A teller inside Bank of Kigali. / File
There has been an unprecedented decline in
the flow of remittances to Rwanda – a vibrant source of
money for a
section of Rwandan– just as cases of coronavirus surge worldwide and the
country grapples with the pandemic.
Remittance inflows to Rwanda decreased by 16 per
cent in March from Rwf22.5 million, according to the latest data from
the National Bank of Rwanda (BNR).
In March this year, remittance inflows recorded
in Rwanda stood at Rwf18.9 million compared to Rwf22.5 million recorded
during the same period in 2019, a drop that could be attributed to
Covid-19.
“We continue to monitor the trend in April 2020
to see if the drop realized in March 2020 persists and if so, it will
affirm Covid-19 effect,” an emailed response from the Central Bank to
this publication read.
This is because some of the largest remittance
sending countries – such as the US and Germany – have locked down in an
effort to reduce the impact of the virus, leaving many migrants unable
to work.
In the first three months of this year (January –
March), diaspora remittance inflows to Rwanda rose by 1 per cent to
Rwf63.1 million from Rwf62.55 million in 2019.
On average, migrants send home 15 per cent
of their earnings, with one in nine people or around 800 million people
on the receiving end of these flows, according to the UN Department of
Economic and Social Affairs.
The Covid-19 has exacerbated the inflows of
remittances to low and middle income countries, generally because
incomes have shrunk.
But even in cases where migrants have money to send home, it has become more difficult to do so — around 80 per cent
of remittances are sent physically via a Remittance Service Provider,
but these money transfer networks have partially or totally shut down.
On April 22 the World Bank predicted that remittances to low and middle-income countries would see the sharpest decline in recent history this year, falling by 19.7 per cent to around $445 billion, compared to $554 billion in 2019.
The fall is expected to disproportionately affect
emerging economies, which are the greatest recipients of these inflows
and whose citizens rely on them to varying extents for a basic income.
David Malpass, the President of the World Bank
Group, said in a statement released on April 22 that remittances are a
vital source of income for developing countries.
“The ongoing economic recession caused by
Covid-19 is taking a severe toll on the ability to send money home and
makes it all the more vital that we shorten the time to recovery for
advanced economies,” he noted.
Given that foreign direct investment flows to
emerging markets are expected to fall even further than remittances this
year, by around 35 per cent, the proportional reliance of some
economies on remittances as sources of foreign currency may be even more
prominent.
In May this year, the World Bank Group predicted a
drastic drop in remittances based on projections of a fall in the wages
and employment of migrant workers, who tend to be more vulnerable to
loss of employment and wages during an economic crisis in a host
country.
Remittances to low and middle-income countries
(LMICs) was projected to fall by 19.7 per cent to $445 billion,
representing a loss of a crucial financing lifeline for many vulnerable
households.
This is an issue of concern as remittances are
important in alleviating poverty in lower- and middle-income countries,
improve nutritional outcomes, are associated with higher spending on
education. A fall in remittances affect families’ ability to spend on
key areas as more of their finances will be directed to solve food
shortages and immediate livelihoods needs.
Experts say that the decline in remittances calls
for increased social protection efforts especially to safeguard
vulnerable members of societies.
The large decline in remittances in 2020 comes
after remittances to lower- and middle-income countries, reached a
record $554 billion in 2019.
In 2021, the World Bank estimates that remittances will recover and rise by 5.6 per cent to $470 billion.
Remittances to Sub-Saharan Africa which
registered a small decline of 0.5 percent to $48 billion in 2019 will
decline by 23.1 per cent to reach $37 billion in 2020, while a recovery
of 4 percent is expected in 2021.
No comments :
Post a Comment