Pardee-CFLP-Remittances-TF-Report

eceiving remittances provides an enormous opportunity for millions of familiesto enter the world’s financial system: to open a savings account, or obtain a loanor mortgage” (Terry 2005, 11).Local development initiatives can be very important in post-conflict situations.Building upon existing remittance systems and encouraging local initiativerather than seeking to import formal financial institutions is relevant in conflictaffectedcontexts where basic financial and legal infrastructures are severelylacking and large parts of populations are displaced: “By focusing on what is leftafter the conflict, rather than what is lost, it is then possible to begin to see thefull potential of remittance systems as potential partners in the developmentof financial systems” (Maimbo 2007, 28). Maimbo emphasizes that sustainablefinancial reforms are long-term processes that require proper sequencingand institutional integration, and introducing and supporting a competitiveand diversified environment for remittance services can often be pivotal. Theprocesses of financial sector development and diversification should thereforeaccord more attention to “promoting alternative providers such as microfinanceinstitutions, credit cooperatives, and postal savings banks” (Mohapatra andRatha 2011, 40). That involves improving coordination among various regulatoryentities and legislatures as well as promoting novel institutional linkagesfor sending and delivering remittances: “Financial democracy also requires newpartnerships: with civil society, nongovernmental organizations, microfinanceinstitutions, and others close to remitters and their families” (Terry 2005, 12).There is an increasing recognition of the need to view financial inclusion initiativesas an integral component of human security. As emphasized in the UNMillennium Development Goals that operationalize the components of humansecurity and set forth strategies for a multi-sided cooperation for global povertyreduction, financial inclusion and microfinance initiatives should not be seenas separate from issues such as environment, health, education, and genderempowerment. Therefore, there is a need to focus on broader, transformationalgoals of financial inclusion, apart from transactional ones like the flow of peopleand capital within microfinance institutions (Goldsworthy 2010, 455). As buildinglocal resilience to a multitude of partially related hazards—economic, environmental,and political—is therefore at the forefront of post-conflict development,remittance systems should involve linkages to diverse local institutions and differentsocial and economic realms.14 A Pardee Center Task Force Report | October 2013