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Covid-19: Rural families at risk due to decline of remittances

  • Published at 05:25 am June 23rd, 2020
Representational photo: Bigstock

IFAD calls to expand rural access to digital technology

The decline of remittances globally, including in Bangladesh, due to the Covid-19 impact on the economy, has put rural families at risk, the United Nations International Fund for Agricultural Development (IFAD) has said.

Losing jobs, returning home, closure of markets, banks, transportation, and remittance service providers during lockdowns further hampered the ability of migrants to send money back to their families, living in rural areas. 

In this case, the IFAD experts called on the governments and the private sectors to expand rural access to digital technology which could support rural transformation, bringing new jobs and opportunities back home.

Returning home creates pressure on rural areas

It is known that Bangladesh has a huge labour force-- with about 12 million people working in 169 countries -- in the Middle East, Southeast Asia, and Europe, while most of their families depend on remittances.

According to an observation report of the Bangladesh government in May, almost 800,000 migrants returned home from 15 major remittance-sending countries due to Covid-19 situation.

A migrant worker, Shohag Mia who worked at a grocery shop in Oman and lost his job two months ago, said: "I came here last year by spending a lot of money and taking loans from others which I could not repay yet. Now I am jobless and cannot send money to my family. I am now even afraid of being sent back to my home country forcefully." 

A resident of Comilla, Nupur Akter spoke about her husband Manik Hossain who is working in Saudi Arabia.

"My husband has not sent money for the last three months. So, I borrowed money to support the family and buy medicines for my mother-in-law."

Like Shohag and Manik, a lot of Bangladeshi migrants are now facing trouble overseas.

Many of them have lost their jobs and have been sent back home worsening the pressure on rural areas.

Difficulties in wiring money

Due to the lockdown, many migrant workers are facing difficulties in wiring money directly to their bank accounts and through money transfer services such as MoneyGram or Western Union.

Amad Ahmed, who has been working at a hotel in Rome, Italy, for 10 years, is supporting five families including his own family in Chandpur, by sending Tk80,000 each month. Because of lockdown, he is unable to send any of that amount. 

"I receive unemployment allowance from the Italian government after losing my job. I wanted to send the amount along with my savings but could not, owing to the lockdown here. My family also faces trouble while receiving money since banks are far from home, and due to the lack of access to digital services there," he said. 

In this situation, remittances in Bangladesh are projected at $14 billion for 2020, a likely fall of about 22%, according to a World Bank estimate. 

Bangladesh Bank said expatriates sent around $128 crore to the country in March, which is a 12% decline from last year in March and the lowest not only in the current fiscal year but also in the last 15 months. 

Families' problems

The share of remittance is higher in rural areas and people who depend on remittances are struggling to meet expenses for food and other basic needs. 

The families in rural areas are facing problems as Covid-19 has cut them off from the remittances.

It is estimated that one in nine people in the world has been directly affected by the declining flow of remittances.

Besides, many rural residents faced difficulty in their activities of harvesting and buying seeds because they depend on remittances to do that. 

The IFAD has emphasized on private sector investment in developing innovative technological solutions for remittance transfers to reduce costs, improve speed, enhance security, and increase flows through digital means to remote areas.

Gilbert F Houngbo, president of IFAD, said: "Governments should take measures and do everything possible to facilitate the flow of funds during crises since remittances are a lifeline for poor families in low and middle income countries."

Expanding rural access for remittance to digital technology

To solve this problem, the IFAD experts have put emphasis on expanding rural access to remittances through digital technology and promoting the use of digital channels for sending and receiving remittances, dissemination of information about available remittance products, and ways to obtain them. 

While talking to Dhaka Tribune in a session of distance learning program recently arranged by the Thomson Reuters Foundation (TRF), Pedro de Vasconcelos, head of IFAD's Financing Facility for Remittances, said the economic consequences due to the pandemic could push rural families in Bangladesh even deeper into poverty and threaten global prosperity and stability.

"By expanding rural access to digital technology, remittances could support rural transformation, bringing new jobs and opportunities back home. Receiving remittances digitally could give rural dwellers access to savings, credit, or insurance products [that] can build much needed resilience at family level and benefit the communities around them. 

"It is difficult to cash out the money in locked areas, so digital systems should be taken into consideration to send remittances.

Pedro referred to Mexico in Central America where Western Union reported remittances increased by 300% in March due to use of a digital remittance system.

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