Remittance flows have increased five-fold over the past twenty years, serving in a counter-cyclical capacity during economic downturns in recipient countries, the United Nations said in a statement to celebrate today's (16 June) International Day of Family Remittances (IDFR).
The UN said while COVID-19 has been a formidable test for global remittances, early forecasts of sharp declines greatly underestimated the resilience in remittances flows.
A May 2021 report by the World Bank revealed a drop in remittances of only 1.6% in 2020, to $540bn from $548bn in 2019.
"The resilience of these flows is not surprising. Remittances are the financial side of the social contract that binds migrants to their families back home. While these inflows total in the billions, the number that matters the most to families is the average remittance of $200-$300 a month", the UN said.
The International Day of Family Remittances recognizes more than 200 million migrant workers, women and men, who send money home to over 800 million family members.
This day further highlights the great resilience of migrant workers in the face of economic insecurities, natural and climate related disasters and a global pandemic, the UN said.
"The IDFR is now globally recognized and is a key initiative in the Global Compact for Safe, Orderly and Regular Migration (Objective 20), which urges the reduction of transfer costs and greater financial inclusion through remittances."
It said behavioural shifts among migrants and the diaspora over the past year have further bolstered the resilience of remittances. Changes include an increased use of savings to sustain remittances flows, greater utilization of formal sending channels and more migrants sending money home for the first time.
Local currency depreciation in recipient countries and increased government support for formal migrants in host countries during the pandemic also had an impact.
"One of the greatest catalysts for formal remittances during 2020 was the accelerated adoption of digital technology by the migrant workers and their families. Both online and mobile digitalization have buoyed remittance flows during this challenging period. Mobile remittances alone increased 65% during 2020 to $12.7bn.
"This change was hastened by lockdowns and social distancing rules that spurred the move away from informal channels and the use of cash for senders and recipients. Digitalization is less costly than cash transfers and has reinforced the adoption of mobile money, thereby advancing the financial inclusion of migrants and their families."
The UN also called for governments, the private sector, development organizations and the civil society to promote digital and financial solutions for remittances that foster greater social and economic resilience and inclusion.
For further information visit: familyRemittances.org and ifad.org/en/idfr.