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COVID-19

COVID-19

The impact of the COVID-19 crisis on remittance families and markets

In only a few months, COVID-19 has changed the world. Governments everywhere have responded with a mix of policies and restrictions to contain the pandemic. These are having an immense socio-economic impact. Tens of millions of jobs have been lost, some of these permanently. Migrant workers are among the most directly affected by the economic fallout of this crisis, as employment levels and wages for this segment have both plummeted.

With limited access to unemployment benefits, many migrants are unable to continue sending money to support family members in home countries. Overall, 200 million migrants – half of them women – who send money and their 800 million family members who receive remittances in low- and middle-income countries (LMICs) may have been impacted by the crisis.

As a result, remittance flows are “projected to decline 14 per cent by 2021 compared to the pre COVID19 levels in 2019,” the sharpest fall ever registered. “Based on the trajectory of economic activities in large migrant‐hosting countries, especially the United States, European countries, and the Gulf Cooperation Council countries, remittance flows to low- and middle‐income countries (LMICs) are projected to decline by 7.2 percent, to $508 billion in 2020, followed by a further decline of 7.5 percent, to $470 billion in 2021”. 

Nonetheless, while the majority of sources indicate that remittance flows are decreasing, recent data from several central banks are reporting that in a few corridors, migrants’ total remittances have been stable or even increased over the last months (e.g. Bangladesh, Mexico and Pakistan). Circumstances vary by country, and certain markets are showing elements of resilience as remittances often have a counter-cyclical role in response to adverse shocks.  Indeed, migrants in several markets are using their savings to support families during the pandemic, and in some instances are preparing for their return home due to unemployment in countries of destination. However, there is still inconclusive proof of these tendencies, as a second wave of the pandemic is only starting.

Unlike previous shocks, the economic impact and scale of COVID-19 is simultaneously affecting remittance sending and receiving countries. The decrease in these flows threatens decades of progress towards the achievement of the Sustainable Development Goals (SDGs), including poverty reduction, income equality, nutrition, health and education.

The Remittance Community Task Force 

On 19 March 2020, the Secretary-General of the United Nations called for an urgent and coordinated response from the international community to address the COVID-19 pandemic, underscoring the fact that “remittances are a lifeline in the developing world – especially now”.

Responding to the UN Secretary-General’s call, on 24 March, IFAD, together with the World Bank Group and the African Union (the co-organizers of the Global Forum on Remittances, Investment and Development), launched the Remittance Community Task Force (RCTF), as part of the IDFR 2020 Campaign “Building resilience in times of crisis”.

RCTF’s list of members 

The Blueprint for Action

Understanding the need to act together as one to confront the global emergency, key stakeholders of the remittance ecosystem from all sectors joined forces to raise awareness of the impact of the pandemic on the one billion people on earth directly involved in remittances and to give voice to remittance families. National Remittance Task Forces were also created in Gambia, Ghana and Senegal. The work of the RCTF culminated in the release of a Blueprint for Action “Remittances in Crisis: Response, Recovery, Resilience”, outlining a set of immediate and short-term measures to address the challenges confronting migrant workers and their families with the COVID-19 pandemic.

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