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According to the World Bank, global remittances in 2022 are expected to be a total of $734 billion which will be up some $15 billion dollars on last year. This is important information given the impact which remittances have on developing nations. Those who send money to African countries and nations throughout Asia in particular, have sent less in the last two years as a result of the pandemic. The UN has pledged to increase remittances by 2030 owing to how important this money is, and here is exactly why there is such a heavy focus on making sure that remittances continue grow.
Impact of Family Remittances
It is easy to look at remittances as a large sum of money moving from one nation to another, but there is in fact much more to it than that. In fact it is estimated by the UN that these remittances directly impact the lives of 1 billion people on the planet, that is staggeringly 1 in every 7 people in the world who relies on remittances. These figures actually surpass any foreign direct investment which is made to developing nations.
The latest findings from 2019, albeit pre-pandemic, found that migrant workers in 40 countries around the world, totaling some 200 million workers, sent money back to an estimated 800 million relatives in some 125 countries. Even more interesting was that the study found almost half of those who received the money, were living in rural areas, where this money is able to make the biggest impact.
According to the UN, which has committed to a reduction in remittance costs in coming years, around 75% of the remittances which are received by those in developing nations goes directly towards immediate needs. Additionally the remaining 25% is then used for additional purposes, and this is the money which they can use to lift themselves up. This money can be used for savings, investments and ultimately opportunities which can help to improve lives and communities.
Another reason why remittances are so important is that they go directly to the people who they are supposed to. We have seen examples time and time again of mass contributions, foreign aid and charity fundraising which failed to deliver the money raised to the people who need it most. Bad actors, red tape and greed so often causes obstacles which prevent the money from going to its proper destination, but this is not the case with remittances. Thanks to money transfer services, cash is collected directly by family members who are then able to use it for what they need.
The pandemic certainly saw a great reduction in the number of remittances around the world, chiefly because those who usually send money were not able to work. As we come through this tough time, things are picking up and the hope is that this means that remittances will also get back to pre-pandemic levels.
Tricia Lee is a contributing writer at Sparkwebs, a Digital Marketing Agency. When she’s not writing, she loves to travel, dance, and read non-fiction.