According to the World Bank, the COVID-19 pandemic reduced remittance inflows to Nigeria by 28% in 2020.
According to the bank’s Migration and Development Brief 33 Phase 11 titled “COVID-19 Crisis Through a Migration Lens” published on Thursday, remittance flows to Sub-Saharan Africa dropped by 12.5%.
According to the survey, the drop in remittance flows to Sub-Saharan Africa is largely due to a decrease in remittance flows to Nigeria.
“The drop in remittance flows to Sub-Saharan Africa was almost entirely due to a 28% drop in remittance flows to Nigeria,” says the study.
“With the exception of Nigeria, remittances to Sub-Saharan Africa increased by 2.3%, showing resilience,” according to the survey.
The relatively strong output of remittance flows during the COVID-19 crisis, according to the study, has also highlighted the importance of timely data availability.
Given its increasing importance as a source of external financing for low- and middle-income countries, it stated that better data on remittances was needed.
It emphasized the importance of improving remittance data collection in terms of frequency, timeliness, and granularity by corridor and channel.
“The resilience of remittance flows is remarkable,” said Dilip Ratha, lead author of the study on migration and remittances, according to the report. Remittances are assisting families in meeting their increased need for financial assistance.
“They can no longer be treated as pennies on the dollar.
“For nearly two decades, the World Bank has been tracking migration and remittance flows, and we are working with governments and partners to produce timely data and make remittance flows even more productive.”
Remittances to low- and middle-income countries are projected to rise by 2.6 percent to $553 billion in 2021 and by 2.2 percent to $565 billion in 2022, as global growth is expected to pick up in 2021 and 2022.
According to the survey, the global average cost of sending $200 remained high in the fourth quarter of 2020, at 6.5 percent, more than double the Sustainable Development Goal target of three percent.
It claimed that Sub-Saharan Africa continued to have the highest average cost (8.2%), and that efforts to lower fees are part of maintaining the remittance infrastructure and keeping remittances flowing.
It also reported that the fall in recorded remittance flows in 2020 will be smaller than the one seen during the global financial crisis of 2009. (4.8 per cent).
It was also significantly lower than the drop in FDI flows to low- and middle-income countries, which dropped by more than 30% in 2020, excluding flows to China.
As a result, remittances to low- and middle-income countries exceeded the amount of foreign direct investment (259 billion dollars) and overseas development assistance (179 billion dollars) in 2020.
Fiscal stimulus that resulted in better-than-expected economic conditions in host countries, a shift in flows from cash to digital and from informal to formal networks, and cyclical fluctuations in oil prices and currency exchange rates were the key drivers of the steady flow.
Although the magnitude of COVID-19’s effect on informal flows is unknown, the true size of remittances, which involves both formal and informal flows, is assumed to be greater than officially recorded data.
“As COVID-19 continues to wreak havoc on families around the world, remittances remain a vital lifeline for the poor and vulnerable,” said Michal Rutkowski, Global Director of the World Bank’s Social Protection and Jobs Global Practice.
“All communities, including migrants, should continue to be included in supportive policy responses, as well as national social protection systems.”
It also noted that remittance flows’ relatively strong performance during the COVID-19 crisis had highlighted the importance of timely data availability.
“Given its growing importance as a source of external financing for low- and middle-income countries, better data on remittances is needed, in terms of frequency, timely reporting, and granularity by corridor and channel.”
The World Bank is assisting member states in tracking the flow of remittances across various networks, the costs and convenience of sending money, and the regulations that affect remittance flows to maintain financial integrity.
It is collaborating with the G20 and the rest of the world to lower remittance costs and increase financial inclusion for the vulnerable.