Cape Town: Global remittances, a key source of revenue for many developing countries, may fall 5% in 2009 after years of strong growth, a World Bank official said on Thursday. Millions of people in poorer countries depend on money sent home by migrant workers, and risk further impoverishment, should the economic crisis result in further job losses in developed nations.
“It might be that we will look overall at a decline of 5% or something,” Massimo Cirasino, head of the payment systems development group at the World Bank, told reporters.
“We don’t know really how much this will decline... but we can conclude these flows are more resilient than any other flow. You certainly don’t give up your support to your family... no matter what happens,” he said.
A World Bank report released last month showed remittance flows possibly declining by between 5 and 8% from an estimated $305 billion in 2008, in contrast to double-digit annual growth in recent times.
“If the crisis continues probably we will see more decline (but) as we all hope, we will soon recover globally, then we can expect these flows to continue,” Cirasino said.
He was attending a World Bank conference to suggest reforms to the global remittance and settlement system, including ways of extending financial services to more people.
There is a large untapped market of people who opt to send cash home using taxi drivers or other informal intermediaries instead of using the formal sector, partly due to red tape and bank charges.
Cirasino said, for example, a person could expect to pay $50 for every $200 sent from South Africa to Zambia when using the formal sector, mainly for add-on fees and exchange rate margins.
“You can (also) create a better infrastructure, a more open infrastructure both at the level of national payment systems and at cross-border systems,” he said.