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Remittances to SSA rise 5.2% to $53bn in 2022, says World Bank

Remittances to low and middle-income countries withstood this year’s global headwinds, growing an estimated 5% to $626 billion.

This is sharply lower than the 10.2% increase in 2021, according to the latest World Bank migration and development brief.

Remittances to Sub-Saharan Africa (SSA), the region most highly exposed to the effects of the global crisis, grew an estimated 5.2% to $53 billion in 2022, compared with 16.4% last year (due mainly to strong flows to Nigeria and Kenya).

Remittances in 2023 are projected to soften to 3.9% growth as adverse conditions in the global environment and regional source countries persist.

Remittances as a share of the gross domestic product (GDP) are significant in the Gambia (28%), Lesotho (21%), and Comoros (20%).

Sending $200 to the region cost 7.8% on average in the second quarter (Q2) of 2022, down from 8.7% a year ago.

Remitting from countries in the least expensive corridors is on average 3.4% compared to 25.2% for the costliest corridors.

“Migrants help to ease tight labour markets in host countries while supporting their families through remittances. Inclusive social protection policies have helped workers weather the income and employment uncertainties created by the COVID-19 pandemic.

“Such policies have global impacts through remittances and must be continued,” said Michal Rutkowski, World Bank Global Director for Social Protection and Jobs.

By region, Africa stands to be the most severely exposed to the concurrent crises, including severe drought and spikes in global energy and food commodity prices.

Migrants help to ease tight labour markets in host countries while supporting their families through remittances.

Regional flows

In other regions, remittance flows are estimated to have increased 10.3% to Europe and Central Asia, where rising oil prices and demand for migrant workers in Russia supported remittances, in addition to the currency valuation effect.

In Ukraine, remittance growth is estimated at 2%, lower than earlier projections as funds for Ukrainians were sent to countries hosting them, and hand-carried money transfers likely increased.

Growth in remittance flows is estimated at 9.3% for Latin America and the Caribbean, 3.5% in South Asia, 2.5% in the Middle East and North Africa, and 0.7% in East Asia and the Pacific.

In 2022, for the first time a single country, India, is on track to receive more than $100 billion in yearly remittances.

In a special feature on climate-driven migration, the Brief notes that rising pressures from climate change will both drive increases in migration within countries and impair livelihoods.

The poorest are likely to be most affected as they often lack the resources necessary to adapt or move.

Studies show that migration can play a role in coping with climate impacts, for example, by providing an escape from disasters and also through remittances and other forms of support to affected households.

Changes in the international legal norms and institutional frameworks for migration may be required to cope with the challenge of climate-related migration, particularly in the context of cross-border mobility, as is the case for small island nations.

“People throughout history have responded to deteriorating climates by moving to survive. Planning for safe and regular migration as a part of adaptation strategies will be required for managing displacement in the affected regions as well as the influx of people in the receiving communities,” said Dilip Ratha, lead author of the Brief and head of the Global Knowledge Partnership on Migration and Development.

“National and regional development strategies should be viewed through a climate migration lens,” he added.

Also reported in the Brief is the cost of sending $200 across international borders to LMICs, which remains high at 6% on average in Q2’22, according to the Remittances Prices Worldwide Database.

It is cheapest to send via mobile operators (3.5%), but digital channels account for less than one per cent of total transaction volume.

Digital technologies allow for significantly faster and cheaper remittance services.

However, the burden of compliance with Anti-Money Laundering/Combating the Financing of Terrorism regulations continue to restrict access of new service providers to correspondent banks. These regulations also affect migrants’ access to digital remittance services.

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