[EU] EC, IFAD to assist in fight against poverty

from the Tide News, Nigeria

The European Commission (EC) and the International Fund for Agricultural Development (IFAD) have launched a new initiative to alleviate rural poverty in developing countries, IFAD announced in Rome on Thursday.

The two organisations have established a funding facility for innovative remittance services, IFAD said in a press release.

Remittances are the sums of money that migrant workers send home to their families, which help fight rural poverty in some of the poorest parts of the world.

Poor families use remittances to pay for food, housing, healthcare and education. Although the individual amounts sent are often small, remittances put money directly in the hands of rural poor people.

According to the World Bank, in 2005 global migrant remittances sent by formal financial institutions totaled more than 160 billion dollars.

The actual size of remittance flows may be as much as 50 per cent higher, if unrecorded flows through informal channels are included.

Today remittances represent the second largest inflow of foreign capital to developing countries, just behind foreign direct investment.

Acknowledging the United Nations (UN) agency’s experience in bringing financial services to rural poor people, the EC has contributed 4 million euros to IFAD.

The money will be used to establish a Funding Facility on Remittances and to support the second phase of IFAD’s programme to promote savings and investments in poor rural areas in Latin America and the Caribbean that receive remittances from migrants, according to IFAD.

“The EC and IFAD recognise that in order for remittances to have the greatest impact on rural poverty, they must be easily accessible, cost effective, and whenever possible, linked to other financial services such as savings, loans and insurance.

“These are services that are often not readily available in rural areas,” said Henri Dommel, IFAD’s Senior Technical Advisor for Rural Finance.

The funding facility will also support projects that promote the development of strategic partnerships between formal financial institutions and other institutions with experience in remittances, including NGOs, hometown associations, international money transfer organisations and credit unions.

IFAD is a specialised agency of the UN dedicated to eradicating poverty and hunger in rural areas of developing countries.