The United Nations’ International Fund for Agricultural Development (IFAD) says it is working on a series of concrete measures to help mitigate the impact of the COVID-19 crisis on the lives of one billion people directly involved in sending and receiving remittances.
The UN agency is not doing that alone. Since March, IFAD is leading a global Remittances Community Task Force which comprises 35 international organisations, inter-governmental bodies, industry and private sector groups, and networks of diaspora organizations.
The coalition is pressing for the improvement of access to remittance services, especially in poor rural areas.
‘’There should be incentives to develop and use digital products that link remittances to a full range of financial services, so that migrants and their families can be encouraged to save and invest their money creating more opportunities for themselves and their communities’’, IFAD says.
With the significant decline in money sent home by migrants due to the impacts of the COVID-19 pandemic, IFAD is calling for governments across the world to declare remittance service providers essential businesses in times of crisis.
President of IFAD, Gilbert F. Houngbo, on the occasion of the International Day of Family Remittances said, ’’remittances are a lifeline for poor families in low and middle-income countries. Governments should take measures and do everything possible to facilitate the flow of funds during crises like the COVID-19 pandemic.”
The economic sectors that employ migrant workers, such as tourism, hospitality and agribusiness, are being hit the hardest by the impacts of COVID-19 restrictions, resulting in many migrants becoming underemployed or unemployed.
As a result, remittance flows are projected to make their sharpest decline in history, falling by 20 per cent in 2020.
The closure of remittance service providers during lockdowns has further exacerbated the ability of migrants to send money back to their families.
An IFAD survey last month of the Senegalese diaspora in France found that about 30 per cent of those who stopped or reduced sending money home did so because their money transfer operator was closed, or informal networks were no longer operating.
Head of IFAD’s Financing Facility for Remittances, Pedro de Vasconcelos, says “IFAD is now tracking the impact of declining remittances on the ‘receiving end’ in developing countries, where typical remittances of $200 to $300 per month account for about 60 per cent of household income.
“While the reduction in remittances will not fall evenly across countries and communities, the impact is likely to be substantial in rural areas where remittances count the most.”
Hundreds of thousands of migrants have returned home to their rural communities. At the same time, their families are also negatively impacted by lockdown measures that have paralysed economic activity and destroyed livelihoods in their countries of origin.
With both sides of remittance corridors being simultaneously affected, disruptions directly affect the lives and livelihoods of one billion people: 200 million migrants who send money to their 800 million relatives.
Almost half of these families live in rural areas where poverty and hunger are the highest. This year, tens of millions of families who rely on the remittances they receive will fall below the poverty line, resulting in more hunger and less spending in education and health.
“While keeping remittances services running through the crisis will certainly reduce some of the impacts of the decline in migrant incomes, there urgently needs to be a greater reform of the system so that after this crisis ends, migrants can send their money home faster, safer and cheaper”, de Vasconcelos says.
To address the situation, IFAD is making the following calls on governments and the private sector: Governments need to develop more conducive policy and regulatory environments that enable competition, regulation and innovation on the remittance market and declare these services essential.
Private sector entities should invest in developing innovative technological solutions for remittance transfers to reduce costs, improve speed, enhance security and increase flows through digital means to remote areas.
IFAD invests in rural people, empowering them to reduce poverty, increase food security, improve nutrition and strengthen resilience. Since 1978, we have provided about $21.5 billion in grants and low-interest loans to projects that have reached some 491 million people. IFAD is an international financial institution and a specialized United Nations agency based in Rome – the UN’ s food and agriculture hub.