REPORT

Travel restrictions pushed up diaspora remittances

Interim data on remittances shows resilience in the months following the outbreak of COVID-19

In Summary

•According to the financial investment firm, different Central banks reported that the numbers inflated as some sizable flows which previously went through unofficial channels were now recognised.

•EFG Hermes also attributed the increased diaspora remittances to large transfers from expatriate workers going back home for good.

DEMAND: American dollars.Photo/FILE
DEMAND: American dollars.Photo/FILE

Travel restrictions in place to curb the spread of coronavirus has seen diaspora remittances increase as unofficial channels sealed, EFG Hermes has said.

The financial investment firm notes that different central banks reported higher figures as some sizeable flows previously sent through unofficial channels were now captured in reported data as they passed through formal channels .

Interim data on remittances shows resilience in the months following the outbreak of COVID-19, coming in above the World Bank’s expectations of a decline of 10-15 per cent in 2020.

 

Contrary to those expectations, data for Morocco,Bangladesh,Kenya and Pakistan shows that remittances actually grew nine per cent year-on- year on average over March to September this year.

This strong showing of remittances comes amidst a marked deterioration in the job markets across the globe as a result of the outbreak of COVID-19.

This is particularly the case in key remittance-exporting markets like the US, the UK, Europe and the Gulf Corporation Council.

In the first months of the outbreak, unemployment peaked to record highs in advanced economies.

EFG Hermes also attributes the increased diaspora remittances to large transfers from expatriate workers going back home for good, hence transferring larger sums of money.

Even as the  pandemic slowed down most activities globally with business operations halted and initiatives postponed, the African diaspora appears to have taken all this in stride.

Consistent diaspora remittances to the continent amounted to $80 billion, of which $48billion were attributed to sub-Suharan Africa remittances for last year, according to the World Bank.

 

In September however, Kenya recorded a third monthly drop in diaspora remittances as Kenyans living abroad sent home Sh28.1 billion.

The drop came at a time some countries especially in Europe tightened Covid-19 restriction measures, fearing the possibility of the second wave of the virus.

The remittances sent in June, which stood at Sh31.1, billion ($288.5 million) were the second-highest booked flows in a single month, defying the coronavirus wave.

Data from the Central Bank of Kenya recorded that total inflows in the 12 months to September stood at $2,967 million (Sh322.8 billion) compared to $2,786 (Sh303.1 billion) in the 12 months to September 2019.

Diaspora remittances have grown to become Kenya’s largest foreign exchange earner, largely contributing to the country’s forex reserves aimed at stabilising the shilling.

The country is set to host the 1st African Diaspora Symposium in Nairobi from 8-10 December, 2020 where various world leaders will dialogue,reflect on and plan for a post-pandemic Africa