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Migrants sent home $605 billion via mobile payments in 2021: UN Report
A UN study published on Thursday estimates that migrant workers sent $605 billion home to low and middle-income countries last year, including a rise in payments made via mobile phones.
Global remittances climbed 8.6% in 2020, and the International Fund for Agricultural Development projects that they will reach $630 billion in 2022. With around 800 million family members expected to benefit by 2022, these payments are a significant source of income for many low-income households. Global remittances are expected to reach $5.4 trillion by 2030, nearly twice Africa’s GDP in 2021, according to IFAD.
“Remittances pull families out of poverty, put food on the table, pay for schooling, cover health costs, allow home investments, and many other family aspirations beyond consumption,” said IFAD President Gilbert Houngbo.
The research did warn, however, that the growing trend would likely weaken this year as inflation reduced wages and as a result of Russia’s invasion of Ukraine. According to the survey, several Central Asian countries rely on Russian remittances, with payments accounting for up to 30% of their GDP. However, the drop in the value of the ruble, as well as the economic impact of sanctions, has resulted in a “dramatic decline in transfers,” according to IFAD.
The majority of money sent home by migrant workers is transmitted through physical institutions with cash payments, but the coronavirus pandemic saw a significant movement toward digital. With physical services becoming more difficult to acquire due to lockdowns and border closures, mobile phone payments are expected to increase by 48 percent in 2021. They still accounted for only 3% of worldwide remittances, but Pedro De Vasconcelos, manager of IFAD’s Financing Facility for Remittances, believes the trend is established. “Cash is still king,” he told AFP, “but it’s losing ground.”
This is significant since making payments through mobile device is not only more convenient but also less expensive, especially in more remote areas.