GHANA emerged a top gainer of
remittance inflows in the last two years, in spite of the ravaging COVID-19
pandemic that collapsed businesses and eroded the incomes of people across the
world.
Remittances
to the country continued their steady growth in 2020 and 2021 as more people
outside the country capitalised on the silver lining of the pandemic to remit
more money back home to their relatives and friends.
Data
from the World Bank and the Bank of Ghana (BoG) show that remittance inflows
amounted to $4.05 billion in 2019 but rose by 5.9 per cent to $4.29 in 2020,
which was the first full year of the COVID-19 pandemic.
Last
year, remittances to the country rose by 5.8 per cent to $4.54 billion,
according to the World Bank’s Migration and Development Brief released last
month.
Bright prospects
Experts
trace the steady growth in remittances to the country in the midst of the
pandemic to the countercyclical nature of the gifting culture, the presence of
most Ghanaian non-resident workers in the health and social services sectors of
their host countries and the rolling out of unemployment benefits to victims of
the COVID-19 pandemic.
With
the World Bank now estimating that remittance inflows to low- and middle-income
countries (LMICs), including Ghana, would increase by 4.2 per cent this year,
chances are that more money would be remitted to the country to help families
and friends cope with the current challenges.
BoG
has already said that it expected the growth trajectory to continue into this
year as the global economy returned to the path of growth with restrictions
eased and life return to normal.
Implications
A
Professor of Economics, Prof. Peter Quartey, told the Graphic Business on June
14, that increased inflows of remittance was good for the economy as it
strengthened the reserve position of the country.
Reserves
are the assets of BoG that the central bank uses to pay for goods and services
that the country purchases from its peers.
It
also serves as a cushion against the cedi depreciation.
Given
the benefits, Prof. Quartey, who is the Director of the Institute for
Statistical, Social and Economic Research (ISSER), University of Ghana, said
the increased inflows of remittances helped to cushion the country against the
ravaging effects of the pandemic.
“Remittance
inflows are also used for investments. Some people remit to invest, others
remit for education while others also send money back home to fund the medical
bills of their relatives and friends.
“So,
when you have remittance inflows growing, it means that these sectors;
education, health and investment benefit,” the Director of ISSER said.
“It
also smoothens out household consumptions. People remit money to help their
relatives feed. So, in general, remittance inflows play a greater role in the
economy and its increase contributes to economic growth,” he added.
Reasons for growth
At
$4.54 billion for 2021, remittance inflows to Ghana are now at an all-time high
after starting off at $6 million in 1990, according to the World Bank data.
On
what accounted for the steady growth in remittance inflows in spite of the
scourge from the pandemic, Prof. Quartey said remittances tended to be
countercyclical.
“They
increase when there are shocks. When there are economic shocks, disasters or
general challenges, people tend to be more sympathetic and so they remit more
to their relations to help alleviate the suffering.
“Perhaps
that is what we are witnessing,” he said, noting that the countercyclical
nature of remittances had been tested over the years.
“It
also makes sense that if your neighbour is suffering, you have to send
something to help and that is what is reflecting in the trend.
“Again,
the global economy is growing in spite of the pandemic. After 2020, we have
seen some growth although not as high as before and so it means that people are
still gaining incomes to be able to send money back home,” the Professor of
Economics said.
The
ISSER Director also concurred with earlier positions that the relatively large
number of Ghanaians in the health and social sectors of most Western countries
made them more financially resilient to be able to remit money back home.
Given
that such sectors were insulated from the layoffs that followed the outbreak of
the virus, many experts explain that workers in the health sectors and social
services rather gained, thereby strengthening their ability to send money home.
Growth in crisis
Meanwhile,
in the Migration and Development Brief titled: ‘War in a pandemic: implications
of the Ukraine crisis and COVID-19 on global governance of migration and
remittance flows,’ the World Bank examined the implications of the two
developments on the remittance industry for this year.
It
concluded that in 2022, remittance flows to low- and middle-income countries
(LMICs) were expected to increase by 4.2 per cent to reach $630 billion.
Source:Graphic.com.gh