In many developing countries, remittances – projected to reach US$1 trillion annually before 2030 – already dwarf foreign investments and international aid. Yet remittances are often overlooked in broader discussions on development financing, as they have been seen more as a direct injection to personal household income and hence an end in themselves. The link to the SDGs comes with SDG target 10.C, to remove inefficiencies in their transmission and transaction, rather than as a means to achieve the SDGs. 

This is not to say that there isn’t a case. In 2023, remittances amounted to $328 billion in Asia and the Pacific, often passing through intermediaries with high fees and complex regulations. However, it can also be more, with remittances playing a proactive role in reimagining economic policies and financing through domestic and global economic uncertainty. 

During the COVID-19 pandemic remittances stabilized household income, when other sources of revenue and local financing remained volatile.. As job losses surged in major host countries for Asian migrants, remittances to and within Asia-Pacific surpassed expectations and were often life and livelihood-saving. 

At the same time, some analysis indicates that a rapid flush of remittances into local economies pushes up prices for consumables, leading to local market distortions. While this may be the case and requires some regulatory safeguards on the pricing of essential goods, their growing volume and value during in recent years cannot be underestimated. Today, they are an important flow of funds through developing countries, with 40 percent of global remittances between developing economies, and could trigger greater south-south finance and trade cooperation and cross border efficiencies. 

A policy brief by the UNDP Regional Bureau for Asia and the Pacific highlights that remittances now account for 38 percent of global remittance inflows in 2023. In absolute terms, India, China, the Philippines, Pakistan, and Bangladesh are the largest recipients. However, in relative terms, a significant portion of the GDP in countries like Tonga, Samoa, Nepal, Vanuatu, and the Marshall Islands comes from remittances. In Tonga remittances have accounted for over 40 percent of GDP since 2020.

While remittances reach some of the people who need them the most, further inquiry and analysis must focus on whether they are being leveraged to contribute to improving human development in each context. Given the often ‘hands off’ approach of public policy, with a few exceptions, the jury is out on this one. 

How can we support countries to harness the full potential of remittances for development financing? The following areas are worth exploring:

• Addressing transfer bottlenecks. Analyzing remittance corridors and financing flows sheds light on migration patterns and the obstacles migrants face in sending resources home. Reducing the cost of remitting money and improving corridor efficiencies can significantly enhance the livelihoods of migrants and their families. Unlike Foreign Direct Investment, remittances directly affect local economies and, more critically, can strengthen economic and community ties across borders. But cost remains an issue, as exemplified by the Vanuatu-Australia corridor, notorious for its high transaction fees (12 percent), far exceeding the SDG target of 3 percent. Regional integration efforts like ASEAN also could benefit from reduced remittance costs, making prohibitive charges like the average 12 percent fee for transfers between Thailand and Laos a thing of the past.
• Directing remittances for early recovery and rebuilding. This source of funds has repeatedly shown to be a lifeline to vulnerable households during disasters and economic downturns. The diaspora often acts as first solidarity responders, offering immediate and direct financial assistance to their families and communities. Given their countercyclical nature, remittances are remarkably resilient and flexible. complementing international aid. Making remittances more accessible and affordable during crises will amplify their impact, providing immediate relief and supporting long-term recovery.
• Where municipalities, private sector and philanthropy meet. Local government and city authorities, together with the private sector and philanthropy offer a combined untapped opportunity to guide and leverage remittances. By partnering locally, these actors could catalyze and incentivize each other’s roles and resources to provide a pool of locally available development funds, to improve essential infrastructure and services, invest in start-ups and local entrepreneurship, build future capabilities that will be transformative. Ddiaspora bonds, issued to nationals living abroad or to their descendants, are often offered at below market rates. Diaspora bonds have shown to be most effective among large, financially stable diaspora populations with strong patriotic connections and trust in the issuing country organizations, such as in India in the early 2000s.
• Digital and tech innovation and crypto currency. Digital innovation can revolutionize remittance transfers. Cryptocurrency and blockchain potentially offer more accessible and cost-effective means of transferring funds, with fees ranging from 1to 3 percent . The transparency and speed of blockchain transactions can ensure that funds reach recipients efficiently, reducing the risk of fraud and improving trust while potentially broadening access to financial services for underserved communities. This has its downsides and is viable only where the necessary regulatory safeguards are in place, so already vulnerable households do not lose more.

Reevaluating remittances for development can yield insights on policies and practice in Asia and the Pacific, and beyond. With the development financing landscape continuing to shift significantly in 2025, this may be an area for more intentional and scaled remittances, and not a moment too soon.