World Bank projects remittance inflows to Bangladesh at $20 billion in 2020
Remittance inflow is a major contributor to Bangladesh’s economy, and many had believed that it would be adversely affected by global lockdowns to contain transmission of Covid-19. However, the country remarkably had a record-setting year for remittance in 2020.
Although the surge in remittance may be surprising to the casual observer, experts and speakers at a virtual discussion have said the outcome was very much predictable.
The discussion, titled “Remittance flow in recent times: Where is so much money coming from?”, was organized by the Centre for Policy Dialogue (CPD) on Sunday. Migration experts, economists and expatriate workers who have returned to the country were among the participants.
According to the World Bank, Bangladesh’s inflows were projected to hit $20 billion in 2020, making it the eighth highest remittance-receiving country in the world.
Receipts from November 2020 took inflows in the year to $19.8 billion - up 8.2% year-on-year. Bangladesh received its previous highest remittance in 2019 at $18.3 billion.
One of the main reasons for the increase is the shutdown of informal channels for remittance during Covid-19 lockdowns, according to speakers at the discussion.
Syed Saiful Haque, chairman and founding member or Warbe Development Foundation, said previous research has shown that actual remittance inflow to Bangladesh is around $30 billion per year.
“I am not astonished by the increase in remittance. If all the money were remitted through formal channels, remittance would stand at about $30 billion,” he said.
He also lamented that there was no remarkable investment despite about $20 billion being remitted last year.
In a presentation, CPD Distinguished Fellow Mustafizur Rahman identified higher demands from remittance-receiving households, the introduction of 2% incentives, the raising of the ceiling for sending remittance without supporting documents to $5,000 from $1,500, paying an additional 1% charge through some mobile banking platforms and the hajj effect as other reasons for the increase in remittance.
The stopping of transactions through hundi (informal channels) is among the most influential factors in the increase in remittance, he added.
Mustafizur Rahman also ranked the top 15 source countries for remittance, with Saudi Arabia taking the top spot for the last three consecutive fiscal years.
Centre for Non-Resident Bangladeshis Chairperson MS Shekil Chowdhury said remittance from the US and UK is increasing primarily because the ceiling for remittance without supporting documents had been raised.
The speakers also drew attention to the plight of expatriate workers who are unable to return to their workplaces.
Expatriate workers need more financial support
Shohidul Islam Sujon, an expatriate worker who has returned from Saudi Arabia said he was unable to get any financial help from government institutions - Prabashi Kallyan Bank and PKSF - as the loan procedure was too complicated.
Warbe Development Foundation Chairman Syed Saiful Haque said the government allocated Tk700 crore for returning expatriate workers who were forced to leave their jobs, but several problems meant Probashi Kallyan Bank could not distribute the amount properly.
“As the bank has manpower and resources crises and needs huge recruitment, the government may use other government banks to disburse the money,” he suggested.
He also advised increasing incentives for remittance from the existing 2% to 5%.
Barrister Anisul Islam Mahmud, chairman of the Parliamentary Standing Committee on the Ministry of Expatriates Welfare and Overseas Employment, echoed the Warbe Development Foundation chairman in calling for an increase to incentives.
CPD Chairman Prof Rehman Sobhan in his speech called for an effective, long-term strategy to ensure sustainable remittance growth.