UNITED NATIONS, June 17 (NNN-AGENCIES) — Migrant workers sent home an estimated $605 billion to low- and middle-income countries last year, a UN study said, boosted by an increase in payments sent via mobile phones.
Global remittances rose 8.6 percent compared to 2020 and are projected to grow to $630 billion in 2022, according to the International Fund for Agricultural Development (IFAD).
Such payments are a major source of income for many low-income households, with around 800 million family members expected to benefit in 2022.
Between now and 2030, global remittances will amount to $5.4 trillion, the equivalent of twice the GDP of Africa in 2021, IFAD has estimated.
“Remittances lift people out of poverty, put food on the table, pay for education, cover health expenses, allow housing investments and many other family goals beyond consumption,” IFAD president Gilbert Houngbo said.
However, the report warned that the upward trend would likely slow this year as inflation erodes wages, and as a result of Russia’s invasion of Ukraine.
Many countries in central Asia depend on remittances from Russia, with payments accounting for as much as 30 percent of their GDP, said the report.
But the decline in the value of the ruble and the economic impact of sanctions has triggered a “sharp decline in transfers”, IFAD said.
Most of the money sent home by migrant workers is transferred through bricks-and-mortar institutions with clients paying cash, but the coronavirus pandemic saw a important shift towards digital.
With lockdowns and border closures making physical services more difficult to access, mobile phone payments jumped by 48 percent in 2021.
They still only accounted for three percent of the global total, but Pedro De Vasconcelos, manager of the Financing Facility for Remittances at IFAD, said the trend is set.
“Cash is still king, but it’s losing ground,” he said.
This matters because mobile payments are more convenient, particularly for those in rural areas, and are also cheaper.
In Africa — which received $94 billion in remittances in 2021, an increase of 13 percent on 2020 — transfer fees are the highest in the world. — NNN-AGENCIES
