Africa, where the cost of sending $200 averaged 7.8 percent in 2022, is “most severely exposed to simultaneous crises.”
Impact of the ruble’s appreciation and the euro’s decline
According to the World Bank’s latest Migration and Development Brief (MDB), total remittances to so-called low- and middle-income countries (LMICs) in 2022 increased by 5 percent to $626 billion. This increase, which is lower than the 10.2 percent increase in 2021, occurred despite the global headwinds that characterized much of 2022, the report says.
According to the brief, factors that contributed to the slower growth rate in the U.S. dollar value of remittances to LMICs include the appreciation of the Russian currency, the weakness of the euro, as well as the scarcity of foreign currency in some countries.
Commenting on the report, Michal Rutkowski, global director for social protection and employment at the World Bank, said:
Migrants help ease tight labor markets in host countries while supporting their families through remittances. Inclusive social protection policies have helped workers overcome income and employment uncertainties created by the COVID-19 pandemic. These policies have a global impact through remittances and should be continued.
Africa is most exposed to “simultaneous crises.”
At the same time, according to the MDB, Africa is the region “most exposed to concomitant crises“. By way of illustration, the report notes that while remittances to sub-Saharan Africa increased by 5.2 percent to $53 billion, this is significantly lower than the 16.4 percent increase in 2021. In terms of the cost of remittances, the brief notes that the cost of sending $200 to the region is 7.8 percent, which is the highest among the six global regions covered by the study.
Regarding the use of digital channels for sending remittances, the report acknowledges that while the cost of sending remittances via these channels is much lower, several factors make them less ideal alternatives.
“Digital technologies enable significantly faster and cheaper remittance services. However, the burden of compliance with anti-money laundering and anti-terrorist financing regulations continues to restrict new service providers’ access to correspondent banks. These regulations also affect migrants’ access to digital money transfer services“, notes the MDB.