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UNCDF and UNDP Join Forces in Initiative to Improve Flow of Remittances and Counter Socio-Economic Impacts of COVID-19
NEW YORK - MAY 22, 2020 – The United Nations Capital Development Fund (UNCDF) and the United Nations Development Programme (UNDP) today announce their joint support for a Member State-led initiative to call on policymakers, regulators and remittance service providers to improve migrants’ access for sending and receiving remittances, and to reduce transfer costs during the ongoing pandemic of COVID-19 outbreaks.
Spearheaded by the Government of Switzerland and the Government of the United Kingdom, the call to action, Remittances in Crisis – How to Keep Them Flowing, is also supported by the global knowledge partnership on migration and development KNOMAD, the World Bank, the International Organization for Migration (IOM) and the International Association of Money Transfer Networks (IAMTN), and the International Chamber of Commerce (ICC). The goal is to remove the obstacles that migrants and their families face when sending and receiving money so that they can continue to cover basic needs and services such as food, housing, education and health care.
The COVID-19 pandemic has severely impacted health systems worldwide, but in terms of economic impacts, low- and middle-income countries may take a greater hit due to the projected decline in remittances for this year. Data from the World Bank show that remittance inflows are expected to shrink by about 20 percent, which amounts to a fall of around US$110 billion. Reduced remittances can have major ripple effects across economies as investment and consumption spending decrease. It can also slow down the progress countries have made in achieving the Sustainable Development Goals.
To mitigate these impacts, the joint call to action encourages stakeholders in the remittances sector to enhance physical and digital access to cross-border financial services, and to bring together actors in the public and private sectors, especially remittance service providers, to innovate solutions that would improve remittance flows.
“The hardship of COVID-19 felt by migrants in the form of lost wages and employment – often without government safety nets – is a large part of this crisis in remittances. The decline also results from a host of issues caused by the coronavirus that impact the services migrants use to send money home – including the restrictions placed on remittance services providers and their agents. The loss of this crucial financing lifeline is devastating for both the migrant households and receiving countries,” said Judith Karl, Executive Secretary for UNCDF. “UNCDF, together with UNDP, is committed to supporting the Member State-led call to action and to ensuring that every measure is available to facilitate migrants in sending remittances home.”
“Remittances are essential for COVID-19 response and recovery,” said Asako Okai, UNDP Assistant Administrator and Director of its Crisis Bureau. “In countries with limited social safety nets and less diversified economies, they often serve as a lifeline, and more so in times of crisis. The existing obstacles to send and receive money can lead to increased poverty and social insecurity, which would further destabilize national economies,” Ms. Okai added.
By building capacity for a conducive regulatory and policy environment, strengthening open digital payment ecosystems, and fostering innovation for inclusive digital solutions for migrants, UNCDF and UNDP are supporting governments and the private sector to ensure continuity in the remittance flows to the countries and families hardest hit by the effects of the coronavirus. The call to action is also an opportunity for UNCDF and UNDP to strengthen and advance their shared agenda around financial inclusion for migrants and families, as well as to enhance migrant contributions to local development.