Today marks the International Day of Family Remittances. As the world deals with the fallout of the coronavirus pandemic, a new JRC report describes how falling remittances could remove a major source of income for people in several African countries.
The impact of the crisis on jobs and wages across the world will cause unprecedented disruption to the flow of the earnings that many migrant workers send to families back home.
As part of the global response to coronavirus, the EU and partners are taking action to tackle the destructive impact of COVID-19. Priorities and programmes with partner countries are being adapted to address the crisis.
The African Union has listed declining remittances among the major economic impacts of the crisis. In seven African countries, remittance inflows were valued at more than 10% of GDP in 2019. They have outstripped Foreign Direct Investment in Sub-Saharan Africa since 2015, and did the same in North Africa and the Middle East from 2013 to 2018.
JRC experts analysed the relationship between remittance flows and GDP, as well as responses to an Afrobarometer survey, to show how the impacts of this decline are likely to vary across countries.
The findings can support responses by looking beyond the total scale of inflows and reflecting on how declining remittances intersect with existing social and economic challenges.
Falling remittances hit the most vulnerable hardest
A fall in remittances will have a greater impact for people who are more dependent on them to get by. Not all countries in Africa rely on remittances, but in 11 of the 33 countries analysed, over a quarter of people say they depend on remittances to some extent.
Falling remittances will be especially hard for those who have no other source of income, or rely on remittances to get by.
In 30 of the countries analysed, more than half of the people who say that they depend on remittances do not have a job.
In 29 countries, more than half who say they depend on remittances also say that they face cash problems.
The report also identifies countries where there is the greatest convergence of dependence on remittances, economic vulnerability and financial exclusion.
Are digital transfers a solution?
'Stay at home' measures to contain Covid-19 have limited the capacity of people to send and receive remittances in person. Digital money transfers are often cheaper, and don’t involve physical contact.
Many people will be able to adapt to using these services, but not all. In six of the 33 countries analysed, more than half of the people who depend on remittances have no bank account or mobile internet access.
For digital remittances to help mitigate the effects of the coronavirus crisis, a significant expansion of digital and financial infrastructure will be necessary.
The EU works with partners to tackle the crisis
The EU directly supports efforts to tackle the reduction in remittances. The European Commission has for example been involved in developing COVID-19 specific operational measures in the Remittance Community Task Force led by the International Fund for Agricultural Development.
The Commission has also helped create National Remittance Task Forces in Ghana, The Gambia, and Senegal. These task forces bring together public and private stakeholders with the aim of jointly addressing COVID-19 and its implications for the remittance markets.
Acting together as 'Team Europe', the EU and Member States are taking comprehensive and decisive action to tackle the destructive impact of COVID-19. This includes regional approaches tailored to meet the different needs of the different areas of the world.
The EU promotes an equitable, sustainable and inclusive recovery. Team Europe is mobilising almost €36 billion for several actions, including budget support to allow governments to deliver essential services and loan guarantees to boost economic activity and safeguard livelihoods.
JRC Report: Covid-19 and Remittances in Africa
International Day of Family Remittances: tackling COVID-19 challenges
- Publication date
- 16 June 2020