The power of digital remittances in supporting women in Egypt

International Migrants Day, observed annually on December 18, is a day designated by the United Nations to recognize the contributions and challenges of migrants worldwide. It serves as an opportunity to promote awareness about the social, economic, and cultural contributions that migrants make to their host and home countries.

One way in which migrants contribute to their home countries is through remittances. Migrant remittances play a crucial role in the economies of their home countries, providing a stable source of income for millions of families. They enable households to afford necessities such as food and education and help improve their resilience to economic shocks. They can also foster financial inclusion as many recipients interact with the formal financial sector for the first time for receiving remittances. At the aggregate level, remittances can increase consumption and investment and contribute to economic growth. And they also provide a vital source of foreign currency.

Egypt is one of the largest remittance receiving countries in the world, with inflows of $19.5 billion in 2023, amounting to 5% of GDP. Around 3.6 million Egyptians live in other countries. The top destination countries for Egyptian migrants are Saudi Arabia, United Arab Emirates, Kuwait, Qatar, Jordan, Italy, and the United States. According to the World Bank, many Egyptians abroad reverted to using informal channels for sending money home due to the volatile exchange rates. In early 2024, the Egyptian authorities put in place several initiatives to foster the growth of the remittances market, including digitalization of remittances, savings products for the diaspora, and exchange rate liberalization.

Digitalization of remittances can have multiple effects in improving development outcomes: digital remittances are shown to be less costly, digital remittances can contribute to financial inclusion, more transparent and they are conveniently available 24/7.

Recognizing these, the Central Bank of Egypt (CBE) implemented a pilot for digitalization of remittances during 2022-2023, with World Bank’s technical assistance. The pilot specifically focused on women remittance receivers in rural areas, with the overall aim of financially including them. Three banks participated in the pilot, working on product design, financial literacy and incentives for women remittance receivers. Adopting a customer-centric approach, the participating banks implemented a survey on consumer behavior, and designed remittance product bundles which included the account in which remittances are to be received along with a payment instrument, financial literacy interventions, and incentives to receive remittances digitally and to make payments for daily needs digitally. The product bundles were offered to all walk-in remittance customers, as well as the existing bank customers who were interested, even though the overall approach targeted women.

Within one year of the pilot, approximately 250,000 new accounts were opened. The number and value of remittance transactions received by also increased: the number of incoming international remittance transactions for women increased by 13%, while it was a 1.4% increase for men, and the value of incoming international remittance transactions for women increased by 13% while there was a 1.4% increase for men.

In addition, during the pilot, the participating banks worked on improving the landscape for electronic payment acceptance by small merchants in the pilot locations to enable users to spend digitally when making purchases at everyday stores. This included acquiring more and smaller merchants in the pilot locations, as well as providing incentives for digital payments at the point-of-sale. As a result, digital transactions at the point-of-sale done using the payment instrument associated with the remittance product led to an increase in the overall digital point-of-sale transactions in the pilot locations of 13% within one year.

The CBE intends to work on scaling up the pilot by including more providers, more locations, and testing different aspects of the product bundle.