This presentation by Adrian Dincsoy was made during session 3 at the High-level Conference on Global and European Trends in Financial Education held on 22-23 May 2014 in Istanbul, which explored the role(s) of the private and not-for-profit sectors in financial education, financial literacy and innovation for young people and financial education for migrant workers and their families. Find out more at http://www.oecd.org/daf/fin/financial-education/2014-conference-global-european-trends-financial-education.htm

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Financial Literacy for Remittances
and Diaspora Investment
-A Last Mile Challenge for Technical Cooperation
Adrian Dincsoy
Sector Project Migration &
Development (GIZ)
High-level conference on global
and European trends in financial
education
22-23 May 2014 - Istanbul

2. Page 223.05.2014 SV Migration & Entwicklung, GIZ
Studies show both positive and negative effects of remittances on housholds
and economies. Therefore technical cooperation aims at fostering positive and
minimizing negative effects to increase the development impact of remittances.
Practical Technical Cooperation
First Mile:
Remittances
Last Mile:
Practical TC
Concepts
Sustainable
Development
The Challenge for development organisations and technical cooperation:
 How can we use the accumulated knowledge about remittances to design
effective technical cooperation projects that leverage remittances for
development?
?

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FReDI’s Purpose:
 To support the design of projects linking financial
literacy, remittances and diaspora investments
FReDI’s Goals:
 To contribute to increased financial inclusion of
migrants and their families
 To link remittance flows to financial products
 To foster migrant savings and diaspora
investments in country of origin
Methodology
 About 50 projects that use financial literacy in
the remittances context from around the world
were screened.
FReDI –A Last Mile Enabler
FReDI, comissioned by GIZ and eMFP, is a collection of practical methods for
technical cooperation organizations to help them design effective projects
linking financial literacy, remittances and diaspora investments.

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Financial
Literacy
Increasing Awareness and Competition
in the Remittance Market
Product Design for
Financial Institutions (FIs)
Converting Senders &
Recipients into Clients of FIs
Business Development and Entrepeneurship
Diaspora Investments in
the Country of Origin
Build Asset
Base and
Better
Manager
Financial Risk
Empower
Migrants and
Reduce
Vulnerability
+ =
It was found that projects combine financial literacy components with
remittance components and that they tend to be mutually reinforcing. A
combination of the two creates five methods presented in the handbook.
SV Migration & Entwicklung, GIZ 23.05.2014
Means to an End
Means Method End

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Increasing awareness and competition in the
remittance market
 High remittance prices are a main issue
identified by the international community
regarding remittances (G20, Global
Remittances Working Group)
 The Handbook focused on remittance price
comparison websites
 The main objectives are providing migrants
with accurate information and reducing
transfer costs
 The main components:
 Development of the website
 Marketing of the website
 Consultation with stakeholders
Method 1: Financial Literacy + …
Lowering the costs of remittances and including them into the formal financial
sector can put additional money in the pockets of migrants and their families –
(price) transparency, awareness and ultimately competition are prerequisites.
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Product Design for Financial Institutions
 A wide range of projects with two main
objectives
 Assisting (M)FIs to introduce or
improve remittance services
 Designing and launching remittance-
linked products
 The main components:
 Product development, including IT
and Partnerships
 Linking activities between FIs and
Money Transfer Operators (MTOs)
 Development of marketing
campaigns/specific marketing material
 Staff training for participating FI(s)
Method 2: Financial Literacy + …
Supporting the “supply-side” in understanding and catering the financial needs
of remittances senders/recipients in order to improve access to formal
financial services (remittances services, savings, loans, insurances)
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Converting remittance senders and
recipients into clients of financial institutions
 Focuses on the demand side i.e. flip side
of Method 2 and has two main objectives:
 Providing financial education to
migrants and their families
 Increasing the use of financial
products/services by migrants and
their families
 The main components:
 Financial education for remittance
senders and recipients (one-on-one
and classroom)
 Training of trainers
 Linking remittance senders and
recipients to financial institutions
Method 3: Financial Literacy + …
Supporting the “demand-side” in understanding formal financial services in
order to improve access adequate formal financial services (remittances
services, savings, loans, insurances)

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Remittances to promote business development
and entrepreneurship
 The main objective is to channel remittances
towards the creation of MSME/family
enterprises
 The main components:
 Market research or feasibility study of
business opportunities
 Entrepreneurship trainings for
remittance senders and/or remittance
recipients
 Linking enterprises of remittance
recipients to MFIs to obtain loans
 Development of marketing
campaign/specific marketing materials
Method 4: Financial Literacy + …
Focus is on channeling remittances to MSMEs in combination with
entrepreneurship and general financial literacy training in order to promote
business development and entrepreneurship amongst transnational families.

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Investing remittances in investment projects
in country of origin
 Investments are too large for individual
investors and therefore structured in
relatively complex vehicles
(debt/equity/mezzanine possible)
 The main components:
 Institutionalizing migrant activities
 Investing in the country of origin
mainly in existing and start-up
(medium and large) businesses and
cooperatives, diaspora bonds
 Entrepreneurship training
 Method 5 potentially carries high rewards
and high risks for migrants
Method 5: Financial Literacy + …
The main objective is to provide asset building and income generating
investment vehicles to migrants and their families and thereby supporting
entrepreneurs and the economy in the country of origin.

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FReDI in Action
 Country: Uzbekistan (Remittances >10% of GDP)
 Goal: Enhance financial literacy among and the
use of formal financial services amongst
remittances recipients.
 FReDI: Method 3 (Converting Remittance Senders
and Recipients into Clients of Financial Institutions)
 Training of Trainers
 1 on 1 financial literacy education to recipients
 Cooperation with private banks to offer products
 Partners:
 Inter-American Dialogue (IAD) .
 Five banks in Uzbekistan.
 Cost: ~ 40.000 $US financed by BMZ (Germany)
 Result / Sustainability:
 4,635 clients educated, 15% opend account
 Pilot banks interested to continue the initiative
individually; aiming to develop proper strategies
 Central Bank interested in scaling up
Financial Literacy nation-wide
Financial Literacy Education in Uzbekistan

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 Including financial education adds value as it strengthens the results of the various
remittances interventions.
 The reverse is also true: financial literacy projects not linked to other activities are less
effective to realize development objectives.
 Reaching (financial) sustainability can be challenging, in particular for Methods 1, 4, 5.
 One should be aware of the complexity of Methods 4 and 5. More research and pilots are
needed to increase their cost-effectiveness, development impact and sustainability.
Conclusions

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Contact FReDI
Type presentation title here23/05/2014
… give feedback
… dissemination activities
… project proposals
… engage in discussions
E-mail: adrian.dincsoy@giz.de
Website: www.giz.de/migration
Thank you!