Africa to Lose US$11bn in Remittances This Year due to Coronavirus – World Bank

24-04-2020

Africa to Lose US$11bn in Remittances This Year due to Coronavirus – World Bank

Remittances to sub-Saharan Africa are projected to fall from US$48 billion last year to US$37 billion in 2020 – a drop of 23.1 percent – because of the economic consequences of the COVID-19 pandemic, according to the World Bank.

It said that the continent would, however, register an expected recovery of four percent next year.

The Bank explained: “The anticipated decline can be attributed to a combination of factors driven by the coronavirus outbreak in key destinations where African migrants reside, including in the EU area, the US, the Middle East, and China.

“These large economies host a large share of sub-Saharan African migrants and, combined, are a source of close to a quarter of total remittances sent to the region".

“In addition to the pandemic’s impact, many countries in the Eastern Africa region are experiencing a severe outbreak of desert locusts attacking crops and threatening the food supply for people in the region.”

It said global remittances would drop sharply from US$554 billion in 2019 to US$445 billion (19.7 percent) this year, the biggest decline in recent history.

“The projected fall…is largely due to a fall in 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,” the Bank said.

Various studies have shown that remittances to lower- and middle-income countries help to reduce poverty.

World Bank President David Malpass said: “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.

“Remittances help families afford food, healthcare, and basic needs".

“As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs,” he added.

The Bank warned that the outlook for remittances remained as uncertain as to the impact of COVID-19 on global growth and on the measures to control the disease.

It said that in the past, remittances “have been counter-cyclical, where workers spend more money in times of crisis and hardship back home”.

But this time, however, the pandemic had affected all countries, creating additional uncertainties.

"Effective social protection systems are crucial to safeguarding the poor and vulnerable during this crisis in both developing countries as well as advanced countries,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

“In host countries, social protection interventions should also support migrant populations.”

There is also the problem of the high cost of remitting money to Africa, whereby sending US$200 cost 8.9 percent on average in the first quarter of 2020, compared with the average cost of 9.25 percent last year.

The Bank said that Southern African was the most expensive region to send money to, with costs as high as 20 percent.

“Quick actions that make it easier to send and receive remittances can provide much-needed support to the lives of migrants and their families,” said Dilip Ratha, the head of the Global Partnership on Migration and Development (KNOMAD).

“These include treating remittance services as essential and making them more accessible to migrants.”

 

Source: https://www.ghanaweb.com/GhanaHomePage/business/Africa-to-lose-US-11bn-in-remittances-this-year-due-to-coronavirus-World-Bank-932965

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