such as Xpress Money, there is a flexible infrastructure that makes it easy to send funds to banks and non-financial institutions. Most financial institutions like banks have savings accounts as well as deposit accounts which enable remitters to route a portion of their regular transfers where they can gain interest.
With the growth of global remittances and the networks that support them, there is a strong market for diaspora banking and financial products that are tailored to the needs of migrant workers, guiding them on how to save. For example, First Bank of Nigeria provides a service called First Diaspora. Designed for Nigerians living abroad, First Diaspora is a financial platform that includes a special savings account for non-resident Nigerians who want to save towards certain goals.
Another example is Bancolombia, which provides a wide range of financial services across Latin America. The bank has a clear strategy to promote financial inclusion and is committed to chanelling migrant remittances towards savings and investment goals. According to a report titled ‘Transforming Remittances into Savings and Investments’ Bancolombia’s inclusive strategy helped channel migrant remittances towards the diaspora’s savings and investment goals.
Many of the products and services that financial institutions offer are poorly understood and under-used. No matter which home country you belong to, it would be useful to do your research and narrow down options for savers. In addition to diaspora bank accounts, savers should explore other ways to maximize their capital. For instance, diaspora bonds have proved particularly successful in Israel and India. Most countries are aware of the economic value contributed by the migrant population through savings and investments, hence legal structures are in place to encourage savings sourced from remittances.
Thanks to the growing variety of remittance channels and in particular the rise of mobile money, financial inclusion is increasing worldwide. Digital wallets go a long way in helping the unbanked, promote savings and offer interest on stored values. The FinMark Trust, an independent non-profit organisation whose aim is to make financial markets work for the poor, highlighted in a recent report how mobile money is encouraging formal savings. It strongly advocates the payment of interest on mobile money, and cites pioneering examples in Tanzania, Ghana, Malawi and Lesotho.
Whether remitters send money to traditional bank accounts or digital wallets, an additional saving can be made by choosing the right money transfer organisation. With Xpress Money, you can be sure that you are using one of the most cost-effective money transfer services to save for your secure future.