The foreign currency transfers made by individuals through banks during 2012, amounted to USD 1.77 billion, a share of 23 % in the GDP (according to the World Bank). As estimated by World Bank, remittance flows to RM have reached a historical peak in 2007 with a remarkable 36 per cent ratio to GDP. In addition, there are remittances sent through informal channels – typically bus drivers or fellow migrants going home – which is hard to estimate.
Over one fifth of households in Moldova benefit from remittances, the share of remittances in the household’s disposable income is considerable and represents, on average, around 60 per cent. A larger share of households benefiting from remittances is registered in rural area as compared to urban ones, 29.5% and 22.6% respectively, registered in 2008. While remittances have contributed to decreasing poverty in the benefiting households, and have increased access to education, less than 10 per cent of remittances are productively invested, the bulk being used for consumption and acquisition of real estate. In this context IOM activities aim at increasing efficiency of remittances in Moldova.
Data & Research
IOM supported data collection to ensure that policy-makers have at their disposal robust estimates of key macroeconomic variables as well as data on migration modalities, income distribution and poverty. The overall and long-term objective of the surveys is to assist the Government to develop a comprehensive, clear, and objective analysis of migration and remittances and its effect on poverty in Moldova.
In December 2008 IOM published the results of the first survey on assessing the financial literacy and use of bank and financial services and products of Moldovan citizens. The study titled "How Moldovan Households Manage Their Finances - Knowledge and Practices" focuses on the population’s perception of the business and entrepreneurial environments in Moldova, the current use of banking systems, the consumption of bank services and national mass media abroad.
The 2008 Migration and Remittances Survey was finalized in March 2009, based on the data collected by CBS-AXA, analyzed and compiled by the Kiel Institute for the World Economy.
According to the data, collected from 3,914 households living in both rural and urban areas, the average total amount of annual remittance per migrant increased from US$ 1,296 in 2006 to US$ 1,848 in 2008. Sixty percent of migrants reported sending their money home through formal banking channels with less than 12% relying on informal services or personal transfers as the share of households with members abroad having bank accounts had grown to 12%.
The IOM study also demonstrates that over 35% of the population resides in households that receive remittances, with the majority of these flows being used to fund basic household consumption, consumer durables, purchase of housing, and debt repayment. It was found that a meager amount of these flows, less than 7 percent, were used to finance business investments, and as little as 5 percent were deposited into savings accounts.
During 2010-2013, IOM supported the elaboration of the Extended Migration Profile (EMP) with the aim to foster efficient migration management through supporting the development of evidence-based policies. In particular it should broaden the Government’s knowledge-base about migration and enable it to assess how it can beneficially impact development, improve the use and smooth dissemination of existing migration information among relevant stakeholders and support the establishment of mechanisms for regular reporting on migration-related trends. The EMP offers a description of key migratory trends and migrants’ characteristics; an analysis of the impact of migration on development in terms of the interlinkages with demographic, economic, labour force employment and labour market, social and public health development; a succinct explanation of existing migration policies and governance frameworks within national and regional contexts; policy recommendations and actions on how to promote more effective and humane management of migration, ensure policy coherence across various sectors, and help maximize the positive impact of migration on development and minimize associated risks and negative effects.
Remittances contribute to increasing households’ level of well-being. According to the EMP, if there were no remittances, the poverty rate would be about 40%. Remittances also leads to increasing inequality between the households that benefit from them, and those that do not.
The present Extended Migration Profile (EMP) Report of the Republic of Moldova is a country-owned tool, prepared in consultation with a broad range of government and non-government stakeholders, to be used to enhance policy coherence, evidence-based policymaking and the mainstreaming of migration into development planning.
Public Information & Education
In December 2008, IOM Moldova launched a mass information campaign in Moldova and the main destination countries for Moldovan migrants, Italy and Russia, targeting Moldovan emigrants, their families and other recipients of remittances in a bid to increase the efficiency of remittance flows.
The main objective of the initiative was to provide migrant workers and their families with information on socio-economic reintegration opportunities and efficient use of remittances flows. For this initiative, leaflets, posters, brochures, audio and video spots were developed to encourage and stimulate Moldovans to use formal money transfer channels, to open bank accounts, to deposit their money, as well as to use other financial products and services. The respective information and promotion materials were broadcasted on public TV and radio and distributed in key locations for migrants, such as consulates, employment agencies, bus stations, airports, etc.
Moreover, in partnership with ILO, IOM has developed pre-departure information curricula for migrant workers, as well as information material on existing channels to transfer remittances to Moldova, including information on corresponding banks, cost of transfers, linked financial services, etc.
IOM has provided assistance to strengthen the institutional and human resource capacities of the Ministry of Economy (former Ministry of Economy and Trade), namely to improve the staff abilities to design, implement, monitor and evaluate the policy related to Small and Medium Enterprises (SME) development and national priorities in the field of migration and development. Technical and policy support have been provided to create a self-sustaining long-term institutional capacity with advanced analytical, operational and language skills to ensure effective work with regional stakeholders (National Organization for SMEs). Targeted Training on methods of enhancing SMEs competitiveness; project development, management and implementation; promoting enterprise networking; computer literacy and English courses training have been provided to the newly created OSMEs staff and to SMEs’ heads and specialists of the district economic units. Also, computing equipment with communication technology has been provided for regional local authorities’ offices to improve and accelerate information flows between the Ministry of Economy and their district economic units.
Policy Debate & Guidance
IOM has also been working on the institutionalization of the National Referral System on SMEs. The importance of a referral system between the active agents in SME sector (including Micro Finance Institutions, banks, and government agencies) has been confirmed by all actors. Once the consultations were finalized, the Ministry of Economy and Trade, together with IOM and ILO, implemented a comprehensive, modular and easy to amend web-based information portal, comprising the rayons input from local public authorities (district Economic Units) and business service providers.
IOM worked to consolidate the regional outreach capacity of the authorities responsible for supporting the SME sector, and strengthen the links between the central authorities such as the Ministry of Economy and other ministries (including the Ministry of Labour, Social Protection and Family) and OSME on the one hand, and the regional level authorities, namely the economic units of the local public authorities. Capacity building trainings were provided for the relevant officials, in order to enhance their ability to consult young self-starting entrepreneurs and thereby contribute to local development, poverty reduction and prevention of irregular migration.
IOM has contributed to the elaboration of a pilot Program PARE 1+1(Program for Attracting Remittance into the Economy of Moldova). In 2008, IOM brought a Moldovan delegation to Mexico to study the functioning of a remittances-investment scheme and promoted its adaptation to the Moldovan context. In October 2010, by the decision of the Government of Moldova, the pilot Program PARE 1+1 was launched for 2 years. The aim of the program is to mobilize the human and financial resources of migrants and their first degree relatives for the development of small and medium enterprises in RM. The Program acts on the 1+1 principle, i.e. 1 leu invested by the migrant is coupled with 1 leu as a grant invested by the state. The maximum amount for the matching grant on the part of the state is up to 200,000 Lei, roughly 12,000 Euro. The implementing institution is the Organization for Small and Medium Enterprise in cooperation with different development partners, including IOM. Since 2010, PARE attracted 2.4 million Euro of remittances into the SME sector. Due to the high interest towards the Program on the part of the target group, the Government planned to continue its implementation for the following years until 2015. For more info at: http://www.odimm.md/pare.htm