The foremost factors driving the decline in remittances include weak economic growth and employment levels in migrant-hosting countries, weak oil prices; and depreciation of the currencies of remittance-source countries against the USD.
The amount of money migrant workers send home is projected to decline
by 14 per cent compared to the pre-COVID-19 levels, according to
the latest estimates published in the World Bank’s Migration and Development
Remittance flows to low and middle-income countries are
projected to fall by 7 per cent, to USD 508 billion (1.896 trillion Shillings)in 2020, followed by a further
decline of 7.5 per cent, to USD 470 billion (1.7 trillion Shillings) in 2021.
The foremost factors driving the decline in remittances
include weak economic growth and employment levels in migrant-hosting
countries, weak oil prices; and depreciation of the currencies of
remittance-source countries against the USD.
Mamta Murthi, the Vice President for Human
Development and Chair of the Migration Steering Group of the World Bank,
said the impact of COVID-19 is pervasive when viewed
through a migration lens as it affects migrants and their families who rely on
remittances. She said theWorld
Bank will continue working with partners and countries to keep the remittance
lifeline flowing, and to help sustain human capital development.
The declines in 2020 and 2021 will affect all regions, with
the steepest drop expected in Europe and Central Asia. Sub-Saharan Africa is
expected to have between 9 per cent and 6 per cent decline.
According to the World Bank, remittance flows to Low
and Middle-Income Countries (LMICs) touched a record high of USD 548
billion in 2019, larger than foreign direct investment flows (USD 534 billion) and
overseas development assistance (about USD 166 billion).
For Uganda, the World Bank had earlier said the economy experienced a slowdown in growth due to the severe impact of the COVID-19 (coronavirus)
pandemic crisis, Uganda’s
real gross domestic product (GDP) in 2020 is projected to be between 0.4 and
1.7 per cent compared to 5.6 per cent in 2019.
The gap between
remittance flows and FDI is globally expected to widen further as FDI is expected to
decline more sharply.
Dilip Ratha, lead author of the
Brief and head of KNOMAD saidmigrants are
suffering greater health risks and unemployment during this crisis”
“The underlying fundamentals driving
remittances are weak and this is not the time to take our eyes off the downside
risks to the remittance lifelines.”Said Ratha.
This year, for the first time in recent history, the stock
of international migrants is likely to decline as new migration has slowed and
return migration has increased.
Return migration has been reported in all parts of the world
following the lifting of national lockdowns which left many migrant workers
stranded in host countries. Rising unemployment
in the face of tighter visa restrictions on migrants and refugees is likely to
result in a further increase in return migration.
Remittances to Sub-Saharan are expected to decline by around 9 per cent in 2020 to $44 billion. Within the region, remittances
to Kenya have so far stayed positive, though flows are likely to eventually decline in 2021.
All major remittance-receiving countries
will likely see a decline of remittances. As the COVID-19 pandemic
affects both destination and origin countries of Sub-Saharan migrants,
the fall in remittances is expected to further lead to an increase in
food insecurity and poverty.
Remittance costs: Sending USD 200
remittances to the region cost on average 8.5 per cent in the third quarter of 2020, representing a modest decrease compared with 9 per cent a
year ago. Sub-Saharan Africa is the costliest region to send remittances to.