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Remittances and Beyond: COVID-19 impacts all forms of migrants economic contributions

Nepali Doctor in the Maldives.. Photo: IOM/Natalie Oren


 

The International Day of Family Remittances (IDFR) has traditionally focused on raising awareness around migrants and remittances. Beyond remittances however, migrants and diaspora contribute to countries of origin and destination economically in many more ways – through labour force participation, entrepreneurship and self-employment, small scale investments including real estate/portfolio markets, nostalgia/ cross border trade, and the transfer of social and technological capital. On this 16th of June, when all eyes are on the World Bank’s predicted 20 per cent  drop in migrant remittances this year, it is important to recognize the key factors behind this drop and to draw the attention to how broader economic contributions of migrants and diaspora are affected and could be safeguarded in the future.

DROP OF REMITTANCES CAUSED BY LOSS OF INCOME 

Remittances are the most visible form of migrants’ economic contributions to their home countries. At an economy-wide level, remittances form a substantial part of several countries’ GDP and help shore up foreign reserves.  However, being private money, 75 per cent of which are used to cover essentials, the anticipated drop in remittances will be particularly felt by migrants and their families who may no longer be able to cover school fees, medical expenses, housing, or even food. The COVID-19 lockdown severely limited the business of money transfer operators (MTOs) which migrants rely on, highlighting the importance of digitalization in service provision.  At the same time, an even more important factor disrupting remittance flows remains the disproportionate loss of income by migrants who became stranded in countries of destination or managed to return only to face little prospect of any economic activity in their communities of origin, similarly affected by economic stalemates.

Similar to the 2008 global financial crisis, when the increase in unemployment among foreign‐born workers in the EU‐28 countries was substantially higher than that of native‐born workers, during the COVID-19 crisis too, migrant workers are more exposed to the loss of employment and risks of being stranded in situations of vulnerability. With a considerable number of migrant workers employed in low-skilled professions with high levels of informality, they are particularly vulnerable owing to limited savings and access to social security.

LOCKDOWN AND MOBILITY RESTRICTIONS EXPOSE SECTORS AND BUSINESSES TRADITIONALLY RELIANT ON MIGRANTS AS THEIR WORKFORCE 

A large proportion of the estimated 164 million migrant workers are impacted by COVID-19-related restrictions, both in term of immediate loss of jobs but also their capacity to engage in economic activity abroad even once these restrictions start loosening up. Strict lockdown measures have disproportionally impacted sectors with high reliance on migrant labour. In the transport sector, more than 52,000 extraordinary restrictions to mobility were put in place worldwide. In the tourism sector, the United Nations World Tourism Organization predicts a 45–70 per cent decline in the international tourism economy. In the agriculture sector, due to movement restrictions, producers experience severe labour shortages, which resulted in disruptions to harvesting, processing and distribution, and impacting agri-food systems more broadly. The construction sector, which employs migrant manual workers, especially in the Middle East, has been similarly negatively impacted. Finally, the healthcare sector itself, experiencing an unprecedented increase in demand for its services, employs has a large migrants: nearly 30 per cent of healthcare workers in OECD countries having a migrant background.

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IMPACT ON MIGRANT ENTREPRENEURSHIP AND TRADE 

Migrant and diaspora entrepreneurship is primarily concentrated in small and medium-sized Enterprises (SMEs) and micro-businesses. COVID-19 has particularly impacted micro-businesses and SMEs. ILO estimates that around 81 per cent of employers and 66 per cent of own-account workers are in countries with recommended or required workplace closures with severe impacts on current operations and solvency. Migrants and diaspora trade and operate as cross-border traders. Trade in goods and services in the era of COVID-19 is seeing a slowdown owing to the disruption of value chains, border restrictions, and trade policy shocks, such as commodity prices.

COVID-19 pandemic is seeing a slowdown owing to disruption of value chains, border restrictions, and trade policy shocks, such as commodity prices. COVID-19 has exposed vulnerabilities of the global and regional supply chains. During the pandemic there were severe disturbances in about a quarter of intermediate inputs coming from China used in high-tech exports in the US, Japan, Korea, and Mexico. Migrant businesses, even small-scale suppliers of goods and services or nostalgia goods, can be linked directly or indirectly to supply chains. Further, informal cross-border trade in goods and services between neighboring countries and at border markets which is conducted by small, unregistered traders suffered due to lockdown and travel restrictions.

WHAT CAN WE DO TO SAFEGUARD MIGRANTS CONTRIBUTIONS? A FEW SUGGESTIONS 

Monitor the situation and evolve appropriate responses: As industries and sectors respond and restructure to the COVID-19 pandemic, labour mobility is likely to evolve, with some jobs being created while others become obsolete either by design or default. Effective responses at each distinct phase of the COVID-19 crisis will depend on good data collection and analysis relating to migrant movement and concerns, the financial sector, economy wide developments and national policy measures.

Access to social security and fiscal stimulus packages: As of now, 190 countries introduced some kind of a social protection programme in response to COVID-19. Most countries also implemented some form of financial stimulus. These mechanisms can be an important safety net for migrant employees, self-employed individuals, entrepreneurs, and traders. Ensuring awareness of and access to financial stimulus packages and other employment measures is important for both diaspora and stakeholders in the migration continuum, such as remittance services providers.

  • Remittances specific: During the past few months, the international community worked intensively to evaluate remittance developments and formulate responses for governments, the private sector and diaspora associations. Two notable initiatives in this regard are the Swiss and UK government-led Call to Action on “Remittance in Crisis: How to Keep Them Flowing” and the International Fund for Agricultural Development (IFAD) coordinated Remittance Task Force. Migrant and Diaspora areas for consideration include:
  • Digital Remittance Transfers: A technology-centric framework can bring remittance costs down, largely due to the lower physical infrastructure requirements, as was the case for mobile money transfers in Sub-Saharan Africa.
  • Informal Remittances: It is estimated that informal remittances amount to 35-75 per cent of official remittances to developing countries with significant regional variations; exact figures are however difficult to obtain. Digitization and falling commission charges may reduce reliance on informal channels. Enabling behavioral change from informal towards formal remittances including through financial and digital literacy is therefore important.
  • Inter-relationship between debt and remittances: Some of IOM’s initial work on debt, migration and remittances for South and South-East Asia indicates that debt can be both a driver and an outcome of migration. Migrant households incur loans to cover education, healthcare, farm support and business establishments. Migrants also take out debt to cover migration-related costs, e.g. recruitment, transportation, documentation and medical checks. Remittances are used to service such debts as, for instance, in rural households in South-East Asia which reported debt repayments as the primary use of remittances as well as in Bangladesh and some parts of South America. In the COVID- 19 context, migrants debt sustainability becomes important as remittances and income levels shrink.
  • Financial inclusion:  In 2017, only 63 per cent of adults in developing economies had an account at a financial institution, well below the 93 per cent in developed economies. The COVID-19 pandemic provides an opportunity through greater digitization and expanding the migrant and diaspora financial ecosystem to enable greater financial inclusion. Financial/ digital literacy enables informed choices by migrants on the cheapest and most secure means of sending money home, as well as saving possibilities. Enhancing the financial ecosystem, in terms of creating or re-adapting financial products to migrant- specific needs including savings accounts, insurance products, mortgages, investment products, portfolio investment and real estate purchases can further boost financial inclusion.
  • Diaspora contributions: A key and often forgotten factor is the need for active inclusion of diaspora and migrants who are willing contributors in times of crisis. In the context of the COVID-19 pandemic, governments can deepen relations with diaspora communities and strengthen virtual collaborations with skilled diaspora, such as health care professionals via telemedicine.
  • Migrant enterprises and trade opportunities: migrant enterprises lack access to finance and are least likely to benefit from COVID-19 linked fiscal stimulus measures. Migrant entrepreneurship and trade can consider the applicability of financial stimulus packages and other schemes to access credit, loan guarantees, microfinance. In the case of returning migrants, access to such schemes would enable longer-term livelihood plans. In addition in the context of internal migration, the creation of employment opportunities in the rural context is both an opportunity and a necessity.
  • Looking to the future of work:  Finally, the world of work even prior to the COVID-19 pandemic was already changing due to technology and globalization. COVID-19 may result in newer ways of working, i.e. digital versus physical, changes in business models, e.g. 3D printing versus manufacturing, changing workers preference, i.e. remote versus on site working and potentially both job destruction and job creation. Developments in the future of work arena can act as both a driver of migration – if there is massive unemployment – as well as reducing migration pressure, if creative solutions can be found. These developments are likely to influence migration flows resulting in what some economists refer to as a “period of unpredictable and fast-changing migration flows.” A key challenge will therefore lie in managing these transitions.
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In conclusion – while the true impact of COVID 19 will depend on the kind, shape and duration of the economic recession, it does provide us with an opportunity to reset, for the better, certain areas of the migration continuum, including in the area of migrant and diaspora economic contributions. Any way we look at the evolving post COVID-19 world, and how it will impact the migration domain, we are at an inflection point with the opportunity of turning this phenomenon into something that benefits all countries and people.

 

Note: Views expressed are those of the authors and do not reflect the views of IOM.


(1) Senior Economic Development Specialist, International Organization for Migration. The author is grateful to Marina Manke, Head Labour and Human Development Division, IOM and Sarah Lima, Intern, IOM for the substantive comments provided in the preparation of this piece. While this piece is focused on the economic contributions made by migrants and diaspora, it is important to recognize that these economic contributions are possible if migrant’s social protection and rights are safeguarded. For the purposes of this piece the term migrant is deemed to include diaspora and maybe used interchangeably.

 

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Opinions

Response capacities stretched with hasty return of 40,000 Ethiopian migrants

International Organisation of Migration (

Ethiopia – The International Organization for Migration (IOM) is urgently appealing for funds to respond to the needs of 40,000 Ethiopian migrants returning from the Kingdom of Saudi Arabia (KSA). Over 30,000 have arrived in Ethiopia over the last two weeks, at the rate of over 2,600 people a day. More than 20,400 (68 per cent) are from parts of Tigray and Amhara regions which are in the midst of conflict in Northern Ethiopia that has displaced nearly two million people.

The returns of Ethiopian migrants follow a bilateral agreement between the governments of Ethiopia and KSA.

According to IOM, USD 740,000 is needed to provide assistance for every 10,000 migrants returning. This is for essentials such as medical treatment, supplies for babies and infants such as diapers, clothing, help with finding and tracing family members, and reunifying them or providing alternative care arrangements as appropriate, as well as to respond to protection concerns.

“This sudden upsurge in returns poses a major challenge to our ability to assist the returnees – many of whom require medical and psychosocial assistance, support reuniting with their families, and livelihood options that would help to diminish the appeal of irregular re-migration to KSA and other countries of destination,” says Maureen Achieng, IOM Chief of Mission in Ethiopia.

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“Our response is seriously underfunded and barely reaching the needs of returnees in the provision of essential basic and specialized assistance, including for unaccompanied migrant children, pregnant and lactating mothers, and victims of trafficking.”

Many of the migrants will require help to return and reintegrate back into their communities.  Reintegration assistance is therefore vital to supporting the returnees psychologically, and to find work and stability, to help them avoid irregular migration, and exploitation by trafficking and smuggling rings.

The returning migrants are among the target population included in the Regional Migrant Response Plan  2021-2024 (MRP) for the Horn of Africa and Yemen, a USD 99 million appeal launched by IOM and 39 partners in March 2021 to address the protection needs, risks and vulnerabilities of migrants along this route. The MRP is underfunded and urgently requires additional resources to carry out its response, including for this target population.

While recognizing the sovereign right of States to determine their national migration policy and their prerogative to govern migration within their jurisdiction, in conformity with international law, IOM, as part of the United Nations Network on Migration, reaffirms its commitment to keeping everyone safe. It means that all Member States need to ensure that collective expulsions of migrants and asylum-seekers must be halted; that protection needs, including international protection, must be individually assessed; and that the rule of law and due process must be observed. It also means prioritizing protection, including every child’s best interest, under the obligations in international law.

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IOM provides over 1,300 migrants with emergency shelter and assistance on the Canary Islands

International Organisation of Migration (

Madrid – As more migrants arrive in the Canary Islands, the International Organization for Migration (IOM) has provided shelter, protection services, medical, legal and other types of assistance to 1,361 migrants on Tenerife.

The arrival of more than 23,000 people in the Canary Islands by sea in 2020, particularly in the last three months of the year, strained the reception capacity and COVID-19 has further complicated the response.  In November 2020, the Government of Spain announced “Plan Canarias” to renovate and expand the archipelago’s reception facilities to accommodate and assist 7,000 migrants.

Since 26 February this year, IOM has been operating at the Las Canteras Emergency Reception Facility (ERF) on Tenerife to support the Spanish government in managing the site. The EU-funded facility is an open centre which can accommodate as many as 1,100 people.

“Our priority is to support Spain with site management to provide safe and dignified living conditions and tailored services for migrants who have arrived via extremely treacherous journeys to the Canary Islands,” said Maria Jesús Herrera, Head of IOM’s Office in Spain.

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Today, some 300 migrants are staying at the facility from Morocco, Senegal, Mali, Guinea Conakry, Guinea Bissau, Sudan, The Gambia, Mauritania and Côte d’Ivoire.

At Las Canteras, IOM provides meals, core relief items, water and sanitation, maintenance, and Multipurpose Cash Assistance. The Organization also offers protection assistance, which includes vulnerability assessments, Mental Health and Psychosocial Support (MHPSS), primary health care, legal information and counselling for family reunification or international protection, and assistance with transfers of eligible vulnerable migrants to the mainland.

IOM’s Assisted Voluntary Return and Reintegration (AVRR) is also available to migrants who wish to return to their country of origin.

Marouane, a 27-year-old from Morocco, had arrived at the facility on 6 March. One year ago, he risked a harrowing sea journey towards the islands.

“For three days, you hang out with death, you see it. But if you don’t die, then you get there,” he told IOM in May.

To date, IOM has provided legal counselling to more than 780 people seeking asylum, in cooperation with UNHCR, the UN’s refugee agency. IOM also ensured – through close collaboration with the Spanish authorities – the referral and transfer of some 682 migrants to other specialized centres on the islands and the mainland.

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The Organization also works closely with the municipality of La Laguna to engage with neighbourhood associations, the Tenerife council, civil society, citizens and local actors in the interest of transparency, mutual exchange, and social cohesion.

“We consider the people hosted in Las Canteras centre as citizens of La Laguna municipality. We therefore try to collaborate as much as possible so that they also benefit from the activities organized by the City Council,” said José Luis Hernandez, Environment Councillor from the La Laguna City Hall.

Arrivals to the Canary Islands on the Western Africa-Atlantic Route this year have reached 7,309 – more than double the number of arrivals at the same time last year. Some 23,848 migrants have reached Spain irregularly via all land and sea routes so far this year.

The project at Las Canteras,“Supporting the Spanish Authorities in managing an Emergency Reception Facility on the Canary Islands”, is funded by the EU (European Commission, DG Home). The overall management of the ERF is under the coordination of the Site Manager of the Spanish Ministry of Inclusion, Social Security and Migration. 

 

READ  Somali migrants return from Iran, after several months of being stranded
  • IOM staff welcome a group of newly arrived migrants at the Las Canteras facility on Tenerife, Spain. Photo: IOM

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Opinions

IOM Ethiopia appeals for USD 40 million to assist additional 1.6 million people in Northern Ethiopia

Addis Ababa – Nearly two million people affected by the crisis in northern Ethiopia desperately need life-saving assistance, including water, medicine and shelter, the International Organization for Migration (IOM) said today as it issued an urgent appeal for USD 40 million to help internally displaced men, women and children, including newborn babies.

Since the outbreak of the conflict eight months ago in Ethiopia’s Tigray Regional State, millions of people are enduring unimaginable suffering, including forced displacement, hunger, death, and destruction of private and public property.

In Tigray, IOM has been providing support to more than half a million people, including displaced children, women, men, and vulnerable groups such as pregnant women and persons with disabilities. This includes shelter and provision of essential items such as food, water, clothing, medicine and supplies for babies, as well as sanitation and hygiene services.

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IOM has also been supporting camp coordination and management efforts, providing mental health care to those in need, and producing Displacement Tracking Matrix (DTM) reports to shed light on the evolving situation.

Nearly USD 70 million (USD 69.3M) is needed to respond to the needs of internally displaced populations in northern Ethiopia but only USD 28.7 million has been received this year. IOM needs an extra USD 40.6 million for the remainder of 2021 to be able to continue and further expand its response to help the displaced.

“The nearly two million people displaced by this crisis continue to live in inhumane and undignified conditions and require critical and urgent support,” said Maureen Achieng, IOM Chief of Mission to Ethiopia and Representative to the African Union and UNECA. “IOM Director General António Vitorino said it before, and we say it again: we must act without delay to meet the needs of people in the region.”

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The situation in Tigray remains volatile. In partnership and coordination with other UN agencies, IOM is committed to delivering life-saving humanitarian assistance, to continue reaching people in need. IOM is planning to significantly scale up response programming and increase the deployment of senior IOM staff in the region despite the severe shortage of funding.

IOM’s response is aligned with the Inter-Cluster Coordination Group’s (ICCG) – a cooperative effort among sectors and the Humanitarian Country Team to improve the national response – Northern Ethiopia Response Plan, which estimates that 5.2 million people are in dire need in the worst-case scenario of this escalating humanitarian crisis.

 

IOM’s Global Crisis Response Platform provides an overview of IOM’s plans and funding requirements to respond to the evolving needs and aspirations of those impacted by, or at risk of, crisis and displacement in 2021 and beyond. The Platform is regularly updated as crises evolve and new situations emerge.

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