Egyptian migrant workers in crisis as pandemic cuts remittance lifeline

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Egypt is bracing for a triple whammy: a collapse in tourism, declining Suez Canal revenues and falling foreign remittances – which make up nearly 9% of the country’s GDP – said the International Food Policy Research Institute.

Even in an optimistic scenario, poor households could lose about 160 Egyptian pounds (US$10) per month – about 9% of their income – from reduced remittances, said Clemens Breisinger, a researcher with the Washington-based think-tank.

Strict curfews, lockdowns and travel bans enforced around the world to slow the spread of the COVID-19 pandemic have decimated jobs and slashed remittances from Egyptian migrants like Fathy, a car painter in the United Arab Emirates.

Fathy, who used to send home part of his 1,500 dirhams (US$408) salary, lost his job in March, when a coronavirus lockdown was introduced. And just like him, other migrant workers who lost their jobs means cutting off a lifeline for millions around the world.

Some 270 million migrants sent US$554 billion home to developing countries in 2019 – surpassing foreign direct investment flows for the first time and more than three times annual official development aid, according to the World Bank.

“It is a matter of time before poor families are not able to afford to buy things anymore,” said DilipRatha, lead author of a World Bank study that estimated a staggering 20% fall – some US$100 billion – in remittances to developing nations in 2020.

“Remittances … provide basic means of livelihood, buying food, shelter, housing, clothing, medicine, and healthcare, sending children to school,” he said.

Plunging remittances will also hurt small merchants and businesses that serve the poor and ultimately the local economy as people stop buying things, Ratha said.

“Millions of families got hit immediately by the lockdown simply because migrants … could not work anymore,” said Pedro de Vasconcelos, manager of the UN’s Financing Facility for Remittances, set up to maximise their impact in rural areas.

“Families on the other side … suddenly have their source of income, or at least part of it, disappear,” he said, adding that remittances account for 60% of rural households’ income on average.

“The remittances are a lifeline,” said de Vasconcelos, who works for the U.N.’s International Fund for Agricultural Development (IFAD). “It’s an emergency right now.”

One in nine people globally – some 800 million – benefitted from international remittances in 2019, according to IFAD.

In addition, a similar number of people send remittances within countries, said the World Bank’s Ratha.

“Remittances are probably affecting a third, or maybe half of humanity. This is not small change or a side show,” he said.

This year, almost all regions are set to see a decrease.

The coronavirus crisis may have one upside – more people may start sending money home digitally, which the World Bank says can be 50% cheaper than traditional transfers, where recipients have to go to a shop to pick up money.

But cheaper and easier remittance procedures provide no solace to Fathy, who is waiting for the lockdown to end so that he can start work again.

“The only reason I’m working abroad is because my family depends on me,” he said. “This is the first time … where I have absolutely no money.” (Source: Thomson Reuters Foundation)

 

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