IFAD President Gilbert F Houngbo made this call on the occasion of the International Day of Family Remittances to be observed on Tuesday (June 16).

“Remittances are a lifeline for poor families in low- and middle income countries. Governments should take measures and do everything possible to facilitate the flow of funds during crises like the COVID-19 pandemic,” said IFAD President.

According to World Bank Data, personal remittances account for a significant portion of the GDP in most South Asian countries.

As a share of GDP, remittances range from between 2-3 percent (Bhutan and India) to nearly a third of GDP in Nepal (28.6 percent), WB data show.

In Nepal, IFAD works with local governments to provide pre-departure and support services to migrants through migration resource centres, as well as on a range of on- and off-farm activities to help families of migrants build resilience.

The COVID-19 restrictions have hit the economic sectors that employ migrant workers, such as tourism, hospitality and agribusiness, hard.

As a result, many migrants have become underemployed or unemployed. Remittance flows are projected to make their sharpest decline in history, falling by 20 percent this year. 

The closure of remittance service providers during lockdowns has further exacerbated the ability of migrants to send money back to their families.

An IFAD survey last month of the Senegalese diaspora in France found that about 30 percent of those who stopped or reduced sending money home because of the closure of their money transfer operator, or informal networks were no longer operating.

“IFAD is now tracking the impact of declining remittances on the ‘receiving end’ in developing countries, where typical remittances of $200 to $300 per month account for about 60 percent of household income,” said Pedro de Vasconcelos, chief of Financing Facility for Remittances, IFAD.

Hundreds of thousands of migrants have returned home to their rural communities. At the same time, their families are also negatively impacted by lockdown measures that have paralysed economic activity and destroyed livelihoods in their countries of origin, he said.

With both sides of remittance corridors being simultaneously affected, disruptions directly affect the lives and livelihoods of one billion people: 200 million migrants who send money to their 800 million relatives.

Almost half of these families live in rural areas where poverty and hunger are the highest. This year, tens of millions of families who rely on the remittances they receive will fall below the poverty line, resulting in more hunger and less spending in education and health.

“While keeping remittances services running through the crisis will certainly reduce some of the impact of the decline in migrant incomes, there urgently needs to be a greater reform of the system so that after this crisis ends, migrants can send their money home faster, safer and cheaper,” said de Vasconcelos.

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IFAD has made some calls on governments and the private sector to address the situation.

IFAD urged governments to develop more conducive policy and regulatory environments that enable competition, regulation and innovation on the remittance market and declare these services essential.

It also urged private sector entities to invest in developing innovative technological solutions for remittance transfers to reduce costs, improve speed, enhance security and increase flows through digital means to remote areas.

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IFAD also called for arranging access to remittance services, especially in poor rural areas, needs to be improved.