The latest edition of the Migration and Development Brief just released at the ongoing Spring meetings of the World Bank claimed that remittances to Nigeria from abroad fell by -10 per cent. The trend which also affected many other developing countries was the second in 2016, a trend not seen in three decades.
The Bank estimated that officially recorded remittances to developing countries amounted to $429 billion in 2016, a decline of 2.4 percent over $440 billion in 2015. Global remittances, which include flows to high-income cocountries, contracted by 1.2 percent to $575 billion in 2016, from $582 billion in 2015.
The world body also said that low oil prices and weak economic growth in the Gulf Cooperation Council (GCC) countries and the Russian Federation are taking a toll on remittance flows to South Asia and Central Asia, while weak growth in Europe has reduced flows to North Africa and Sub-Saharan Africa.
The decline in remittances, the Bank said, when valued in United States dollars, was made worse by a weaker euro, British pound and Russian ruble against the U.S. dollar.
As a result, it stated that many large remittance-receiving countries saw sharp declines in remittance flows. India, while retaining its top spot as the world’s largest remittance recipient, led the decline with remittance inflows amounting to $62.7 billion last year, a decrease of 8.9 percent over $68.9 billion in 2015.
Remittances to other major receiving countries are also estimated to have fallen last year, including Bangladesh (-11.1 percent), Nigeria (-10 per cent), and Egypt (-9.5 per cent).
The exceptions among major remittance recipients were Mexico and the Philippines, which saw inflows increase by an estimated 8.8 percent and 4.9 percent, respectively, last year.
“Remittances are an important source of income for millions of families in developing countries. As such, a weakening of remittance flows can have a serious impact on the ability of families to get health care, education or proper nutrition,” sActing Director of the World Bank’s Global Indicators Group, Rita Ramalho said
In keeping with an improved global economic outlook, the Bank stressed that remittances to developing countries are expected to recover this year, growing by an estimated 3.3 percent to $444 billion in 2017.
The global average cost of sending $200 remained flat at 7.45 percent in the first quarter of 2017, although this was significantly higher than the Sustainable Development Goal (SDG) target of 3 percent. Sub-Saharan Africa, with an average cost of 9.8 percent, remains the highest-cost region. A major barrier to reducing remittance costs is de-risking by international banks, when they close the bank accounts of money transfer operators, in order to cope with the high regulatory burden aimed at reducing money laundering and financial crime. This has posed a major challenge to the provision and cost of remittance services to certain regions.
The Bank noted that several high-income countries that were host to many migrants were considering taxation of outward remittances, in part to raise revenue, and in part to discourage undocumented migrants. However, taxes on remittances are difficult to administer and likely to drive the flows underground.
On the global migration crisis,in the Brief, the world bank said that between 2015 and 2016, the number of refugees in the 28 European Union countries increased by 273,000 to 1.6 million. During the same period, the number of refugees worldwide increased by 1.4 million, to 16.5 million.
In a special feature, the Brief notes the absence of a formal definition of the Global Compact on Migration, and advances a working definition of “an internationally negotiated framework for governments and international organizations to harness the benefits of migration while navigating its challenges.” It calls for regional and bilateral agreements that address migration, to develop a normative framework or guidelines for governments and international organizations.
Remittance flows to Sub-Saharan Africa declined by an estimated 6.1 percent to $33 billion in 2016, due to slow economic growth in remittance-sending countries; decline in commodity prices, especially oil, which impacted remittance receiving countries; and diversion of remittances to informal channels due to controlled exchange rate regimes in countries such as Nigeria. Remittances to the region are projected to increase by 3.3 percent to $34 billion in 2017.