Monday, October 19, 2020

Migrants' Remittances Misery

 Migrants make international payments to support their families back home. Now these important transfers have declined dramatically amid the global coronavirus outbreak.

According to World Bank spokesperson Alexandra Klopfer Hernandez, global remittances have dropped recently. "There was a sharp decrease in payments during April and May following the lockdown," she said. Hernandez remains pessimistic about the future: "We predict a further decline of remittances because of high global unemployment among migrants and the economic crisis."

As early as spring, the World Bank was projecting that the pandemic would cause a 20% drop in remittances. In 2019, remittances worth $554 billion (€473 billion) were transferred by migrants to their families back home — $133 billion of which was sent from Europe.

The Global Knowledge Partnership on Migration and Development (Knomad), which is co-financed by Germany's Ministry for Economic Cooperation and Development (BMZ), which has looked into the effects of a 20% remittance drop, pointed out that remittances exceed all foreign direct investment and development aid combined.

Knomad wrote that "the despair of those 800 million people who rely on these payments will grow; and the economic stability of many poorer countries is in jeopardy." Germany, France, Spain, Great Britain, Russia and Italy are the most important countries when it comes to remittances in Europe. According to Germany's central bank, maintenances have steadily increased over the past five years, growing from €3.5 billion to €5.4 billion.

Marina Manke of the International Organization for Migration(IOM) says there are no reliable figures regarding the volume of international payments amid the pandemic. "We have neither up-date-date figures, nor figures on the effects of COVID-19," she said. So for now, the organization must rely on local surveys and estimates.

"Half of the Moldovan migrants we interviewed confirmed they no longer have an income, so they stopped sending money to their families back home," says Manke. 

The financial reports of TransferWise, Western Union and MoneyGram — service providers which facilitate remittances — reveal a sharp drop in international payments. Western Union reported a 17% revenue drop in its second financial quarter compared to the same period last year, while MoneyGram reported a 13% decline between April and June. Experts are now calling on these and other financial service providers to lower their fees so that migrants can do more to support their loved ones back home. Currently, remittance fees range from between 3% and 7% per payment, which means that when $554 billion in remittances were paid last year, financial service providers earned between $16 and $38 billion — a considerable sum of money that could be used to improve the lives of poor families, and give a boost to developing economies.

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