It is the sixth month of the world since its health is disrupted by the Novel Coronavirus, lost lives of many dwellers with sympathy and its ability to fight is being tested. The health sector experts and research institutions continue to spend day and night searching vaccine for the pandemic that puts human life in a query of living or not.
Countries have not been slothful to try their best to prevent the spread of viral invasion and to reduce the risk. Beyond its positive outcome in controlling and reducing the spread and impact of the pandemic, this regulatory effort has created numerous social, economic and political losses.
Decisions made to defend and block COVID-19 have greatly disrupted the world economy, which has laid its foundation on activity rather than any other thing. The crisis has led to the closure of many companies and businesses, as well as losing of millions of people to full or part-time jobs.
Citizens who stay away from home land are also becoming jobless for a number of reasons, and the money they send home, the remittance, to their families and their home country working day and night can significantly reduce.
The World Bank data, released some days ago, confirmed that this year, international remittances would drop dramatically. It said: “The amount of the money is downed by twenty percent.”
The Bank noted that the amount of 554 billion USD was sent to the poor, low- and middle-income countries across the world last year, which is historically and economically significant. This figure, it said, will reduce to 445 billion USD due to the impact of the corona pandemic.
Banks’ data shows that the remittance amount will be dwindled internationally pressed by corona pandemic. The amount dwindled shows vary in different parts of the world like 27.5 percent in Europe and Central Asia, 23.1 percent in Sub-Saharan Africa, 22.1 percent in South Asia, 19. 6 percent in Middle East and North Africa, 19.3 percent in Latin America and the Caribbean and 13 percent in East Asia and the Pacific.
Remittance of The Middle East and North Africa, which has seen two-six-percent growth over the past year, is noted to decline by 19.6 percent or 47 billion USD. During the past year, a 0.5 percent growth rate that recorded 48 billion USD sent to sub-Saharan countries was reported to be below 23 percent or 37 billion dollars this year due to corona.
Philip Inn of The Guardian noted that the total amount of money sent to poor, low- and middle-income countries is more than tripled of grants from different entities. The amount of remittance declined by 110 billion USD is undoubtedly undergone a major financial crisis to these countries compared to last year.
Economists who share Philippe’s ideas have also underlined that the decline in money goes beyond individuals and is a serious challenge for countries those are looking forward remittance to foreign exchange.
Indeed, it is observed that the African continent gains higher amount of money sent by expatriate citizens than exporting owned goods and tourism income.
As various studies and scholars explain, under the skies of Africa, foreign money will go beyond guaranteeing the basic needs of citizens. Many unanimously agree that Africa would put the money in its foreign currency case and that it is the backbone of its economy.
According to various studies, the amount of money sent to Africa has risen by 3.7 percent and reached 707 billion USD over the past year and contributes to a 2.5 percent share in gross domestic product.
Among African countries, Egypt is the leading in foreign currency remittance earning 27 billion Dollars last year. Nigeria, Morocco, Ghana and the East African country, Kenya, rank two to five by earning 24 billion, 6.7 billion 3.5 billion and 2.5 billion Dollars respectively.
Foreign currency contributes significantly to the overall national production of some countries. Various sources testify to the fact that remittance money contributes 16 percent to Lesotho, 10 percent to Senegal, and 6 percent to Nigeria.
This year, the World Bank estimates that Africa will lose about 37 billion Dollars of its remittance income snatched by the Coronavirus pandemic. The media and academics have also engaged in extensive analysis, emphasizing the seriousness of the harm caused by declined remittance that African expatriates send to their families and their homeland.
It is noted that the reduction in the money would be particularly damaging to Africans who depend on the money sent to them by relatives who live abroad, and that the crisis would directly or indirectly affect not only hundreds or thousands of house heads, but millions.
World Bank Group President David Malps said: “Foreign money is a major guarantee of food, health, and basic needs, especially for the developing countries.” As a result, he noted that the Bank would implement a plan to provide immediate and extensive support for the basic needs of the citizens most affected by the event.
It has been suggested that food security of many is likely to be endangered by the exacerbated poverty, which is associated with the decline in income. The authors and scholars say; “The impact of the crisis on African food security is significant.” And they emphasized that the locust swarm, which feed on equals to its own weight each day and causing devastating damage to the larger area especially aided by the convenient East African climate, would magnify the harm.
The role of the fund is not limited to meeting individual’s consumption or needs. Rather, contribution of the increased remittance to the country’s general economy where it is sent is enormous. The decline on the contrary, is the reverse.
The financial experts who share this view also noted that it is a serious headache especially for companies and individuals involved in the financial industry in the countries where the shortage of foreign exchange is a problem. “The shortage of foreign exchange following the crisis will lead to inflation, resulting in the imbalance of supply and demand,” they said.
Some have argued that the decline in remittance of this year due to impact of the coronavirus pandemic, forecasted by the World Bank to be historically unique, may have been incorrect. “Reasons why we are saying this are that some restrictions have been slowed down and the number of people returning to work in some countries is many.”
The World Bank also estimates that the amount of money sent from abroad can show improvement over the next year, even if it depends on the burial of the pandemic or the length of the restrictions.
According to the Bank, the amount of money sent to the poor, low- and middle-income countries will increase by five and six percent next year and revenues in this regard will rise to 470 billion Dollars.
These hope and expectation, however, do not win the agreement of many. It is said to be unreasonable to say that the amount of the finance will improve without knowing clearly the length of restrictions imposed aiming to prevent and control the corona pandemic globally.
The proponents of this idea suggest that human and economic activity cannot be restored quickly, even if effective restrictions to stop the epidemic are lifted. The fact that the damage of the virus cannot be erased quickly from people’s mind could prevent them from doing their job as usual, earning and sending as much money as they used to.
Moreover, the state in which some companies and businesses dismiss their employees due to bankruptcy induced by the pandemic harm will be the reason for the elongation of the lowered remittance over the next year.
The number of media and academics that explain the major actions must be taken to cope with the impact of the event rather than expressing hope or concern is abundant worldwide.
Michel Rothoski, head of social security at the World Bank, suggested that countries that support their economies on foreign income, as well as the most vulnerable poor and needy must be supported until the coronavirus crisis is managed.
Dilip Rathtam, prominent economist at the World Bank, pointed out that considering the impact of the pandemic, people also need to be introduced digital options that they can easily accept and send money.
More importantly, it has been suggested that it should be robust to promote and enforce strict regulations in regulating illegal money transfers. It is said that countries should apply directives particular incentives to return black market exchanges to a normal banking system. Above all, it has been emphasized that countries should keep their economies from becoming dependent on these funds, since the remittances are not obligatory rather based on voluntary.
The Ethiopian Herald June 23/2020
BY BACHA ZEWDIE
