Impact of COVID 19 on remittance
File photo: Migrant Workers

Remittance earning from the expatriates and migrant workers is one of the most important factors in the economy of Bangladesh. More than 10 million people of Bangladesh live as permanent residents or temporary migrants in 174 countries of the world. Remittances sent by Bangladeshis working abroad have added a new dimension to the country's economy and its contribution is steadily increasing.  

In 2019, expatriate Bangladeshis sent US$ 18.345 billion to the country, which is about 5.6% of Bangladesh's GDP. In the financial year 2019–20, the only upward economic indicator of the country was the remittances.  As a result, it is undeniable that remittances are in any case a regulatory force for a healthy economy. So issue of remittance must be given special importance at any cost, especially in the turbulent times of the global economic situation during the Corona pandemic situation.

No developed, developing or the least developed country is relieved of the impact of COVID 19. In every case they are going to emphasize on the management of health services, the affected cases with Corona virus and the number of death.

The burning question of the present moment faced by all the countries is "Life or livelihood" which is first? Almost everyone from their own respective interestis advising the people of the country to adapt with this pandemic situation. They have the tension on their economic factor behind all this suggestions.

Bangladesh is no exception to that. However, remittances must be considered for the economy of Bangladesh at any cost.A recent study report by the World Economic Forum (WEF) predicts that global remittance inflows will decline by 25% in 2020. As a result, income of the Bangladeshi expatriatesmay fall to US$ 14 billion. This will reduce the income of several lakhsof families at a significant rate. The average family income of immigrants was three to six hundred dollars per month in Bangladesh. Meanwhile, Bangladesh Bank data also showed that remittances declined by 25% in May compared to the same month last year.

The crisis has the unique effect of tightening fiscal constraints in low-income migrant-source countries just when there’s much more for the public sector to do in terms of protecting the population from the pandemic and supporting local economies from negative shocks.

This reduction means that the income of millions of families in the country will be in dire straits in the coming days. According to the report of the Study on the Use of Remittance (SUR) 2013, 46% of the women receiving remittance households are acting as the head of the family. As a result, significant numbers of women in remittance-dependent households will be under pressure to support their families.

As per the output of the study, remittance income is around 78% of the total income of the remittance earning households and the lion's share of this income is spent on the consumption of food. All these information indicates that action needs to be taken now to deal with this situation with an utmost importance.

More than a thousand expatriate Bangladeshis have died in different countries infected with Corona virus so far among which migrants working in Saudi Arabia are counted as the highest. This is followed by the United States and the United Kingdom. Onthe other hand, Bangladeshis working in Singapore are living in dormitories in large numbers. Even in Middle Eastern countries, Bangladeshis are suffering from high rates of COVID 19 due to being exposed in the unhealthy and overcrowded living accommodation.

Numerous migrants working in the tourism, services and construction sectors in the Gulf countries have recently lost their jobs due to the COVID pandemic. Mostly they are engaged in 3D jobs and some are working on so called “Free Visa". Several countries in the Middle East and South Asia have taken steps to repatriate workers.

The crisis will get worsensituation if these unemployed expatriates return to the country after the travel ban is lifted. That is why the recommendations of the World Economic Forum stated that Bangladesh should intensify its diplomatic efforts now. Not only in the lockdown situation, but also after the situation of COVID 19 is over, the promotion of the overseas employment should be emphasized with proactive approaches.

The government has already taken several steps to keep the flow of expatriates’remittance on the positive trend. An amount of Tk. 3,060 crore has been allocated in the budget for the 2019-20 fiscal year to encourage expatriate workers to send money in the legal channel.

From this allocation, the government is providing incentives to the expatriates at the rate of Tk. 2 per 100. Similar amount of allocation has also been proposed in the current budget of 2020-21.

The World Economic Forum (WEF) commends the government's initiative to provide this incentive. According to the Bangladesh Bank statistics, the highest remittances in 2019 came from Saudi Arabia (US$ 3646.61m), UAE (US$ 2732.8m), United States (US$ 2082.16m), and Kuwait (US$ 1575.57m), United Kingdom (US$ 1410.22m), Malaysia (US$ 1278.57m), Oman (US$ 1215.2m), Qatar (US$ 1106.02m) and Italy (US$ 800.94m).

Analyzing this data, it can be seen that most of the remittances are coming from the Middle East. Although the United States and United Kingdom are not the destination countries for foreign employment for temporary migrants, Bangladeshis residing there regularly send remittances.

The economies of these countries are expected to turn around and remittances will continue to flow from there. On the other hand, the problem in the Middle East is the fall in oil price. To stop the downward trend of expatriate income in the country, it is necessary to start discussions on migration. Many workers in the Middle East have lost their jobs and their fields of work are shrinking. In this situation, discussions should be started now on the cooperation on manpower diplomacy and migration negotiation.

Even after the introduction of many modern services, sending cash through someone personally who is returning to the country is still the most popular means for sending remittance. Another illegal channelis also widespread called ‘Hundi’ which is also not included in the regular process of transferring money from the destination countries.

However, sending of remittances is being severely hampered as a result of Corona Pandemic. According to a survey conducted in March 2020 by the International Association of Money Transfer Networks (IAMTN), Remittances from Saudi Arabia, the United Arab Emirates, the United States and the United Kingdom will have a negative impact due to COVID 19 pandemic.

Generally, about half of Bangladesh's expatriate income comes from these countries. Therefore, in the interest of continuing to send remittances through digital means, it is necessary to ensure the opportunity of communication between the families of migrants in Bangladesh and those countries.

At the moment, the service providers at the doorstep of remittance recipients can go to expatriates and their family members in an integrated way to open bank accounts and provide digital transaction services. In this case, government and non-government organizations can also extend the support to this service. Agencies with mobile financial services need to take steps to enable them to transact with each other.

Besides, in case of sending expatriates’ income like a bank transaction through mobile wallet, the fee has to be waived.

The government may provide incentives to banks, expatriate income providers, mobile phone operators and other stakeholders to continue their activities. Expatriate income service providers can also introduce difference promotional schemes on savings, loans, insurance and other financial services to make their services more attractive to Bangladeshi migrants and their family members.

The incentives given to cash out by sending remittances through digital wallet can play a significant role. The current crisis will have a huge impact on the income of migrants and expatriate. So there is no alternative to improving digital transactions to adapt the changing situation and keep the flow of money for the low-income population.

Government and non-government cooperation will play an important role in addressing the impact of COVID-19, as in other sectors. Meanwhile, on 22 May, 2020 the UNCDF and UNDP called for high level joint leadership action, with the Swiss and UK governments as to lead the process.

The UNCDF and UNDP joint statement said that they want to help governments and the private sector in various countries by strengthening the process of digital transactions in a creative way, a supportive regulatory and policy environment to ensure digital solutions for all migrants. So that they can continue to the flow of expatriates’ income in their own country and help the migrant families severely affected by the coronavirus pandemic. There is a lot to be done to help Bangladeshi migrants and their families, who are making a huge contribution at home and abroad.

Now, it is imperative to protect the interest and the human rights of the migrant workers. The host countries need to retain the employment of the migrant workers in their economies. Relief packages that target employment protection for citizens in rich countries can also help migrant workers remain employed.

Actions by host countries can help keep the remittance lifeline alive, as well as reduce the likelihood of migrants returning home.If host countries send migrants back, it will take even longer to restore production in rich countries to former levels. Bangladesh may adopt social insurance programs for the well-being of the population those are mostlydependent on remittance inflows for their consumption.

 

[The article has been composed by Kazi Abul Kalam, Joint Secretary to the Government of Bangladesh and Md. Nurul Islam, Former Director of the Bureau of Manpower Employment and Training (BMET)]

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