World Bank vows to ‘keep the remittance lifeline flowing’
The World Bank has warned that remittances to Sub-Saharan Africa are expected to decline by approximately 9% in 2020 to US$44-billion due to COVID-19.
In its Migration and Development Brief 33, the Bank said all major remittance receiving countries in the region will experience a decline.
It added that as COVID-19 affects both the destination and origin countries of Sub-Saharan migrants, the fall in remittances is expected to lead to an increase in food insecurity and poverty.
However, despite the projected decline, the importance of remittances as a source of external financing for Low and Medium Income Countries (LMICs) is expected to increase, according to the organisation.
The World Bank said the gap between remittance flows and foreign direct investment (FDI) is expected to widen as FDI is projected to decline more sharply.
Mamta Murthi, vice president of 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. The World Bank will continue working with partners and countries to keep the remittance lifeline flowing, and to help sustain human capital development.”
Lead author of the brief Dilip Ratha said: “Migrants 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 remittances lifeline.”
According to the World Bank’s Remittance Prices Worldwide Database, the global average cost of sending US$200 was 6.8% in the third quarter of 2020, largely unchanged since the first quarter of 2019 and is more than double the Sustainable Development Goal target of 3% by 2030.
However, the Bank said the cost of sending the same amount was highest in Sub-Saharan Africa at 8.5% adding that the region is the most expensive to send remittances to.
Commenting on the projections, Economic Association of Malawi (ECAMA) president Lauryn Nyasulu said, “The projected drop in remittances is not surprising because every country is now trying to utilise resources they have within.”