Remittance inflows have become one of the most stable and significant sources of external financing for Bangladesh over the past decade. Growing from approximately US$ 12 billion in 2015 to over US$ 22 billion in 2024-equivalent to around 6.4 per cent of GDP-these funds directly benefit over 10 million families across both urban and rural areas.
The impact on household welfare is particularly noteworthy. A substantial portion of remittance is used for education and healthcare, allowing children from recipient families to attend private schools, pursue higher education, and cover routine or emergency medical expenses that would otherwise be financially out of reach.
In rural communities, remittance plays a crucial role in helping ease consumption and resilience-building. Households invest in small assets such as livestock, land, or water pumps, which strengthen their ability to cope with shocks like floods, cyclones, or crop failures.
Encouragingly, a growing share of remittance income is now being channelled into micro-enterprise development. Many returnee migrants and their families are using these funds to launch small garment sub-contracting businesses, local shops, or agro-processing ventures. Microfinance institutions have reported a 30 per cent increase in remittance-backed loan applications over the last five years, indicating rising entrepreneurial activity. These micro-level investments generate wider economic benefits, creating backward and forward linkages in rural economy, new employment opportunities, and increased demand for services such as transport and construction.
However, these benefits are not evenly distributed. Families living in remote areas or without access to formal banking services face high remittance transfer fees, sometimes up to 8.0 per cent that slash their disposable income. Additionally, social pressures to spend on weddings or religious celebrations can lead to over-borrowing.
In response, policymakers are expanding mobile-remittance channels, negotiating lower transfer fees-especially in major corridors such as the Middle East and Malaysia-and piloting diaspora bonds to harness overseas savings for national development.
To further maximise the developmental impact of remittances, efforts must focus on improving financial literacy, increasing digital connectivity, and linking remittance inflows to formal credit histories. These steps will enhance the ability of remittances to drive sustainable livelihoods, build human capital, and promote inclusive economic growth.
Esrat Jahan Neha
Student
North South University
esrat.neha@northsouth.edu
