The Middle East and North Africa was the only region to experience a fall in remittances during the year, according to the World Bank data.
Mena remittance dips 2% over foreign labour deportations from Saudi Arabia
Foreign labour deportations from Saudi Arabia dragged regional remittance flows down by 2 per cent to US$46 billion last year.
The Middle East and North Africa was the only region to experience a fall in remittances during the year, according to the World Bank data. Globally, foreign workers from the developing world transferred $404bn to their home countries last year, up 3.5 per cent from the year before, according to a report by the Washington-based lender.
“Remittances have become a major component of the balance of payments of nations,” said Kaushik Basu, the senior vice president and chief economist of the World Bank. “There is no doubt that these flows act as an antidote to poverty and promote prosperity.”
The World Bank said while the global medium-term outlook for remittances was strong, downside risks loomed from the return to their home countries of migrants.
In Saudi Arabia, more than 370,000 migrants were sent home since November, said the World Bank. Many more left under an amnesty programme. Many of those deported were from Ethiopia, Egypt and Yemen.
The exodus followed a government crackdown on illegal immigrants in a bid to improve employment opportunities for Saudi nationals.
Egypt was particularly hard hit by the move, with 300,000 Egyptians leaving the kingdom in the second half of last year, according to the World Bank. The kingdom is the destination for about 37 per cent of Egyptian migrants.
Egypt, the largest destination for remittances in the region, received about $17.5bn in transfers last year, 9.2 per cent down from $19.2bn the year before.
Egypt has relied on remittance flows to help to plug its current account deficit and prop up its currency after two revolutions in almost 18 months. Remittances from overseas Egyptians are equivalent to more than 4 per cent of GDP in the Arab world’s most populous country. Transfers are worth a similar amount in Lebanon and Jordan.
Elsewhere in the region, inflows grew by 3 per cent, the World Bank said. The positive uplift chimes with generally positive data from local money exchange houses.
“We are on a positive trajectory and saw no drop in remittances to Egypt last year,” said Promoth Manghat, the vice president of global operations, UAE Exchange, which reported growth of 6 per cent in remittances in 2013. It does not operate in Saudi Arabia. “This year we’re looking at 7 or 8 per cent growth.”
The report flagged the “stubbornly high” cost of transferring money to the region and within it. Costs averaged about 8 per cent of the transaction value since 2012 with the highest costs linked to transfers from Europe to the region. The UAE to Egypt was the cheapest corridor, with costs averaging 4 per cent, it said. Globally, the most expensive transfer destination was Sub-Saharan Africa, where costs averaged about 12 per cent.
The World Bank urged international organisations to do more to help to ease the process of remitting money to the Syrians within and outside Syria and support a lowering of remittance costs. More than 2.5 million Syrians are now living in neighbouring countries, with more than half of those estimated to be in Lebanon.
Within the region, the World Bank said remittances were forecast to rise to $55bn by 2016.
Globally, it said transfers would rise by 7.8 per cent this year from 2013 to $436bn.
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