How COVID-19 is changing global remittance flows

The World Bank recently predicted a 14% decline in the amount of money migrant workers will be able to send home in 2021. The factors contributing to this decline include weak economic growth and employment levels in migrant-hosting countries, weak oil prices, and the depreciation of currencies against the US dollar. Michael Kent, the Founder of Azimo, gave his insights during a CNBC Africa interview, shedding light on the impact of these factors and providing a perspective on the global remittance landscape. Kent noted that while the decline is concerning, it is less severe than initially forecasted by the World Bank at the onset of the pandemic. He highlighted the shift towards digital money transfer services amid the crisis, with more customers opting for digital platforms over traditional operators like banks and Western Union. Kent emphasized the challenging economic conditions worldwide, especially in migrant-heavy regions like the UK, where lockdown measures have stalled economic activities, leading to reduced remittance flows. Despite the challenges, Kent expressed optimism about the resilience of remittances, attributing it to the necessity rather than discretionary nature of these transfers. He pointed out that migrants, often the 'brightest and best' of their communities, view remittances as a lifeline for their families back home, reinforcing the significance of these financial flows. Kent also addressed the impact on sub-Saharan Africa, highlighting the region's reliance on remittances as a crucial source of external finance, separate from foreign direct investment. He expressed confidence in the resilience of remittances within the region, noting that economic recovery and government support measures could mitigate the adverse effects on remittance flows. Regarding the decline in the stock of international migrants, Kent acknowledged the temporary trend of returning migrants in response to job losses and economic uncertainties in certain regions. However, he stressed that overall migration remains on an upward trajectory, fueled by historical trends of global mobility. Despite the current challenges posed by the pandemic, Kent remains optimistic about the enduring appeal of migration as a means of seeking better opportunities. Overall, the discussion with Michael Kent underscored the resilience of global remittance flows amidst the unprecedented challenges brought about by COVID-19.