Remittances to low- and middle-income countries (LMICs) withstood global headwinds in 2022, growing an estimated 5 per cent to $626 billion. This is sharply lower than the 10.2 per cent increase in 2021, according to the latest World Bank Migration and Development Brief.
Remittances to Sub-Saharan Africa, the region most highly exposed to the effects of the global crisis, grew an estimated 5.2 per cent to $53 billion in 2022, compared with 16.4 per cent last year (due mainly to strong flows to Nigeria and Kenya).
Remittances in 2023 are projected to soften to 3.9 per cent growth as adverse conditions in the global environment and regional source countries persist. Remittances as a share of GDP are significant in the Gambia (28%), Lesotho (21%), and Comoros (20%).
Sending $200 to the region cost 7.8 per cent on average in the second quarter of 2022, down from 8.7 per cent a year ago. Remitting from countries in the least expensive corridors is on average 3.4 per cent compared to 25.2 per cent for the costliest corridors.
The Migration and Development Brief analyzes trends in migration-related SDG indicators: increasing the volume of remittances as a percentage of GDP, reducing remittance costs, and reducing recruitment costs.
Remittances are a vital source of household income for LMICs. They alleviate poverty, improve nutritional outcomes, and are associated with increased birth weight and higher school enrollment rates for children in disadvantaged households. Studies show that remittances help recipient households to build resilience, for example through financing better housing and to cope with the losses in the aftermath of disasters.
Remittance flows to developing regions were shaped by several factors in 2022. A reopening of host economies as the COVID-19 pandemic receded supported migrants’ employment and their ability to continue helping their families back home. Rising prices, on the other hand, adversely affected migrants’ real incomes.
Also influencing the value of remittances is the appreciation of the ruble, which translated into higher value, in U.S. dollar terms, of outward remittances from Russia to Central Asia. In the case of Europe, a weaker euro had the opposite effect of reducing the U.S. dollar valuation of remittance flows to North Africa and elsewhere.
In countries that experienced scarcity of foreign exchange and multiple exchange rates, officially recorded remittance flows declined as flows shifted to alternative channels offering better rates.
“Migrants help to ease tight labor markets in host countries while supporting their families through remittances. Inclusive social protection policies have helped workers weather the income and employment uncertainties created by the COVID-19 pandemic. Such policies have global impacts through remittances and must be continued,” said Michal Rutkowski, World Bank Global Director for Social Protection and Jobs.