COVID-19: SSA sees sharp decline in remittances in 2020

Remittances to Sub-Saharan Africa saw a sharp decline in 2020, with an estimated 12.5% drop to $42 billion, as per the latest report by the World Bank Group. The lead economist at the World Bank, Dilip Ratha, shared insights on the factors behind this decline and the outlook for remittances in the region. While the global pandemic had a significant impact on remittance flows worldwide, the decrease in remittances to Sub-Saharan Africa was notable. The total amount of remittances recorded in the region in 2020 was $42 billion, a decrease from $48 billion in 2019. This 12.5% decline in remittances represents a story of human suffering as these funds provide crucial support to families in need. The decline can be attributed to various factors, including the effects of lockdowns, curfews, and job losses. However, despite the challenging circumstances, migrants showed resilience in sending money home to their families, even if it meant sacrificing their own living conditions. The willingness of migrants to support their families was bolstered by economic support programs in host countries and the shift to digital channels due to travel restrictions. In the case of Nigeria, the largest recipient of remittances in the region, there was a significant decline of 28% in 2020, partly due to currency fluctuations and a shift to informal remittance channels. On the other hand, countries like Kenya and Ghana saw an increase in remittances, driven by advancements in financial technology and digital remittance services. Looking ahead to 2021 and 2022, there is optimism for a modest increase in remittance flows to Sub-Saharan Africa and other developing countries. However, there are concerns about potential downside risks, such as the sustainability of fiscal policies, limited access to banking services for migrants, and the volatility of oil prices and currencies. The high cost of sending money remains a significant challenge, with the average cost of remittances to Africa exceeding 8%. Efforts to reduce this cost and achieve the Sustainable Development Goal target of decreasing remittance costs to 3% by 2030 are crucial for improving financial inclusion and supporting vulnerable migrant populations.