The Pacific Island Forum Secretariat is supporting the call to action to policymakers, regulators and remittance service providers to improve migrants’ access for sending and receiving remittances, and to reduce transfer costs during the ongoing COVID-19 pandemic.
The goal of the call to action, Remittances in Crisis – How to Keep Them Flowing, is to remove the obstacles that migrants and their families face when sending and receiving money, so that they can continue to cover basic needs and services such as food, housing, education and health care.
As the economic impact of COVID-19 continues to be felt globally data from the World Bank suggests that remittance inflows are expected to shrink by about 20 percent, which amounts to a fall of around US$110 billion. Reduced remittances can have major ripple effects across economies as investment and consumption spending decrease.
Pacific countries could be particularly affected by this decrease. Remittances represent a main, or the main, source of forex in countries like Tonga, Samoa, Kiribati, Fiji and Tuvalu. In Tonga, remittances represent some 38.5% of the GDP, the highest proportion in the world.
Expressing her support, the Secretary-General of the Pacific Island Forum, Dame Meg Taylor mentioned; “The Pacific depends on only a few sectors and sources for economic growth and incomes for their communities, including exports, tourism, fishery and remittances. Remittances are an important source of income for families and foreign exchange reserves for governments. It also provides an important buffer in periods of economic shocks and natural disasters.”
The Forum highlighted two areas of particular concern:
Money Transfer Operators (MTOs) provide safe, reliable and affordable remittance channels. However, many MTOs were already struggling to maintain services and closing before COVID-19, and many more can be expected to do so. This is due to stringent legislations by the commercial banks they rely on to transact funds across borders. Their closure will increase costs and limit access to services and remittances inflows to the Pacific.
The Pacific remittances corridors are amongst the most expensive in the world. The cost of sending remittance to the Pacific remains higher than the global average. Continuous effort is therefore required for the cost of remittances into the Pacific to be reduced to the global target of 3% set as a target for SDG 10: Reducing inequality within and amongst countries.
The Pacific Financial Inclusion Programme, a jointly administered programme from the United Nations Development Programme (UNDP) and the United Nations Capital Development Fund (UNCDF), has been working on initiatives to ensure the flow of remittances in the region continues. These include a partnership with Vodafone Fiji to offer fee-free remittances into Fiji during the COVID-19 crisis, and, in Vanuatu, continued technical support for the National Bank of Vanuatu and Vodafone Vanuatu’s mobile money platforms.
Spearheaded by the Government of Switzerland and the Government of the United Kingdom, the call to action is also supported by the global knowledge partnership on migration and development KNOMAD, UNCDF and UNDP, the World Bank, the International Organization for Migration (IOM) and the International Association of Money Transfer Networks (IAMTN), and the International Chamber of Commerce (ICC).
More information on the work of UNCDF on remittances during the COVID-19 pandemic can be found here.
Source: Pacific Financial Inclusion Plan