There has been an alarming drop in the flow of remittances to Rwanda-a vibrant source of money for a portion of Rwanda-even as there has been a worldwide explosion in coronavirus cases and the country is grappling with the pandemic.
According to the latest National Bank of Rwanda (BNR) numbers, remittance inflows to Rwanda decreased by 16 per cent from Rwf22.5 million in March.
Remittance inflows recorded in Rwanda in March this year stood at Rwf18.9 million compared to Rwf22.5 million reported in 2019 during the same time, a fall that could be due to Covid-19.
“We continue to monitor the trend in April 2020 to see if the drop realized in March 2020 persists and if so, it will affirm Covid-19 effect,” an emailed response from the Central Bank to this publication read.
That’s because some of the largest remittance exporting countries – including the US and Germany – have locked up in an attempt to reduce the virus’ effects, leaving many migrants unable to function.
In the first three months of this year (January-March), diaspora remittance inflows to Rwanda increased from Rwf62.55 million in 2019 by 1 per cent to Rwf63.1 million.
On average, according to the United Nations Department of Economic and Social Affairs, migrants send home 15 per cent of their earnings, with one in nine people or around 800 million people on receiving end of these flows.
The Covid-19 has exacerbated remittance inflows to low- and middle-income nations, primarily because revenues have shrunk.
But even in situations where migrants have money to send home, it has become more difficult to do so-about 80 per cent of remittances are physically sent via a Remittance Service Provider, but these networks of money transfer have been partly or entirely shut down.
On April 22, the World Bank predicted that remittances to low- and middle-income countries would see this year’s sharpest decline in recent history, dropping by 19.7 per cent to around $445 billion, compared with $554 billion this year.
The fall is expected to impact the emerging economies disproportionately, which are the main recipients of these inflows and whose people rely on them for a basic income to varying degree.
In a statement released on April 22, World Bank Group President David Malpass said remittances are a vital source of revenue 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,” he noted.
Considering that foreign direct investment flows to emerging markets are projected to fall even further than remittances this year, some economies could be even more prominent in relying on remittances as sources of foreign currency.
The World Bank Group forecast a dramatic decrease in remittances in May this year, based on forecasts of a decline in the salaries and employment of migrant workers, who appear to be more vulnerable to job losses and salaries in a host country during an economic crisis.
Remittances to low- and middle-income countries (LMICs) were projected to decrease by 19.7 per cent to $445 billion , representing a loss for many vulnerable households of a crucial financing lifeline.
This is a concern since remittances are important to alleviate poverty in low- and middle-income countries, improve nutritional outcomes, and are associated with higher education expenditures. A reduction in remittances will impact the willingness of families to spend on key places, because more of their resources will be diverted towards addressing food shortages and the needs for immediate living.
Experts say the decline in remittances calls for increased social protection efforts to protect vulnerable members of societies in particular.
The large decline in remittances in 2020 follows remittances to countries with lower and middle incomes, reaching a record $554 billion in 2019.
In 2021, the World Bank predicts remittances will rebound and grow to $470 billion by 5.6 per cent.
Remittances to Sub-Saharan Africa, which recorded a slight decline of 0.5% to $48 billion in 2019, will decline by 23.1% to $37 billion in 2020, while a recovery of 4% is expected in 2021.