Overseas Migration in the Household Economies of Microfinance Clients: Evidence from Sri Lanka

Abstract

Remittances from migrant workers account for 30% of national savings and 9% of GDP making this source the third largest contributor of foreign exchange. Increasing interest is seen internationally in remittances being used as a development resource, using financial institutions as the channel. Microfinance has now emerged as key player in remittance linked products, the microfinance industry being quick to respond to the demand for such products. In Sri Lanka however, this industry has been slow to take hold. Not much information is available on the financial services needed and used by migrants, and the impact of microfinance on their remittances if any. This paper reviews the use of microfinance in a rural MFI, using both migrant and non migrant clients. Recommendations are also provided to in this connection, to maximize the use of remittances through MFIs for the betterment of the country as well the migrant and the household.