Remittance inflows to Rwanda for 2021 are estimated at around $246 million after a drop to $241 million in 2020 as a result of the Covid-19 pandemic, the latest World Bank’s migration and development analysis show.
The analysis showed that remittances to low-and middle-income countries are projected to have grown a strong 7.3 per cent to reach $589 billion in 2021.
This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7 per cent despite a severe global recession due to Covid-19.
A remittance is a transfer of money by a foreign worker to an individual in his or her home country.
In 2019, the remittances stood at $261 million before taking a plunge in 2020.
Remittance inflows to Sub-Saharan Africa returned to growth in 2021, increasing by 6.2 per cent to $45 billion.
In 2022, remittance inflows are projected to grow by 5.5 per cent due to continued economic recovery in Europe and the United States.
Remittance costs averaged 8 per cent in the first quarter of 2021, down from 8.9 per cent a year ago.
Although intra-regional migration makes up more than 70 per cent of cross-border migration, costs are high due to small quantities of formal flows and utilization of black-market exchange rates.
Despite the rise of remittances, the cost of sending $200 across international borders continued to be high, averaging 6.4 per cent of the amount transferred in the first quarter of 2021, according to the World Bank’s Remittance Prices Worldwide Database. This is more than double the Sustainable Development Goal target of 3 per cent by 2030.
The analysis also shows that it is most expensive to send money to Sub-Saharan Africa (8 per cent) and lowest in South Asia (4.6 per cent).
It also emerged that costs tend to be higher when remittances are sent through banks than through digital channels or through money transmitters offering cash-to-cash services.
“To keep remittances flowing, especially through digital channels, providing access to bank accounts for migrants and remittance service providers remains a key requirement. Policy responses also must continue to be inclusive of migrants especially in the areas of access to vaccines and protection from underpayment,” Dilip Ratha, lead author of the brief noted.
Factors contributing to the strong growth in remittance are migrants’ determination to support their families in times of need, aided by economic recovery in Europe and the United States which in turn was supported by the fiscal stimulus and employment support programs.
In the Gulf Cooperation Council (GCC) countries and Russia, the recovery of outward remittances was also facilitated by stronger oil prices and the resulting pickup in economic activity.
“Remittance flows from migrants have greatly complemented government cash transfer programs to support families suffering economic hardships during the Covid-19 crisis,” said Michal Rutkowski, World Bank Global Director for Social Protection and Jobs.
Remittances are projected to continue to grow by 2.6 per cent in 2022 in line with global macroeconomic forecasts.
cmwai@newtimesrwanda.com
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