How is the pandemic affecting remittances to fragile and conflict affected settings?

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Migrants and refugees are among the vulnerable populations that are hardest hit by the COVID-19 pandemic. But it’s not just them – the crisis is also impacting their families back in their home countries who depend on the money they send to make ends meet. Especially for households in countries affected by fragility and conflict (FCS) who are more likely to be extremely deprived, these remittances are economic lifelines. Over 50 million international migrants and refugees come from FCS. 

In 2019 remittances to FCS countries reached a record high of $58 billion, more than their receipt of official development assistance (just over $50 billion in 2018). As a result, remittances provide an important source of external financing for FCS countries, averaging 9% as a share of GDP compared to a share of around 2% for the low- and middle-income countries  (table 1). In Haiti and South Sudan, that share is more than 35%. 

 

Table 1: Remittance flows to FCS countries

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Remittance flows to FCS countries

Please see the World Bank Group's FCS List
Source: Migration and Development Brief 33, World Bank

 

The economic crisis induced by the COVID-19 pandemic is expected to cause a decline in remittance flows of 7% globally in 2020. The drop is expected to be sharper (9%) in countries impacted by medium-intensity conflict like Nigeria, the largest remittance-receiving country in Sub-Saharan Africa and sixth largest among  LMICs. 

Renewed lockdowns, travel restrictions and social distancing measures implemented worldwide to contain the spread of COVID-19 have resulted in widespread job losses. In times of crisis, the adverse effects in terms of loss of jobs and earnings are disproportionately high for migrants, especially for those in informal sectors and relatively low-skilled jobs. 

Even if a migrant had money to send, it is not easy to do so because money transfer operators and remittance service providers are also locked down or are not easily accessible to many migrants and their families back home. The lockdowns and travel bans have also impacted the internal migration of workers and displaced persons from rural areas to urban economic centers, a pattern common in many fragile countries. 

As a result, families who are reliant on remittances face increased risk of falling back into poverty—our estimates indicate that up to 30 million more people could fall back into extreme poverty this year due to the economic impacts of the pandemic.  With this comes reduced ability to buy food and essential items –including medicine— and to keep sending their children to school instead of sending them to work. In FCS, it’s yet another shock that adds to the compound crises they already face. 

So far, government responses to the COVID-19 crisis have largely focused on helping their own citizens. But there is a strong case for including migrants and refugee populations in the health response in countries where they live, given that the virus does not differentiate between citizens and others . The World Bank is supporting several countries like Niger, Burkina Faso, Colombia and Uganda to ensure such inclusion, working with UN partners. Any health or other support provided to these populations  can also help the families in their countries of origin who depend on remittance flows to stay afloat, especially in countries impacted by fragility and conflict. 

In the short term, public policy measures in response during the COVID19 crisis include:

  • Targeting migrants and refugees in health awareness campaigns and providing them with access to healthcare. 
  • Where relevant and practical, including migrants in programs that provide a temporary moratorium on debt service in their countries of origin and on rent payments in host countries. 
  • Declaring remittance service providers – who have been facing closures and service disruption – as ‘essential services’ and making them more accessible to these populations 

In the medium- to long-term, host country governments could promote economic, social protection and educational investments for migrants and refugees, and recognize how their skills can be most effectively leveraged as part of recovery efforts. Strengthening the infrastructure underpinning remittances, for example improving data on remittances, facilitating digital systems of sending remittances and reducing remittance costs would also be important. 

The most vulnerable communities in fragile and conflict-affected settings need support now more than ever. Ensuring this support reaches them is pivotal to laying the foundations for an inclusive, resilient, and sustainable recovery.

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