By Olga Zhyvytsya, Caritas Internationalis project advisor
Financial inclusion promotes social inclusion of migrants in the country of destination – this was the idea that brought together the Italian Banking Association and civil society organisations at the meeting “Migrants and financial inclusion” held in Rome, 14 June 2011.
Italy, once a country of origin for migrants, today faces significant immigration flows. According to Caritas Italy data from 2010, 5 million migrants live in Italy and they constitute 7 percent of the population; foreign employees constitute 10 percent of the work force and 3.4 percent of enterprises belong to foreigners. Migrants contribute 11 percent to the GDP and pay near 11 mld euro in social security contributions. Moreover, near 1 million children of migrants were born or brought up in the country. As a result, Italy faces the growing necessity to consider migrants more as citizens rather than simply as guests, with a whole spectrum of social and economic responsibilities and rights.
One thing that links a migrant, as with any citizen, to the community of arrival, is full participation in its economic and social activities using today’s instruments, including banking. It is with the purpose of taking responsibility and of promoting the financial inclusion of migrants and the possessors of international protection in Italy that the Association of Italian Christian Employees, the Association of Social Promotion, Caritas Italy, the Rome-based Centre for Study of International Politics and UNHCR met to sign a memorandum of understanding with the Italian Banking Association.
Why is it worthwhile talking about the financial inclusion of migrants?
The joint initiative between banks and academia and civil society organizations, presented at the meeting, produced a research that analyzes the relationship of migrants with banks in terms of banking, access to credits, migrants entrepreneurship, microfinance, remittances.
This work showed that banking (i.e. becoming a bank’s client) among migrants in Italy has reached 60 percent and the rate is growing quicker than migrant flows. It usually takes some time before incoming migrants obtain economic and employment stability and as a result start banking. Two main characteristics describe the process of migrant banking: relations between work integration and banking; national and gender aspects of migration flows. For example, being employed as a domestic worker doesn’t necessarily require the acquisition of bank account. On the other hand, female migrants as well as Chinese and Bangladeshis have a small rate of banking in general.
One interesting global initiative was introduced by the Italian Ministry of Foreign Affairs in 2009: reducing the average global price for remittance transfer down to 5 percent over a period of 5 years. From 2000-2010 remittances grew 10 times. It is a well-known fact, that remittances contribute not only to the well-being of families but also to the country of origin’s economic growth. The use of bank services for money transfers helps to formalise remittance flows and avoid fraud by criminal groups.
Another result of the partnership is the publishing of an informative multilingual brochure “Welcome to the bank” aimed at the basic banking education of migrant clients. Apart from basic financial services such as serving bank accounts, banks may tend to satisfy the most requested needs of migrants through tutorship and sponsorship: financial counselling on the development of business ideas, various scholarships as well as sponsorships for business.
The entrepreneurial face of migration
Migrant entrepreneurs, as it was noticed at the meeting, have less favourable financial conditions compared to locals. First of all, the lack of crediting history and property guarantees makes it difficult for migrants to apply for credit. This makes banks more reluctant to express their credibility to foreign entrepreneurs and according to recent studies made by the Bank of Italy, migrant entrepreneurs should pay higher bank interests.
In the research it was noticed that Italy still doesn’t appreciate the skills of migrants who are usually overqualified for employment sectors (near 66.3% are employed as artisans, workers, and agricultural labour force). Migrant entrepreneurs are active: in some places they are more inclined to start own business than native citizens. Migrants usually start their business in commercial niches of nostalgic goods and recently evolved ethnic business that request high level of innovation. Migrant enterprises can strengthen the economic relationship between countries of origin and destination through entrepreneurship remittances, resource mobilisation and know-how. Creation of economic activity is a way for economic security as through entrepreneurship, skills and social capital, often not recognised, can be better utilised and appreciated.
Female migrant entrepreneurs constitute 6 percent of female entrepreneurs in Italy and 20 percent of migrants in general. This percentage has recently grown significantly: according to OSCE (the Organisation for Security and Cooperation in Europe) analysis foreign women weren’t significantly touched by the economic crisis and their participation in the labour market has increased also due to the loss of work of family members.
Moreover, migrant entrepreneurs contribute to the change of Italian entrepreneurial reality with their promotion of commerce and investments. As one of the example, the arrival of migrants to Southern Italy according to Italian NGO Cooperation International South-South, brought economic benefits to the territory and promoted international cooperation.
In conclusion, discussion on the financial inclusion of migrants raised a more profound question: whether we are ready to care for a vulnerable part of our society in a serious way, i.e. respecting migrants’ potential and giving them a chance to fully participate in a society which only benefits from their economic activities.