Remittances grow at fastest rate in three decades
Remittances grew 36% in the just ended fiscal year, the strongest in 30 years, thanks to hard-earned money sent by migrant workers amid the coronavirus pandemic .
Bangladeshi diasporas sent home $ 24.78 billion in 2020-2021, the highest on record, up from $ 18.20 billion a year ago, according to data from the Bangladesh Bank.
Analysts say the global hundi cartel, which operates an illegal cross-border financial system, has faced major disruption since the first quarter of 2020 as international travel halted due to the pandemic, fueling growth in remittances .
Many countries, including the countries where most expatriate Bangladeshis work, have from time to time imposed travel restrictions to contain the spread of the virus.
This dealt a blow to the Monday system and encouraged expats to send money formally.
In addition, both the government and local banks have taken some steps, including the introduction of cash incentives, making money transfers through the banking channel attractive.
Growth in remittances in FY21 exceeded the 33 percent expansion recorded in 2001-02. Migrant workers sent $ 2.5 billion a year.
There is no way to be complacent, however, said Ahsan H Mansur, executive director of the Bangladesh Policy Research Institute.
“Labor exports have fallen sharply in recent times and expatriates are in dire straits due to the current downturn in business. “
About 7-8 lakhs of Bangladeshis went abroad each year in search of employment before the pandemic. But, only 2.17 lakh of people found jobs in other countries last year and 1.95 lakh so far this year, according to data from the Bureau of Manpower, employment and training.
In addition, migrant workers now face various problems as many employers have cut wages due to the business downturn, said Mansur, also a former head of the International Monetary Fund.
“Still, remittances have increased as expats send more money through the banking channel due to the collapse of the Monday system.”
Remittances can drop sharply once the movement embargo is lifted. “Thus, the government should prepare for the export of labor to return to pre-pandemic levels,” he said.
Mohammad Shams-Ul Islam, managing director of Agrani Bank, also said the disruption of the Monday system has helped accelerate the growth in remittances. “The government’s initiative to pay a two percent incentive on remittances has also had a good impact on inflows,” he said.
In addition to the government incentive, Agrani Bank itself provides an additional 1% incentive, bringing the benefit of using the formal channel to 3%.
Agrani is the second largest bank in remittance mobilization, bringing the house $ 2.82 billion last year.
The public lender rolled out a mobile app – Agrani Remittance App – to senders last year, allowing them to send money from their offices, factories or homes in Bangladesh.
Recipients also don’t need to visit bank branches to collect the money because the funds are automatically deposited into their accounts, Islam said.
Annual remittances could reach $ 30 billion over the next five years if authorities take appropriate action, said Shariful Hasan, head of Brac’s migration program.
The majority of migrant workers are unskilled and face challenges abroad, he said.
“Their work is vulnerable and they receive virtually no support from the Bangladeshi embassies.
The demand for qualified professionals will increase sharply after the end of the pandemic.
“Thus, the government should take initiatives to provide training to those who intend to work abroad,” Hasan said.