Key Remittance Trends Highlighted in the World Bank Report

The World Bank released the Migration and Development Brief 37 on November 2022 to highlight important developments in migration and remittance flows, as well as related policy and regulatory changes, since the previous brief, which was released in May 2022.

The World Bank noted several remarkable remittance trends. It demonstrated that this industry has always been and will continue to be resilient. It is especially important for low- and middle-income countries, as well as the families who live there, because it is both a necessity and a source of revenue. Cross-border remittances will always play a major role in facilitating global trade expansion and connectivity, especially in e-commerce. According to the report, India is on track to receive USD 100 billion in personal remittances for the first time. This is not surprising given the high demand for Indian workforce globally.

It is essential to note how the report validated the influence of currency fluctuations on the number of remittances. For example, the volume of remittances leaving Europe has been reduced as a result of the Euro’s depreciation versus the US dollar. Whereas in the United Arab Emirates, where the UAE Dirham is pegged to the US Dollar, we have seen an appreciation in the value of the UAE Dirham against many of the world’s major currencies. As a result, the volume of remittances leaving the UAE has surged.

There have been other factors as well, for example, the increase in global oil prices, particularly in the UAE, may have had a negative impact on the workforce’s income. However, it benefits the government and we should expect increased investment in infrastructure projects in the future, which will boost employment. It is critical to emphasise that the Wages Protection System, which is supervised by the Central Bank of the UAE and the Ministry of Human Resources and Emiratisation, has played a key role in ensuring that the workforce in the UAE receive their salaries and wages on a regular basis.

The World Bank report highlighted the cost of sending money. They conduct a survey around the world on a regular basis for sending a set amount of USD 200 and USD 500 globally and then calculate the cost of the remittance as a percentage of that amount. The global average remained at 6 %, while here in the UAE, we are slightly less than half the global average in terms of the cost of sending money at 2.9 %. This is not a surprise, because of the sheer volume of outward personal remittances that the UAE handles. The UAE is the second-largest when it comes to personal outward remittances globally after the United States.

The brief also pointed out the significance of digital technologies. It was surprising to learn that only 1% of personal remittances are made using digital channels such as mobile apps and kiosks globally. In the UAE, it is estimated that 11% of remittances are sent via digital methods. This shows that the UAE is on track in terms of global trends and is ahead of the world trends in many areas.

Personal outward remittances are predicted to increase in 2023, especially in the UAE. There are several explanations behind it, but the most important is that there are many initiatives to attract talent to the country. The distinct demographics of the UAE, with expatriates constituting 88% of the population, are seen as directly proportional to the volume of remittances going out of the country.

This trend will continue to expand in terms of digital technologies. Younger generations will be more interested in digital technology, not just in its traditional forms such as mobile apps and kiosks but also in new innovative solutions.