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World Bank Predicts Sharpest Decline of Remittances in Recent History

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Global remittances are projected to decline sharply by about 20 percent in 2020 due to the economic crisis induced by the COVID-19 pandemic and shutdown. The projected fall, which would be the sharpest decline in recent history, is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country. Remittances to low and middle-income countries (LMICs) are projected to fall by 19.7 percent to $445 billion, representing a loss of a crucial financing lifeline for many vulnerable households.

Studies show that remittances alleviate poverty in lower- and middle-income countries, improve nutritional outcomes, are associated with higher spending on education, and reduce child labor in disadvantaged households. A fall in remittances affect families’ ability to spend on these areas as more of their finances will be directed to solve food shortages and immediate livelihoods needs.

Remittances are a vital source of income for developing countries. The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass. “Remittances help families afford food, healthcare, and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”

The World Bank is assisting member states in monitoring the flow of remittances through various channels, the costs and convenience of sending money, and regulations to protect financial integrity that affect remittance flows. It is working with the G20 countries and the global community to reduce remittance costs and improve financial inclusion for the poor.

Remittance flows are expected to fall across all World Bank Group regions, most notably in Europe and Central Asia (27.5 percent), followed by Sub-Saharan Africa (23.1 percent), South Asia (22.1 percent), the Middle East and North Africa (19.6 percent), Latin America and the Caribbean (19.3 percent), and East Asia and the Pacific (13 percent).

The large decline in remittances flows in 2020 comes after remittances to LMICs reached a record $554 billion in 2019. Even with the decline, remittance flows are expected to become even more important as a source of external financing for LMICs as the fall in foreign direct investment is expected to be larger (more than 35 percent). In 2019, remittance flows to LMICs became larger than FDI, an important milestone for monitoring resource flows to developing countries.

In 2021, the World Bank estimates that remittances to LMICs will recover and rise by 5.6 percent to $470 billion. The outlook for remittance remains as uncertain as the impact of COVID-19 on the outlook for global growth and on the measures to restrain the spread of the disease. In the past, remittances have been counter-cyclical, where workers send more money home in times of crisis and hardship back home. This time, however, the pandemic has affected all countries, creating additional uncertainties.

Effective social protection systems are crucial to safeguarding the poor and vulnerable during this crisis in both developing countries as well as advanced countries. In host countries, social protection interventions should also support migrant populations,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

The global average cost of sending $200 remains high at 6.8 percent in the first quarter of 2020, only slightly below the previous year. Sub-Saharan Africa continued to have the highest average cost, at about 9 percent, yet intra-regional migrants in Sub-Saharan Africa comprise over two-thirds of all international migration from the region.

Quick actions that make it easier to send and receive remittances can provide much-needed support to the lives of migrants and their families. These include treating remittance services as essential and making them more accessible to migrants,” said Dilip Ratha, lead author of the Brief and head of KNOMAD.


Regional Remittance Trends

Remittance flows to the East Asia and Pacific region grew by 2.6 percent to $147 billion in 2019, about 4.3 percentage points lower than the growth rate in 2018. In 2020, remittance flows are expected to decline by 13 percent. The slowdown is expected to be driven by declining inflows from the United States, the largest source of remittances to the region. Several remittance-dependent countries such as those in the Pacific Islands could see households at risk as remittance incomes decline over this period. A recovery of 7.5 percent growth for the region is anticipated in 2021. Remittance costs: The average cost of sending $200 to the East Asia and Pacific region dropped to 7.13 percent in the first quarter of 2020, compared to the same quarter in 2019. The five lowest cost corridors in the region averaged 2.6 percent while the five highest cost corridors averaged 15.4 percent as of 2019 Q4.

Remittances to countries in Europe and Central Asia remained strong in 2019, growing by about 6 percent to $65 billion in 2019. Ukraine remained the largest recipient of remittances in the region, receiving a record high of nearly $16 billion in 2019. Smaller remittance-dependent economies in the region, such as Kyrgyz Republic, Tajikistan, and Uzbekistan, particularly benefited from rebound of economic activity in Russia. In 2020, remittances are estimated to fall by about 28 percent due to the combined effect of the global coronavirus pandemic and lower oil prices. Remittance costs: The average cost of sending $200 to the ECA region declined modestly to 6.48 percent in the first quarter of 2020 from 6.67 percent a year earlier. The differences in costs across corridors in the region are substantial; the highest costs for sending remittances were from Turkey to Bulgaria, while the lowest costs for sending remittances were from Russia to Azerbaijan.

Remittances flows into Latin America and the Caribbean grew 7.4 percent to $96 billion in 2019. Growth in inflows was uneven across countries in the region. Brazil, Guatemala and Honduras saw a rise in remittances of more than 12 percent in 2019. Colombia, Ecuador, Nicaragua and Panama had an increase of more than 6 percent, while remittances to Bolivia and Paraguay declined by 3.8 percent and 2.2 percent, respectively. In 2020, remittance flows to the region is estimated to fall by 19.3 percent. Remittance costs: The average cost of sending $200 to the region was 5.97 percent in the first quarter of 2020. Amid the COVID-19 crisis, the costs of transferring remittances to the region could increase due to operational challenges being faced by remittance service providers (closures of agents and offices, access to cash, foreign exchange, security) and compliance with AML/CFT regulations.

Remittances to the Middle East and North Africa region are projected to fall by 19.6 percent to $47 billion in 2020, following the 2.6 percent growth seen in 2019. The anticipated decline is attributable to the global slowdown as well as the impact of lower oil prices in GCC countries. Remittances from the euro area would also be impacted by the area’s pre-COVID-19 economic slowdown and the depreciation of the euro against the U.S. dollar. In 2021, remittances to the region is expected to recover, albeit at a slow pace of around 1.6 percent due to projected moderate growth in the euro area and weak GCC outflows. Remittance costs: The cost of sending $200 to the region was 7 percent, largely unchanged from the previous year. Costs vary greatly across corridors. The cost of sending money from high-income OECD countries to Lebanon continues to be in the double digits. Sending money from GCC countries to Egypt and Jordan costs between 3 percent to 5 percent in some corridors. The Saudi Arabia to Syria corridor has experienced a dramatic fall in costs as the civil war in Syria has receded.

Remittances to South Asia are projected to decline by 22 percent to $109 billion in 2020, following the growth of 6.1 percent in 2019. The deceleration in remittances to the South Asian region in 2020 is driven by the global economic slowdown due to the coronavirus outbreak as well as oil price declines. The economic slowdown is likely to directly affect remittance outflows from the United States, the United Kingdom, and EU countries to South Asia. Falling oil prices will affect remittance outflows from GCC countries and Malaysia. Remittance costs: South Asia had the lowest average remittance costs of any region, at 4.95 percent. Some of the lowest-cost corridors had costs below the 3 percent SDG target. This is probably due to high volumes, competitive markets, and deployment of technology. But costs are well over 10 percent in the highest-cost corridors due to low volumes, little competition, and regulatory concerns. Banking regulations related to AML/CFT raise the risk profile of remittance service providers and thereby increase costs for some receiving countries such as Afghanistan and sending countries such as Pakistan.

Remittances to Sub-Saharan Africa registered a small decline of 0.5 percent to $48 billion in 2019. Due to the COVID-19 crisis, remittance flows to the region are expected to decline by 23.1 percent to reach $37 billion in 2020, while a recovery of 4 percent is expected in 2021. The anticipated decline can be attributed to a combination of factors driven by the coronavirus outbreak in key destinations where African migrants reside including in the EU area, the United States, the Middle East, and China. These large economies host a large share of Sub-Saharan African migrants and combined, are a source of close to a quarter of total remittances sent to the region. In addition to the pandemic’s impact, many countries in the Eastern Africa region are experiencing a severe outbreak of desert locusts attacking crops and threatening the food supply for people in the region. Remittance costs: Sending $200 remittances to the region cost 8.9 percent on average in the first quarter of 2020, a modest decrease compared with the average cost of 9.25 percent a year before. The most expensive corridors are observed mainly in the Southern African region, with costs as high as 20 percent. At the other end of the spectrum, the less expensive corridors had average costs of less than 3.6 percent.

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Africa Today

UN chief condemns ‘ongoing military coup’ in Sudan

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Protesters take to streets in the Sudanese capital, Khartoum. UN Sudan/Ayman Suliman

UN Secretary-General, António Guterres on Monday condemned the “ongoing military coup” in Sudan, saying Prime Minister Abdalla Hamdok and all other officials, “must be released immediately.” 

Long-time ruler Omar al-Bashir was overthrown by the military following months of popular protest in April 2019, and a transitional government was set up comprising both military and civilian leadership, after a power-sharing agreement, that was due to lead to full democratic elections in 2023. 

Now, according to news agencies, Sudan’s military has dissolved civilian rule, arrested political leaders and declared a state of emergency. Protesters have reportedly taken to the streets of the capital, Khartoum, and there are reports of gunfire. 

In a statement posted on Twitter, the Secretary-General said that “there must be full respect for the constitutional charter to protect the hard-won political transition.” 

The UN will continue to stand with the people of Sudan”, Mr. Guterres assured. 

Progress in jeopardy 

The UN High Commissioner for Human Rights also condemned the attempted coup. 

“These actions threaten the Juba Peace Agreement and jeopardize the important progress made towards democracy and respect for human rights”, Michelle Bachelet said. 

She called on military authorities to abide by the constitutional order and international law, withdraw from the streets, and resolve any differences with civilian leaders serving on the Transitional Council through dialogue and negotiation. 

“I utterly deplore the reported arrest of the Prime Minister, several Ministers, leaders of the Forces of the Freedom and Change and other civil society representatives, and call for their immediate release”, she continued.  

Communication systems down 

Ms. Bachelet also pointed out reports that the internet is down in the country and other means of communication are suspended.  

Blanket internet shutdowns contravene international law, and Internet and mobile services must be restored, as they are essential for people to seek and receive information, particularly in these unsettling circumstances”, she explained.  

She asked military and security forces to refrain from unnecessary and disproportionate use of force, to respect people’s freedom of expression, as well as the right of peaceful assembly. 

According to her, “it would be disastrous if Sudan goes backwards after finally bringing an end to decades of repressive dictatorship.” 

“The country needs to move forward to consolidate democracy, a wish expressed countless times by the Sudanese people, including loudly and clearly on the streets last week and today”, she added.  

UN Mission 

The head of the UN Integrated Transition Assistance Mission Sudan (UNITAMS), also released a statement, declaring that the arrests of the Prime Minister, government officials and other politicians are “unacceptable.”  

“I call on the security forces to immediately release those who have been unlawfully detained or placed under house arrest”, Volker Perthes said. “It is the responsibility of these forces to ensure the security and wellbeing of people in their custody.”  

The UNITAMS chief, who acts as a Special Representative of the Secretary-General, also urged everyone involved to exercise the utmost restraint.  

“All parties must immediately return to dialogue and engage in good faith to restore the constitutional order”, Mr. Perthes concluded. 

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Environment

‘No time to lose’ curbing greenhouse gases

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Last year, heat-trapping greenhouse gases reached a new record, surging above the planet’s 2011-2020 average, and has continued in 2021, according to a new report published on Monday by the UN weather agency.

The World Meteorological Organization (WMO) Greenhouse Gas Bulletin contains a “stark, scientific message” for climate change negotiations at the upcoming UN climate conference, known as COP26, in Glasgow, said Petteri Taalas, head of the UN agency.

“At the current rate of increase in greenhouse gas concentrations, we will see a temperature increase by the end of this century far in excess of the Paris Agreement targets of 1.5 to 2 degrees Celsius above pre-industrial levels”, he explained. “We are way off track.”

Emissions rising

Concentration of carbon dioxide (CO2) in 2020 was 149 per cent above the pre-industrial level; methane, 262 per cent; and nitrous oxide, 123 per cent, compared to the point when human activitity began to be a destabilizing factor.

And although the coronavirus-driven economic slowdown sparked a temporary decline in new emissions, it has had no discernible impact on the atmospheric levels of greenhouse gases or their growth rates.

As emissions continue, so too will rising global temperatures, the report maintained.

Moreover, given the long life of CO2, the current temperature level will persist for decades, even if emissions are rapidly reduced to net zero.

From intense heat and rainfall to sea-level rise and ocean acidification, rising temperatures will be accompanied by more weather extremes – all with far-reaching socioeconomic impacts.

“The last time the Earth experienced a comparable concentration of CO2 was three to five million years ago, when the temperature was 2-3°C warmer and sea level was 10-20 meters higher than now”, stated the WMO chief. “But there weren’t 7.8 billion people then”, he reminded.

Lingering CO2

Roughly half of today’s human-emitted CO2 remains in the atmosphere and the other half is absorbed by oceans and land ecosystems, the Bulletin flagged.

At the same time, the capacity of land ecosystems and oceans to absorb emissions may become a less effective buffer against temperature increases in the future.

Meanwhile, many countries are currently setting carbon neutral targets amidst the hope that COP26 will see a dramatic increase in commitments.

“We need to transform our commitment into action that will have an impact of the gases that drive climate change. We need to revisit our industrial, energy and transport systems and whole way of life”, said the WMO official. 

The needed changes are economically affordable and technically possible“, he assured. “There is no time to lose”.

Battling emissions

CO2 is the single most important greenhouse gas and has “major negative repercussions for our daily lives and well-being, for the state of our planet and for the future of our children and grandchildren”, argued the WMO chief.

Carbon sinks are vital regulators of climate change because they remove one-quarter of the CO2 that humans release into the atmosphere.

Nitrous Oxide is both a powerful greenhouse gas and ozone depleting chemical that is emitted into the atmosphere from both natural and anthropogenic sources, including oceans, soils, biomass burning, fertilizer use and various industrial processes.

Multiple co-benefits of reducing methane, whose gas remains in the atmosphere for about a decade, could support the Paris Agreement and help to reach many Sustainable Development Goals (SDGs), said the Bulletin.

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Environment

Landmark decision gives legal teeth to protect environmental defenders

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A 46-strong group of countries across the wider European region has agreed to establish a new legally binding mechanism that would protect environmental defenders, the UN Economic Commission for Europe (UNECE) said on Friday.

“I remain deeply concerned by the targeting of environmental activists”, said Secretary-General Antonio Guterres, welcoming the rapid response mechanism as “an important contribution to help advance my Call to Action for Human Rights”. 

The agreement will delegate setting up the new mechanism to the United Nations, or another international body.

As the first ever internationally-agreed tool to safeguard environmental defenders, it marks an important step in upholding the universal right to a clean, healthy and sustainable environment – as recognized by the Human Rights Council earlier this month

“Twenty years ago, the Aarhus Convention entered into force, bridging the gap between human and environmental rights.

Today, as the devastating effects of climate change continue to ravage the world, the Convention’s core purpose – of allowing people to protect their wellbeing and that of future generations – has never been more critical”, spelled out the UN chief. 

A protective eye

The agreement to establish the mechanism was adopted on Thursday by the Meeting of the Parties to the Convention on Access to Information, Public Participation in Decision-Making and Access to Justice in Environmental Matters, known as the Aarhus Convention. 

“This landmark decision is a clear signal to environmental defenders that they will not be left unprotected”, said UNECE chief Olga Algayerova.

“It demonstrates a new level of commitment to upholding the public’s rights under the Aarhus Convention, as well as Parties’ willingness to respond effectively to grave and real-time challenges seen in the Convention’s implementation on the ground”.   

Vital defence

Whether it is groups protesting the construction of a dangerous dam or individuals speaking out against harmful agricultural practices in their local community, these activists are vital to environmental preservation across the globe, said the UNECE.

The Aarhus Convention ensures that those exercising their rights in conformity with the provisions of the Convention shall not be penalized, persecuted or harassed in any way for their involvement.

As such, the mechanism will establish a Special Rapporteur – or independent rights expert – who will quickly respond to alleged violations and take measures to protect those experiencing or under imminent threat of penalization, persecution, or harassment for seeking to exercise their rights under the Convention.  

As time is of the essence to buttress the safety of environmental defenders, any member of the public, secretariat or Party to the Aarhus Convention, will be able to submit a confidential complaint to the Special Rapporteur, even before other legal remedies have been exhausted.   

Defenders targeted

Although it is crucial for environmental defenders to confidently exercise their rights, cases have been reported in which instead, they face being fired, heavy fines, criminalization, detention, violence, and even death. 

Moreover, incidents of harassment and violence against environmental defenders are far from uncommon

A report to the Human Rights Council by Mary Lawlor, Special Rapporteur on the situation of human rights defenders, found that one-in-two human rights defenders who were killed in 2019 had been working with communities around issues of land, environment, impacts of business activities, poverty and rights of indigenous peoples, Afrodescendants and other minorities.  

Since January 2017, among the Parties to the Aarhus Convention, incidents of persecution, penalization and harassment of environmental defenders have been reported in 16 countries

In contrast to current existing initiatives, which mainly rely on applying political pressure through the media, the Aarhus Convention’s rapid response mechanism will be built on a binding legal framework, giving it much greater powers to act.

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