Millions of Bangladeshi migrants living abroad send money home. This transfer for their left-behind families reflects the love and obligation that ripple through villages and towns, supporting livelihoods and boosting income. Although billions of dollars of remittances enter the country through the formal banking system, one question remains: what do these remittances really build beyond the front gate of a family home?
For most of these households, remittances are a lifeline. This is considered a private transfer by migrants to their families, to assist payments for food, rent, medical care, school fees, and other day-to-day necessities. While these outcomes may appear promising at the household level, their impact tends to lose its lustre when examined through a broader socio-economic lens. Research shows that most remittances often fuel conspicuous consumption rather than long-term investment and savings. In a 2014 survey, Bangladesh Bank found that 55.6 percent is spent on different types of expenditure, of which 33 percent was spent on food alone. The pattern is understandable. The country's migrants are mostly low-or semi-skilled, working in construction sites, agricultural plants, or in domestic service across the Middle East and Southeast Asia. Moreover, higher migration costs, combined with shorter durations or less secure employment, are common in destination areas. The precarious migration process often leads to indebtedness, which erodes the capital and production capabilities of the households left behind. So, this seems to be a paradox of progress. The country's foreign exchange increases, yet remittances rarely contribute to empowerment and sustainable community development. Much of the money circulates in what economists call "consumption loops," money in, money out, leaving little lasting trace.
Remittances are a private fund; they cannot replace public spending to create jobs, strengthen local economies, or improve community infrastructure. Let us envision this system through a different lens. What if a tiny slice of each remittance, say, fifty cents per remittance transaction (without reducing the remitted amount received by families), could be redirected into a national fund for community development? Half a dollar may sound trivial, but when considered alongside aggregated remittance flows, it could represent a powerful opportunity. Last year, the country received a total of $30 billion in remittances. Now, imagine what a slice of fifty cents could produce in terms of resources and opportunities if we could manage both the fund and its utilisation properly.
However, this calculation is not straightforward, as remittances are processed on a per-transaction basis. Therefore, it is important to know the average amount sent per transaction, but Bangladesh Bank does not publish transaction-level remittance data, which limits the precision of any estimation. Therefore, for the estimation of per-transaction remittance transfers, I rely on empirical data from IOM and ILO studies that show that migrants send money home three to four times a year, with an average total of $1200. This $300 average benchmark per transaction is actually very similar internationally. The World Bank's Remittance Price Worldwide (RPW) methodology uses $200 and $500 as global reference amounts for small and medium-sized remittance transfers, allowing for consistent comparison of transfer costs across countries. Let's use $250 as a conservative midpoint and divide the total remittances ($30 billion) Bangladesh received by the average transaction amount ($250). The result will give an estimated 120 million remittance transactions per year. Now imagine, if just 50 cents from each transfer were voluntarily allocated to this development fund, it would generate nearly $60 million annually (120 million x 0.5 cents), which is equivalent to around Tk 700 crore to Tk 750 crore. If the contribution were set at 1 dollar, that amount would simply double. And this can further reinforce the transformative potential of remittance-driven development and investment in the rural economy.
This kind of model is not new; a similar approach already exists in other countries. Mexico's model "3×1 Program for Migrants" shows that for every dollar migrants contribute to a community project, the federal, state, and municipal governments contribute three times to build infrastructure or fund various community development programmes. In Morocco, the Migration and Local Development (MIDL) programme offers another example, forging partnerships between diaspora associations and local councils to co-finance development projects. Bangladesh, too, is not starting from zero. Like the Philippines' Overseas Workers Welfare Administration (OWWA), Bangladesh already operates a worker-contribution mechanism through the Wage Earners' Welfare Board under the Wage Earners' Welfare Board Act, 2018.
Moreover, the current 2.5 percent cash incentive has significantly boosted remittance inflows through formal banking channels. As a result, commercial and private banks have enjoyed higher transaction volumes and profits, benefiting both from government incentives and transaction fees from global remittance providers such as Western Union and MoneyGram. Within this ecosystem, a modest contribution of 50 cents or even one dollar per remittance transaction would hardly affect profitability. Crucially, it could also change how migrants feel about sending money home. When workers from abroad see that even a fraction of their hard-earned income is building schools, training centres, or health facilities in their own villages, it could foster a sense of ownership and pride. That trust can, in turn, encourage more migrants to remit through formal banking channels for expanding both national reserves and community investment.
Strengthening confidence in formal systems and linking remittances to visible community outcomes could amplify a natural solidarity effect. The purpose of this proposed fund would be clear: converting short-term household consumption into long-term social and economic investment. It could support returnee migrants facing debt and unemployment, offer business start-up grants and psychosocial support, and finance training for aspiring workers to move into higher-value occupations abroad. It could also build rural infrastructure, including roads, and build climate resilience and clean water systems that migrant families rely on.
Of course, the key lies in trust. Migrants must believe that their 50 cents or $1 will not be swallowed up by bureaucracy. A transparent system needs to demonstrate where every dollar goes—every school built, and community initiatives are launched. Only this could help build that confidence. Trust can be strengthened by establishing an accountable mechanism with multi-stakeholder oversight complemented by a public digital dashboard and an annual independent audit. Most importantly, such a mechanism could provide a financial foundation for the effective implementation of the updated National Reintegration Policy for Migrants 2025, turning policy intent into measurable outcomes.
Lutful Kabir is a migration and development specialist with a master's in migration studies from the University of Sussex, UK, and prior experience at IOM.
Views expressed in this article are the author's own.
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