×
× Digital News Videos Health & Science Lifestyle Opinion Education Columnists Moi Cabinets Arts & Culture Fact Check Podcasts E-Paper Lifestyle & Entertainment Nairobian Entertainment Eve Woman Travelog TV Stations KTN Home KTN News BTV KTN Farmers TV Radio Stations Radio Maisha Spice FM Vybez Radio Enterprise VAS E-Learning Digger Classified Jobs Games Crosswords Sudoku The Standard Group Corporate Contact Us Rate Card Vacancies DCX O.M Portal Corporate Email RMS
Login ×

Remittances dry up as Covid-19 crisis ravages the world

By Reuters | May 5th 2020 at 10:30:00 GMT +0300

When Fathy called his family back home in Egypt a week ago, they asked him to send money, as he had for the past year. But he had none, having lost his job as a car painter in the United Arab Emirates in March, when a coronavirus lockdown was introduced.

Fathy’s sisters and aunt rely on his monthly transfers to “eat and drink and live”, said the 38-year-old, who declined to give his full name as he has been living and working in the Gulf state without a permit.

“They’re borrowing a little money from their neighbours at the moment to get by ... my heart goes out to them,” Fathy, who used to send home part of his 1,500 dirhams ($408) salary, told the Thomson Reuters Foundation.

Strict curfews, lockdowns and travel bans enforced around the world to slow the spread of the Covid-19 pandemic have decimated jobs and slashed remittances from migrants like Fathy, cutting off a lifeline for millions.

Some 270 million migrants sent $554 billion (Sh59.3 trillion) home to developing countries in 2019 - surpassing foreign direct investment flows for the first time and more than three times annual official development aid, according to the World Bank.

Read More

“It is a matter of time before poor families are not able to afford to buy things anymore,” said Dilip Ratha, lead author of a World Bank study that estimated a staggering 20 per cent fall - some $100 billion (Sh10.7 trillion) - in remittances to developing nations in 2020.

“Remittances ... provide basic means of livelihood, buying food, shelter, housing, clothing, medicine, and healthcare, sending children to school,” he said.

Plunging remittances will also hurt small merchants and businesses that serve the poor and ultimately the local economy as people stop buying things, Ratha said.

The shock has been swift. “Millions of families got hit immediately by the lockdown simply because migrants ... could not work anymore,” said Pedro de Vasconcelos, manager of the UN’s Financing Facility for Remittances, set up to maximise their impact in rural areas.

“Families on the other side ... suddenly have their source of income, or at least part of it, disappear,” he said, adding that remittances account for 60 per cent of rural households’ income on average.“The remittances are a lifeline,” said de Vasconcelos, who works for the UN’s International Fund for Agricultural Development (IFAD). “It’s an emergency right now.”

One in nine people globally – some 800 million – benefitted from international remittances in 2019, according to IFAD.

In addition, a similar number of people send remittances within countries, said the World Bank’s Ratha.

“Remittances are probably affecting a third, or maybe half of humanity. This is not small change or a side show,” he said. This year, almost all regions are set to see a decrease. Fathy’s home country, Egypt, is bracing for a triple whammy: a collapse in tourism and falling foreign remittances - which make up nearly 9 per cent of GDP - and Suez Canal revenues, said the International Food Policy Research Institute.

Even in an optimistic scenario, poor households could lose about 160 Egyptian pounds ($10) per month - about 9 per cent of their income - from reduced remittances, said Clemens Breisinger, a researcher with the Washington-based think-tank.

The coronavirus crisis may have one upside - more people may start sending money home digitally, which the World Bank says can be 50 per cent cheaper than traditional transfers, where recipients have to go to a shop to pick up money.

With social distancing measures, lockdowns and the closure of many banks and Western Union offices, some digital remittance companies are witnessing a surge in online transfers. French remittance start-up Monisnap, founded by former employees of internet firms Google Inc and Groupon Inc, said it was already seeing a shift.

Digital transfers from Europe to mobile SIM cards, mainly in Africa and Asia, jumped 300 per cent worldwide in the last six weeks while traditional cash transfers fell by about 15 per cent, said chief executive Raphael Riviere.  

Covid 19 Time Series

 


Covid-19 Remittances Coronavirus Global Economy
Share this story

More stories


Take a Break

Feedback