This case study forms part of a series of case studies on good practices, lessons learnt and recommendations extracted from the projects supported by the UN Joint Migration and Development Initiative (JMDI) to enhance migration management for local development. The experience of the JMDI shows that the most effective initiatives are anchored with local or regional authorities and carried out in a multi-stakeholder and participatory approach, including migrants and migrants’ associations or diaspora. This is increasingly important given global trends of increasing decentralization and urbanization with urban areas being the destination of choice for most migrants and displaced persons. Thus the series aims to provide local actors with tools and ideas to take on this role as many can lack the means, human and financial resources, know-how or necessary support to tap into the local development potential of migration.

This case study focuses on the importance of providing financial literacy training when carrying out efforts to harness the development potential of remittances. While the provision of financial products and mechanisms to facilitate the economic inclusion of families receiving remittances is essential, when accompanied with financial literacy training, it can boost productivity and even enhance the development impact for the whole community. This is particularly important in territories and countries with high emigration rates and dependency on remittances. Yet the absence of proper financial planning as well as access to formal financial services can mean that the costs associated with migration are often too high due to the exorbitant interest of loans taken to facilitate migration, which often results in debt bondage. Thus, access to formal financial institutions is important since it increases the safety of household financial transactions and reduces exposure to possible theft, accidental loss, or forced bribery when carrying money across the border. This, in turn, can perpetuate a vicious cycle of migration and labour bondage. Local and regional authorities have a leading role to play in both providing financial tools as well as promoting financial literacy for the best usage of these tools. They are best placed to do so given their proximity to their constituencies and their in-depth knowledge of the needs of the community. Moreover, they have a pivotal role in ensuring that micro-finance companies and other financial service providers offer fair services that benefit the entire community. They also play a crucial role in linking up migrants’ families with public services aimed at supporting entrepreneurship and strategic investment that are in line with local and national development priorities.