16th June is the International Day of Family Remittances
There are many ways of sending and receiving money from one place to another or from one person to another. Apart from commercial activities there is some non commercial transfer of money from one part of the world to another part of the world. Many people migrate to other countries in search of better employment and they do send back money to their families and others. One of the terms which is associated in this regard is remittance. Well, a remittance is a non-commercial transfer of money by a foreign worker, a member of a Diaspora community, or a citizen with familial ties abroad, for household income in their home country or homeland. India receives the maximum amount followed by China, Mexico and other countries.
The matter of concern and worry is that estimates indicate that remittances will decrease by USD$109 billion as a result of the pandemic. Different reports and data state that family remittances have a direct impact on the lives of 1 billion people – one out of seven individuals on earth. Added together, remittances are three times greater than Official Development Assistance and surpass Foreign Direct Investment. Less than 20 years ago, remittances were literally unaccounted for, and the contributions of migrant workers remained unrecognized – though not to their families.
Due to the pandemic there has been a direct impact and for the first time, both sides of remittance corridors have been impacted simultaneously, likely pushing millions of families below poverty lines resulting in food insecurity and other challenges in the small towns and villages of developing countries. Remittances, or “cross-border person-to-person payments of relatively small value,” serve as a vital lifeline to the developing world. A May 2021 report by the World Bank reveals a drop in remittances of only 1.6 per cent in 2020, to US$ 540 billion from US$ 548 in 2019.
The International Day of Family Remittances (IDFR) was adopted by the United Nations General Assembly and is observed on 16th June. The IDFR recognizes more than 200 million migrant workers, women and men, who send money home to over 800 million family members. This day further highlights the great resilience of migrant workers in the face of economic insecurities, natural and climate related disasters and a global pandemic.
The IDFR and the United Nations commend the determination and resilience of the human spirit as evidenced by migrant workers. Further, the UN calls for governments, the private sector, development organizations and the civil society to promote digital and financial solutions for remittances that foster greater social and economic resilience and inclusion.
One of the greatest catalysts for formal remittances during 2020 was the accelerated adoption of digital technology by the migrant workers and their families. Mobile remittances alone increased 65 per cent during 2020 to US$ 12.7 billion (GSMA, 2021). This change was hastened by lockdowns and social distancing rules that spurred the move away from informal channels and the use of cash for senders and recipients. There is no doubt that digitalization is less costly than cash transfers and has reinforced the acceptance of mobile money, thereby enhancing the financial inclusion of migrants and their families.
António Guterres, Secretary-General of the United Nations in his message “looking forward, we must continue efforts to support and protect migrants, who — as the COVID-19 pandemic has made clear — play such an important role in keeping essential services and the economy at large running in many parts of the world. Ensuring that all migrants, regardless of legal immigration status, are included in COVID-19 vaccine distribution plans is critical for the health and safety of all.”
He also urged all stakeholders to continue efforts to reduce the costs of transferring remittances — a lifeline in the developing world — to as close to zero as possible in line with the 2030 Agenda for Sustainable Development and to foster the financial inclusion of migrants and their families, especially in poor rural areas.
Sustainable Development Goals (SDGs) address the major challenges facing the world today and migrant remittances can contribute to reaching the SDGs in a variety of ways which include at household level, at community level and also at national level. The crucial contribution of migrant workers, through remittances and investments, has also been recognized in the Global Compact for Safe, Orderly and Regular Migration, adopted in December 2018. The projected US$6.5 trillion in aggregate remittances to be received by families living in developing countries over the period of the 2030 Agenda represent a tremendous opportunity.
We are aware that remittances count especially in the small rural towns and villages of developing countries including India. As the theme suggests, focus should be more on digital and financial inclusion. There are policies and regulations and the government can make them easy for senders and receivers so that it works positively mostly in rural areas. Remittances shall certainly enhance sustainable development especially in developing or poor nations.
(With direct inputs from UN publication and feedback may be sent to bkranjan@gmail.com)
Ranjan K Baruah