On Nov. 11 last year, as the financial crisis on Wall Street sent panic across the country and worsened the longest recession in 70 years, the World Bank released a report projecting a drastic decline in remittance across the world. Most troubling, Dilip Ratha, the bank’s economist and manager for migration and remittances, said remittances to sub-Saharan Africa were set to fall in 2009 for the first time in more than a decade. It was a devastating, if logical, report that caused worries about the increasing vulnerability of Africans to poverty.
A year later, the World Bank?s forecast has proved incorrect. In fact, the very opposite has happened, according to its new report, issued just last week. Africans living and working abroad might be facing uncertain times, but they are still beating all the odds when it comes to sending money back home.
According to the bank, officially recorded remittance flows to Sub-Saharan countries remained resilient or declined marginally even as the rest of the developing world recorded massive reductions. Based on monthly and quarterly data released by central banks and in line with its global economic outlook, the bank estimates that remittance flows to developing countries will fall to $317 billion in 2009. At the same time, remittances to Sub-Saharan Africa are weathering economic adversities in the face of worsening unemployment outlooks and as harsher immigration policies take root in developed countries.
?Flows to Sub-Saharan Africa are doing better than forecasted, with Nigeria, Kenya and Uganda showing higher growth or smaller declines than expected,? says Ratha.
Instead of returning to their native countries because the job market is weak in the West, migrants are staying on longer and trying to send money home by cutting living costs. ?New migration flows are lower due to the economic crisis, but they are still positive,? Ratha says.
Although tempering their forecasts, economists maintain the expectation of a recovery in migration and remittance flows in 2010 and 2011 as global economic growth returns to previous levels. According to the World Bank, the near-term policy response may lean toward barriers to immigration, but a more appropriate policy response should involve facilitating migration and remittances, making these cash flows cheaper, safer and more productive for both the sending and the receiving countries.
Globally, remittance flows reached $338 billion in 2008, higher than the bank?s previous estimate of $328 billion.?