02/ 07/ 21
THE CASE FOR REMITTANCES IN A POST PANDEMIC WORLD
The decision to migrate to another country is more often than not, a personal one. The reason for the decision might differ, from looking for better opportunities to the need to take care of family back home. Many immigrants from developing countries are faced with economic stagnation, political turmoil among other issues hence leading to large-scale emigration, more in some countries than others. There are approximately 200 million migrants from developing countries living outside their country of origin.
The International Fund for Agricultural Development states that well over US$300 billion a year, remittances to developing countries surpass foreign direct investment (FDI) and development assistance combined. In nearly 40 countries, remittances make up more than 10 percent of GDP.
About one-third of these remittances go to rural areas where they play an essential role in raising incomes and reducing poverty. Money sent home by those who’ve migrated is said to majorly be spent on daily basic necessities such as food, shelter, education, and health care.
It is therefore evident that a huge percentage of people in developing countries are largely dependent on the money that their loved ones send back home. This dependency has been discouraged by some, stating that remittances can reduce labor supply and is also likely to inhibit economic growth. It can however be argued that the only way for those dependent on these remittances to be able to fend for themselves in the long-run, is through them being provided the opportunity via being recipients of these funds and in turn enabling them to access better education, healthcare, etc.
It was recently reported by the East African that, dollar inflows from African countries into Kenya dropped 65.9 percent in the first three months this year, with Tanzania overtaking South Africa as the biggest source of remittances. It was stated that the sharp decline in inflows was driven by lower remittances from South Africa, which was the biggest source last year but has since slipped behind Tanzania and Uganda. This could also generally be attributed to the uncertain economic conditions being faced globally due to the COVID-19 pandemic.
The rise of the remittance industry over the years has shown the ability to improve the livelihood of those left behind and in turn boost the economies of receiving countries. Transferring remittances has thus been a system that has also improved over time in order to make the process of sending money simpler and convenient for both the senders and the recipients. Money Transfer mediums such as Upesi Money Transfer have entered the market to bring about the ease of transferring money from abroad and vice versa with the goal of increasing financial inclusivity and better livelihoods for those in receiving countries.