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Migration & Refugees

Drop in Remittances – a Financial Lifeline for 800 Million People – Could Impact Financial Stability of Numerous Countries

The International Organisation for Migration and World Food Programme’s first joint publication says restrictions to curb the spread of COVID-19 have limited human mobility and left 33 million remittance-dependent people facing hunger.

A landmark United Nations report is calling on governments to declare remittance transfer an essential service. Photo by Christine Roy on Unsplash

A landmark United Nations report is calling on governments to declare remittance transfer an essential service. Photo by Christine Roy on Unsplash

UNITED NATIONS, Dec 9 2020 (IPS) - On Dec. 2 Gabriel Arias, 42, left a Washington Heights, New York, money transfer agency after sending money home to the Dominican Republic. For the past eight years, every fortnight he would come to this branch at 171st street after getting paid from his construction job. But things are different this year and he worries about his family back home. Arias lost his job in May, amid heightened COVID-19 restrictions in the state. He told IPS he has tried to work some odd jobs, but has barely earned enough for his monthly apartment rental. This early December visit to send money home was only his second since June.

“It has been hard because for a long time this year, I had no work. I came here speaking no English. I worked hard. Learned to speak and I took care of my mother and the family in the Dominican Republic. I had no job, no work since the COVID,” he told IPS.

Arias is not alone. A landmark United Nations report is calling on governments to declare remittance transfer an essential service and ensure access to humanitarian assistance, legal services and social protection for migrants and the displaced, as COVID-19 shifts the dynamics of global migration and hunger.

The report entitled “Populations at Risk: Implications of COVID-19 for Hunger, Migration and Displacement” is the first joint global report by the International Organisation for Migration (IOM) and World Food Programme (WFP) and analyses food security trends in the world’s migration hotspots during the pandemic. It warns that COVID-19 and measures taken to contain its spread have disrupted human mobility patterns, the consequences of which could been seen for years to come.

Earlier this year, countries across the globe instituted various tiers of entry requirements. According to the report, while those restrictions resulted in significantly reduced international migration in the first months of the pandemic, the ensuing dip in unemployment and food security led to a desperate need to search for work elsewhere – and a spike in migration due to necessity.

One of the areas hardest hit by the pandemic and subsequent lockdowns involves remittances. Globally, migrant remittances are a financial lifeline for around 800 million people. World Bank figures put remittances to low and middle-income countries (LMICS) at over $550 billion in 2019. For more than half of these countries, funds sent by migrant workers to their relatives in their home countries account for over 5 percent of gross domestic product. However, remittance flows have plunged drastically in 2020 and according to the report, over 33 million people are at risk of going hungry as part of the socio-economic impact of COVID-19.

“If efforts are made to channel remittances properly and ensure as well that you reduce the financial costs, this would have a greater impact on development. The idea is also that good management of the remittance services can help to speed up the recovery from the crisis,” IOM Senior Emergency and Preparedness Officer Rafaelle Robelin told IPS. 

With remittances to LMICS expected to fall by about $100 billion in 2020 and 495 million full time job losses in the first quarter of the year, the report’s partners say it is possible that many migrants are sacrificing their own consumption and other needs, in order to send money to loved ones in their home countries. The report states that this is not a sustainable means of supporting families in the medium to long-term. It is also bad news for countries heavily dependent on remittances. 

“Coupled with the 32 percent drop projected for foreign direct investments (FDI) in 2020, contractions in the prices of natural resources and a significant decrease in tourism revenues, the drop in remittances will likely impact the financial stability of numerous countries….poverty, food security, nutrition, health and educational attainment are all being directly impacted by mobility restrictions and the decline in remittances,” the report said.

While it confirms the importance of migrant work and its contribution to the economies of home countries, the report also highlights the inherent vulnerabilities that migrant workers face and notes that the pandemic has exacerbated those risks.

“It has been very clear since the onset of the crisis, that the impact of COVID on migration and mobility would be huge,” said Robelin, adding that, “migration has a positive impact from the remittance angle. The fact that many people lost their jobs who migrated for development means, means that in the long term, those benefitting from the positive impact of migration, may suffer.”

The IOM official says restriction of movement may have also pushed people to move under dangerous circumstances. Mobile and displaced populations also face new challenges such as increased exposure to work-related abuse and exploitation, the risk of losing residence status, the lack of funds to buy hygiene items and difficulties accessing COVID-19 tests, as well as restrictions on their general freedom to travel back and forth to their country of origin.

The IOM and WFP predict that partial or full lifting of travel regulations will result in more people leaving home to find work in order to feed their families. They are calling for well-governed migration to be a cornerstone of the global response to COVID-19. They believe that making remittance transfer an essential financial service can help families to meet their food and other needs. They are also advising the global community to ensure migrant access to health services including immunisation and mental health support. The partners are also recommending that government recognise the significant role played by migrants by ensuring they have access to social protection initiatives.

Some governments have implemented COVID-19 relief packages. They vary across countries and regions. IPS spoke to a family in Brooklyn, New York, who has opted to send home barrels of groceries, household and hygiene products to their loved ones in Saint Lucia. Lawmakers on the Caribbean island went to parliament in June and amended a bill that provides for late November to early January duty free concessions on barrels of items for household use. They announced that those tax relief measures would now extend from June 2020 to January 2021, in order to assist the most vulnerable and the thousands of Saint Lucians who lost their jobs.

“We took advantage of the duty-free and were able to send food home. We sent cleaning products and items like hand sanitisers, thermometers, masks and months of supplies that are expensive or not available back home,” one family told IPS.

Recovery from the COVID-19 pandemic is expected to be much slower than the 2009 global financial crisis. The report’s joint analysis has concluded that an effective response and recovery plan must take into consideration the link between food security and migration.

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