More money is being sent home by migrant workers to their families, but what kinds of money transfer services are there, and how do they operate? Report of Al Jazeera.
Remittances to low- and middle-income countries alone are estimated to have reached $656 billion last year, surpassing foreign direct investment, according to a World Bank (WB) report. Over the previous 20 years, remittances have increased significantly, from roughly $128 billion in 2000 to $831 billion in 2022
“I was in my late teenage years, and Afghanistan was reeling under the impact of natural disasters and conflicts, making it hard for my extended family members to afford basic necessities. So I began sending between 20 and 30 euros that I earned from my student job,” Mina Hamid*, an Afghan immigrant told Al Jazeera. “So, the money I send them covers the rent of their apartment, which in Kabul is approximately 150 euros, and allows them to use their earnings for other necessities for their two children, such as food and clothing”, she added.
The 36-year-old continues to send money to her extended family in Afghanistan every three months from her current residence and place of employment with the European Union in Belgium.
Similar to Hamid, remittances, or payments in kind or cash, are a common practice among millions of migrants worldwide who send money or other goods to their relatives back home.
Where and from Where is Money Being Sent?
The US, Western European nations, and Gulf Cooperation Council members like Saudi Arabia, Qatar, and the United Arab Emirates are the main sources of remittances to low- and middle-income countries. The US continued to be the main source of remittances in 2023.
With the exception of China, the outflows of this type of money to East Asia and the Pacific increased to $85 billion last year. $50 billion went to China alone, while remittances to South Asia increased by 5.2% to $186 billion. At $125 billion, India was the largest recipient of remittances.
The amount of remittances sent to the Middle East and North Africa decreased to $55 billion, while sub-Saharan Africa and Latin American countries received lower amounts of $54 billion and $156 billion, respectively. Additionally, remittances to Europe and Central Asia decreased by 10.3% to $71 billion. Remittances were impacted by conflicts and declining Gulf oil prices.
What kind of Options Exists to Send Remittances
Remittances are sent by migrants via credit and debit cards, money transfer platforms accessible via their phones or the internet, cash, checks, money orders, and credit cards. Traditional banks, financial services like Western Union or MoneyGram, or fintech apps like PayPal and Remitly are frequently used platforms for money transfers.
Remittance costs remained high as of the fourth quarter of 2023, costing an average of 6.4 percent to send $200, according to the WB. Countries are required by the UN’s Sustainable Development Goals to lower the cost of remittance transactions to less than 3 percent of the total amount being sent.
For Migrants, what do Remittances Mean?
With his family having relocated from the Democratic Republic of the Congo (DRC) to Belgium in 1990, Manasse Massuama views remittances as “a bridge that binds diaspora communities with the people living in their homelands.”
“It’s a way of cooperating, a way of assisting, and a way of improving circumstances for friends and family,” explained Massuama, a financial consultant who has been sending money to his parents for the past eight years since they returned to the Democratic Republic of the Congo.
He told Al Jazeera that his family’s financial stability and ability to purchase land in the DRC are both results of the support.
*(Names changed to protect personal safety)