The $700 billion global remittance economy is taking big hits from COVID-19, and the families and nations that depend on it are in trouble.
Remittances are person-to-person fund transfers from immigrants who travel to wealthy nations for work, and then send the bulk of their earnings back to the millions of families they left behind in their home countries.
Small change, big changes
The sums might seem small: Tens or hundreds of dollars sent month after month by migrant laborers, using wire services and electronic-fund transfers support their loved ones in Latin America, Africa, Asia and Oceania.
In nations where many families live on just a few dollars per day, remittances are a lifeline, and perhaps even an avenue out of poverty.
Now, these families face a dramatic plunge in the remittances being sent across borders.
One problem is that migrant workers, particularly those in the hospitality industry, have been shut out of their jobs by strict lockdowns in nations such as the United States.
Borders and boundaries
These same workers are also forbidden from returning to their own countries due to the severe travel restrictions of the pandemic era.
And those that can work are often unable to travel to the wire-service agencies that send remittances across borders.
These same agencies are also not always considered essential businesses, and may not even be open.
A lack of good digital-finance infrastructure in developing nations also creates barriers for families trying to access remittances sent to them.
The economies of Tonga, Haiti, and Kyrgyzstan are the most remittance-dependent in the world.
Over one-third of the Kyrgyz economy is based on remittances its citizens send back from Russia; similar amounts are sent by Haitians and Tongans from the United States — largely propping up those countries’ economies.
Beyond the pandemic, other threats
Haiti has had only a handful of COVID-19 cases, and just one death so far, while Tonga, an isolated Pacific island nation, has remained miraculously free of the disease.
Ironically, these will be some the nations hit hardest by the pandemic’s indirect effects.
The plunge in remittances sent to Haiti is bad news for a country still suffering the aftereffects of the devastating 2010 earthquake, as well as anti-government protests and a flood of Haitian citizens returning as refugees from storm-wrecked Bahamas.
Tonga is the most remittance-dependent country in the world: 39 percent of its economy consists of money sent to family members from Tongans living in the United States.
With the source of these funds nearly dried up, Tonga might turn to its other major economic wellspring: tourism. But that too has dried up in the pandemic era of travel bands and closed borders.
To make things even worse, Tonga was also hit hard by Cyclone Harold, a tropical storm that wreaked havoc there and on several other Pacific island nations this year, while the rest of the world’s mass media was focused on the pandemic.
Left high, dry and hungry
The impoverished Himalayan nation of Nepal’s economy is largely dependent on remittances from Nepalis working in India.
But with the latter country on lockdown, remittance monies have dried up.
What’s more, Nepal, a net food-importing country, is at the mercy of India’s food policy, and like many countries now, India is focused on keeping its food to feed its own citizens.
Nepal has also been hit hard by the disappearance of tourism income caused by pandemic travel bans.
The threat of violence by Maoist insurgents also looms. Officials fear the rebels may be able to find more popular support if the country’s economy takes a permanent downturn.