Adedapo Adesanya
By Adedapo Adesanya
The United Nations, through the International Fund for Agricultural Development (IFAD), has disclosed that migrant workers sent home an estimated $605 billion to low- and middle-income countries last year.
In a UN study released on Thursday, it was disclosed that this was boosted by an increase in payments sent via mobile phones.
Global remittances flows rose 8.6 per cent compared to 2020 and are projected to grow to $630 billion in 2022.
Such payments are a major source of income for many low-income households, with around 800 million family members expected to benefit in 2022.
Between now and 2030, global remittances will amount to $5.4 trillion, the equivalent of twice the GDP of Africa in 2021, IFAD has estimated.
Speaking on this, the president of the agency, Mr Gilbert Houngbo said, “Remittances lift people out of poverty, put food on the table, pay for education, cover health expenses, allow housing investments and many other family goals beyond consumption.”
However, the report warned that the upward trend would likely slow this year as inflation erodes wages, and as a result of Russia’s invasion of Ukraine.
Many countries in Central Asia depend on remittances from Russia, with payments accounting for as much as 30 per cent of their Gross Domestic Product, said the report.
But the decline in the value of the ruble and the economic impact of sanctions have triggered a “sharp decline in transfers”, IFAD said.
Most of the money sent home by migrant workers is transferred through bricks-and-mortar institutions with clients paying cash, but the coronavirus pandemic saw an important shift towards digital.
With lockdowns and border closures making physical services more difficult to access, mobile phone payments jumped by 48 per cent in 2021.
They still only accounted for 3 per cent of the global total, but Mr Pedro De Vasconcelos, manager of the Financing Facility for Remittances at IFAD, said the trend is set.
This matters because mobile payments are more convenient, particularly for those in rural areas, and are also cheaper.
In Africa — which received $94 billion in remittances in 2021, an increase of 13 per cent in 2020 — transfer fees are the highest in the world.
