Global remittances poised to grow by 7.3% during 2021 as diasporans recover from pandemic fallout

REMITTANCES to low and middle income countries like Nigeria have been projected to grow by about 7.3% during the course of 2021 to about $589bn as the global economy starts to witness a return to normality in the wake of the coronavirus pandemic.

Over the last year-and-a-half, global remittances have felt the impact of the Covid-19 lockdown with many diasporans suffering job losses and a reduction in income. Of late, however, the global economy is gradually returning to normal, however and this has resulted un remittances picking up according to a recent World Bank report.

According to the recently-released World Bank Migration and Development Brief estimates, remittance inflows to sub-Saharan Africa returned to growth in 2021, increasing by 6.2% to $45bn. Nigeria, the region’s largest recipient, is experiencing a moderate rebound in remittance flows, in part due to the increasing influence of policies intended to channel inflows through the banking system.

Worldwide, remittances are projected to continue to grow by 2.6% in 2022, in line with global macroeconomic forecasts. However, a resurgence of Covid-19 cases and re-imposition of mobility restrictions poses the biggest downside risk to the outlook for global growth, employment and remittance flows to developing countries.

According to the report, the rollback of fiscal stimulus and employment-support programmes as economies recover, may also dampen remittance flows. However, the World Bank’s Remittance Prices Worldwide Database lamented the huge cost of sending $200 across international borders which it said averaged 6.4% of the amount transferred in the first quarter of 2021.

This is more than double the Sustainable Development Goal target of 3% by 2030. It is most expensive to send money to Sub-Saharan Africa, as it costs 8, while the lowest place to send money to is South Asia, where it costs just 4.6%.

Data reveal 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. Flows increased by 21.6% in Latin America and the Caribbean, 9.7% in the Middle East and North Africa, 8% in South Asia, 6.2 % in sub-Saharan Africa and 5.3% in Europe and Central Asia according to the report.