Countries urged to protect ‘vital’ global remittances

The governments of Britain and Switzerland are urging countries to work together to ensure that global remittances continue to flow during the coronavirus pandemic.

They are calling on states to provide “greater access to digital remittances services to support people during the coronavirus outbreak”.

Money sent by individuals to family and friends living in low and middle-income countries totalled US$554 billion in 2019 and is seen as a vital lifeline in many developing countries – boosting economic development and lifting people out of poverty.

Such remittances by the diaspora communities around the world account for more than five per cent of Gross Domestic Product (GDP) in at least 60 of these countries, according to the World Bank.

But coronavirus is already having a big impact, with a drop in the wages of migrant workers and restrictions to contain and stop the spread of the respiratory illness making it more difficult for people to access money transfer services.

At the outbreak of COVID-19, the World Bank predicted remittances to these countries would fall by 20 per cent or US$110 billion in 2020.

In the case of Africa, remittances are expected to drop from US$48 billion in 2019 to US$37 billion, this year.

Seventy-five per cent of the world’s migrants work in countries where three-quarters of the globe’s COVID-19 cases have been reported while 90 per cent of global remittances are sent by migrants from these countries.

Now the UK and Switzerland are calling for greater global collaboration among countries to make sure that the financial support continues.

They highlighted the urgent need for people to be able to continue accessing money transfer services, and for governments to make sure those funds reached those reliant on this support.

They called on countries to support greater access to digital remittance services because life in lockdown was making it harder to send and receive funds and to declare remittances an essential financial service.

They are also encouraging remittance service providers to reduce costs and fees for people making payments.

The UK’s International Development Secretary, Anne-Marie Trevelyan, said that because of concerns about family and friends abroad the British government was “making it easier for diaspora communities in the UK and other countries to continue to transfer money to their relatives”.

“This will be lifesaving for some families in developing countries where coronavirus is making a lack of food and healthcare, and extreme poverty, even worse.

“We are helping to prevent fragile economies from facing potential collapse during the pandemic.”

Ignazio Cassis, head of the Swiss Federal Department of Foreign Affairs, said: “Remittances are important, but difficult because of COVID-19.

“So, let’s make sure those barriers are removed worldwide. “New technologies can help us here.”

Previous UK aid is now helping 65 million people in developing countries access digital financial services so they can receive funds via their mobile phones or online.

The World Bank, the UN Capital Development Fund, UN Development Programme and the International Organisation for Migration are among institutions supporting the call by the UK and Switzerland.