Remittances touch the lives of over one billion people worldwide, senders and receivers alike, and account for more than 3% of GDP in more than 80 countries, reaching more than 30% in some cases. At EUDiF, we recognise the importance of remittances as they often represent the entry point through which diaspora contributions begin to generate wider and longer-term impacts. Our research, findings and engagements consistently show how remittances play an important role in supporting broader development goals.
In observance of the International Day of Family Remittances on 16 June, ICMPD shines a light on some remittance practices we have encountered in our work, with this year’s focus on rural resilience, entrepreneurship and employment.
The Remittance–Investment Continuum
The distinction between diaspora remittances and investment is not always clear-cut. While they are distinct financial flows, in practice they often operate in parallel and can be mutually reinforcing. Remittances sent to support families frequently have wider development spillovers, including savings mobilisation and the gradual financing of small businesses or housing improvements. At the same time, diaspora investment provides an additional channel for long-term engagement, complementing the essential role that remittances continue to play in supporting household wellbeing and local economies.
As highlighted in our learning by doing dossier, diaspora investment can complement remittances. It can generate longer-term development benefits by creating job opportunities and supporting innovation and business growth. This has led governments and development partners to design policies that encourage diaspora communities to engage not only financially, but also through the transfer of skills and expertise.
Unlocking this potential, however, is not without its challenges, shaped by both macro- and micro-level factors. Supportive regulatory frameworks and transparent institutions are crucial in helping diaspora communities invest in their countries of origin with confidence. With more targeted programmes and trust-building measures in place, diaspora communities can become more connected to investment opportunities at home, resulting in more sustainable, inclusive growth.
Remittances in Action: supporting entrepreneurship and rural economies
As illustrated in the EUDiF practice database, several countries have introduced diaspora engagement schemes that channel diaspora resources into investment. These experiences can serve as useful inspiration for practitioners and governments.
In Armenia, the Local Empowerment of Actors for Development (LEAD) project implemented by ICMPD contributed to the establishment of migrant businesses by giving grants to successful applicants and providing coaching and mentoring to the beneficiaries. As part of that initiative, the EU4IMPACT initiative mobilised remittances investing in local development and job creation. By doing this, it empowered Armenian migrants, returnees and their families by connecting them to local economic actors creating opportunities for investment and knowledge exchange.
This project was inspired but one of the best practices in the region, piloted by Moldova. Launched in 2010, the PARE 1+1 initiative in Moldova illustrates how remittances can be turned into business capital. The scheme matches migrant investments with public funds, while also providing entrepreneurial training to migrants and their relatives for business development. The results have been significant: more than 60% of the participating businesses belong to the agrifood sector, strengthening rural markets and creating employment in rural communities.
Together, these examples show that when effectively harnessed, remittances can build resilience by boosting entrepreneurship and job creation, especially in rural communities.
Would you like to explore more practices related to remittances? Check out our practice collection on remittances.
Whether through remittances or through the broader work, diaspora communities remain a powerful force for rural development. For example, the EUDiF D4D projects in Bangladesh, Cape Verde, Colombia and Togo all address the needs of rural communities by strengthening women’s entrepreneurial potential. These projects bring expertise, investment ideas, skills circulations and innovation to the local level. We will continue to explore this intersection, with a special focus on agriculture, so stay tuned for all upcoming research.