Covid-19 pandemic: Curbing the downward trend in remittance flow
Despite a momentary uptick before Eid-ul-Fitr, the declining trend of remittance inflow since the inception of the Covid-19 pandemic is evident. This article proposes some measures to compensate at least a part of this unavoidable damage
Inasmuch as all other sectors are being unsettled by the Covid-19 pandemic, a knock-on effect on overseas employment in the form of mass redundancy, joblessness, forced return, and a subsequent plunge in international remittance flow seems inevitable.
Although the full picture of economic and social disruption is yet to be uncovered, recent forecasts by some of the pertinent international organizations may sound as an ominous warning for labour sending countries like Bangladesh.
The UN Economic and Social Commission for West Asia has predicted 1.7 million job losses in the Arab region, while the World Bank has suggested a 22 percent decline of remittance flow to South Asia, including Bangladesh. One would acknowledge that a downturn at the forecasted scale would bring catastrophic implications, as overseas employment and foreign earnings have become the lifeblood for millions of migrant workers and their families in Bangladesh.
While this forecasted loss would exert a huge blow both at national and household level, even a possibility of higher drop in job demand and remittance than these predictions cannot be ruled out. Major destination countries for Bangladeshi migrants are either hit by massive pandemic attacks (UK, USA and Italy) or by record fall in oil price (in GCC countries).
The year-on-year sharp fall of remittance inflow by 12 percent and 25 percent for the month of March '20 and April '20 attests to the credibility of the predicted fears. Although we saw a momentary uptick before the religious festival, the remittance inflow saw a 14 percent year-on-year fall in the month of May as well. For obvious reasons, this trend is expected to become more miserable in the coming months.
Against such a backdrop, an attempt to revamping existing policies, to inspire expatriates to send remittance through legal channels, has to be the highest priority for Bangladesh. Data shows that around 22 percent of the remittance in Bangladesh come through informal channels, which is also equal to the forecasted decline caused by Covid-19 pandemic. Although expecting a hundred percent remittance through legal channels seems impractical, intervening in this area can compensate for at least a part of the slump.
Luckily, an incentive policy of 2 percent cash incentive for remitters was introduced in 2019- which has shown its efficacy in increasing flow through legal channels, until the disruption caused by the Covid-19 pandemic. To keep remittance flow afloat Bangladesh must attempt to leave no stone unturned.
The highest remittance senders have been awarded NRB CIP recognition since 2006 in order to encourage remittance flow through legal channels. To get most out of it, selecting NRB CIP from each source country, in addition to this combined selection, could be thought of. Such a policy would increase competition among expatriates within a country and would increase remittance through legal channels- as was revealed while interviewing some of the expatriates based in Switzerland.
Likewise, a significant extension of existing facilities for NRB CIPs could motivate remittance senders in a significant way. The expatriates want to see a full application of the declared facilities for the NRB CIPs as well.
Furthermore, to make it attractive and to entice more expatriate depositors, the purchasing procedure of ''wage earners' bonds'' could be simplified. Expatriates in the wealthy countries cannot sometimes purchase bonds because the purchase procedure is not friendly.
Secondly, despite the necessity of an increased number of overseas jobs for the country, repositioning focus from quantity to quality is pressing. Most Bangladeshi migrant workers are involved in low- or less-skilled jobs- which yield one of the lowest 'remittances-to-migrant ratio' for Bangladesh.
According to UN DESA, the Philippines received $35.2 billion from its 5.4 million migrants and India received $83.1 billion from 17.5 million migrants; whereas Bangladesh received $18.35 billion from 12 million migrants in 2019. That means, on an average, a Filipino sent 4.2 times and an Indian migrant sent 3.1 times more remittance to their respective countries than a Bangladeshi expatriate did in 2019.
Amid the cutthroat competition in the international labour market, there is no alternative to sending skilled workers. The Covid-19 pandemic has highlighted the acute shortage of health professionals including doctors, nurses, medical assistants and paramedics in developed countries- who in the coming days will seek to fill this gap.
Bangladesh should be keen to take this opportunity by catching up to the international standard in the nursing sector so that at least a portion of trained nurses could be provided with overseas jobs after meeting the local demand.
Finally, the devastating Covid-19 pandemic has left little scope to originating countries to combat tumble in remittance. Thereby, along with the above measures, we should work in ensuring prudent utilization of remittances as well.
Even acknowledging all the positive effects of remittance at both household and national level, it could be said that a meagre portion of those is invested in income or employment generation. Hence, in order to broaden the benefits of remittance, an introduction of a comprehensive guideline and sensitization programme on effective utilization of the hard-earned remittances seems logical.
Mohammed Hossain Sarker is PhD Candidate, University of York, UK. He can be reached at [email protected]