Switzerland and UK launch Call to Action «Remittances in Crisis: How to Keep them Flowing»

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​​​25 May 2020​

The Call to Action “Remittances in Crisis: How to Keep them Flowing” is an initiative jointly launched on May 22, 2020 by the Governments of Switzerland and the United Kingdom, in partnership with the World Bank/KNOMAD, UNCDF, IOM,UNDP, the International Association of Money Transfer Networks (IAMTN) and the International Chamber of Commerce (ICC). The aim of this Call to Action is to raise awareness and call on different stakeholders in the remittances sector to take measures in order to mitigate the impact of the COVID-19 crisis on remittance flows, migrants, members of diaspora communities, as well as the families, communities and economies that rely on receiving remittances.

The current global crisis related to COVID-19 affects all regions of the world, all generations and all segments of society. Besides health vulnerabilities, migrant workers and their families are also hit hard by the economic effects of the crisis. Many migrants have lost their jobs and are compelled to return home, others are stranded without pay in their countries of destination, leaving them without income to support themselves or their families back home.

One crucial aspect of how the COVID-19 crisis is affecting migrants, members of diaspora communities, as well as the families, communities and economies that rely on receiving remittances, is the severe disruption to those remittance flows. The secondary impacts of COVID-19 have resulted in migrants having less or no income, in the closure or reduced operating hours of remittance service providers, their limited access to cash as well as in difficulties for migrants in accessing remittance transfer services due to limited mobility.

The World Bank has projected a sharp decline of around 20% in remittances to low- and middle-income countries (LMICs) in 2020, a drop of US$110 billion. This significant reduction will not only cause hardship for families and communities directly dependent on remittances and may drive further migration, it also carries the risk of adverse macroeconomic impact in many developing and emerging countries. In various LMICs, total remittances correspond to more than 10% of their Gross Domestic Product, and remittances to LMICs as a whole exceed both foreign direct investment and ODA. Given that in past crises remittances have typically acted as a countercyclical and stabilising factor, the impact of a drastic slump in remittances is expected.

The Call to Action intends to encourage policymakers, regulators and remittance service providers to improve migrants’ access to remittance services, by enabling physical or digital access to providers of cross-border financial services. Among other recommendations, it calls on policy makers to declare the provision of remittance services as an essential service during the crisis  and on service providers to reduce or waive remittance transfer costs as a gesture of solidarity during the ongoing crisis. The development and scaling up of mobile and digital transfer channels are also part of the proposed measures in the Call to Action. Furthermore, regulators are encouraged to provide regulatory guidance to remittance service providers and facilitate their access to liquidity and license renewal.

Sending and receiving remittances without obstacles will enable migrants and their families, particularly those in vulnerable situations due to the current crisis, to cover basic necessities such as food, education and healthcare. This will prevent millions of people from falling into a poverty trap, thus causing a backlash to the achievement of the SDGs. Facilitating the continued and even improving the flow of remittances is also vital for the resilience and recovery of the local economies and communities in many low- and middle-income countries heavily affected by the health and economic crisis caused by the spread of COVID-19.

Switzerland is well positioned to lead on this initiative thanks to its long-standing engagement in the field of migration and development, its expertise in financial services and digital solutions.