Streamlining internal remittances

Rural to urban migration and hence diversification of income source can be key in addressing poverty in rural areas and meeting some sustainable development goals (SDGs) like rural employment, reducing inequality and labour rights for everyone including migrant workers. However, a much more dominant view is that of reducing rural to urban migration in countries like Pakistan due to the mounting resource pressure on the already exhausting urban centres. However, this view does not stop the rampant rural to urban mobility in the country.

While there are many policy recommendations to make internal migration less cumbersome, the importance of urban to rural remittances is cannot be stressed more in providing financial resilience and reducing poverty and food security in rural households. In a recent policy brief, “Rural-urban migration and climate change adaptation: policy implications for Pakistan” on SDPI’s website for a study conducted to understand the linkages between migration and climate change, one finding was that “migrant remittances were shown to be crucial to coping with shocks (such as climate disasters) and stresses (e.g. food insecurity and poverty)”.

Remittance from migrants increase rural income and also enhances their investment capacity to increase agriculture production – a challenge they face with a lack of funds. However, assessing the impact in value terms has been futile as there is no official data on the number of internal migrants (i.e. rural to urban) and their contribution to Pakistan’s national economy.

Countries like China have come a long way in addressing poverty and food insecurity and spurring rural development. The study shows that over the past two decades, China reduced rural poverty from 60 to 9 percent, in which internal migrant remittances played a critical role. The policy brief recommends the factoring in of information on internal migrant remittances in the annual Pakistan Labour Force Survey, and investment in research on the contribution of internal migration in rural development.

Qualitatively speaking, the amount in internal rural to urban remittance might be much lower than the international remittances, but the socio-economic impact of the former is quite resounding to ignore when it comes to urban-rural dynamics.

The phenomenon is catchier when looked at from the formal/informal remittance flow lens for the opportunity it offers. While strides from the service delivery side made to increase financial inclusion have been noticeable in Pakistan whether made by the banks, telcos, money transfer operators, postal networks or microfinance institutions, informal channels continue to represent a big chunk. In India, less than a third of the internal remittances flow through formal channels like banks, telcos etc. which could point to a similar if not more disparity here in Pakistan.

What is needed is compilation of rural to urban migration data to not only gauge the contributions made by these migrants to their households, but is also necessary in urban planning whether it is housing, education, health, water and sanitation, or transportation. Experts opine that the lack of such data is an important hurdle it the kind of resource availability and mobilisation in large cities like Karachi.