Despite a massive increase in migrants sending money home via digital transfers due to the COVID-19 pandemic, millions of their rural family members struggle to access the mobile banking services which could help lift them out of poverty.
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The President of the UN’s International Fund for Agricultural Development (IFAD) is calling for urgent investments in digital infrastructure and mobile services in developing countries to ensure rural families are not left behind.
“Migrants have shown their continued commitment to their families and communities during the pandemic with more remittances transfers made digitally than ever before,†said Gilbert F Houngbo, President of IFAD, speaking on the International Day of Family Remittances.
“Unfortunately, families in rural and remote areas - where remittances are a true lifeline - battle to access cash outlets or even more convenient alternatives such as mobile money accounts. Governments and the private sector need to urgently invest in rural digital infrastructure to address this.â€
Mobile remittances increased by 65% last year, rising to $12.7 billion. This change was driven by a switch from cash due to lockdowns that limited informal channels and social distancing rules for senders and recipients alike.
In spite of the global economic recession due to the pandemic, migrants continued to send money home to their families, with remittances in 2020 reaching $540 billion – a drop of only 1.6% compared to the previous year
However, in many countries, people living in remote rural areas have sparse local access to banking services or limited mobile connectivity.
In addition, there is a limited availability of agents offering mobile money services such as pay outs in cash. Often mobile money service providers are only located in urban centres. This means millions of poor, rural people have to travel long distances to towns or cities, often at significant cost, to receive the cash sent digitally by their migrant family members.
Digital transfers are cheaper than traditional cash transfers, and mobile banking services also provide the opportunity for migrants and their families in their countries of origin to access useful and affordable financial products to better manage their finances, including savings, loans and insurance. ■