Remittances (Global Market)
The more successful and larger the country's economy, the more people want to work and live there, even if temporarily. There are a huge number of labor migrants in the world, and a large-scale market for cross-border remittances exists thanks to their money. People send the money they earn to their families living in other, poorer and less successful, countries. Or vice versa - they receive transfers in order to settle down in a new place or make an unexpected profitable deal.
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Main article: Payment systems
Remittances in Russia
Main article: Remittances (Russian market)
2022: Top 10 countries for incoming remittances from their GDP. Tajikistan and Kyrgyzstan lead the way
At the end of November 2022, the Knomad report (an initiative of the World Bank) on the development of the remittance market was published. It is said that the current geopolitical situation and new economic challenges had a significant impact on the industry.
It is reported that remittances to low and middle-income countries in 2022 increased by about 5% - to $626 billion. For comparison: in 2021, the growth was twice as high - about 10.2%. Globally, remittances will reach $794 billion in 2022. The study notes that migration flows are recovering from the recession caused by the COVID-19 coronavirus pandemic in 2020-2021. In addition, refugee flows have increased in the current geopolitical situation. Because of this, the remittance industry is transforming.
If we consider the market in terms of share of GDP, then Tajikistan and Kyrgyzstan are leading with an indicator of 32.1% and 31.3%, respectively. Armenia closes the top three, the result of which is 18.9%. In addition, the ranking includes Kosovo, Uzbekistan, Georgia, Moldova, Montenegro, Ukraine, Bosnia and Herzegovina. Experts emphasize that remittances are an important source of income for households whose financial situation leaves much to be desired. Such revenues partially solve the problem of poverty, and also help to improve the situation in the food sector.
It is reported that in 2022 Ukraine will become the largest recipient of remittances with a result of approximately $18.4 billion. In second place will be Uzbekistan with $13.5 billion, in third - Russia with $6.0 billion. It is also said that in the first eight months of 2022, remittances to Uzbekistan almost doubled - to $10.6 billion from $5.7 billion over the same period in 2021: at the same time, remittances from Russia account for 80% of the total inflow. Such a significant increase is partially due to the sale of goods in Russian rubles.
Remittances Brave Global Headwinds
2018
How much money migrants send to their homeland. Table
The record holders in this matter are migrants from India and - China 78.6 billion dollars and 67.4 billion, respectively. In 18th place of this top is Russia with 8.6 billion. It is important to note that for many countries this profit is an important part. GDP In countries such as Egypt,, the Ukraine Philippines, migrant money makes up 10 to almost 12% of GDP.
Russia is the sixth in the world with the lowest commissions
Main article: Remittances (Russian market)
In 2019, migrant transfers to low and middle income countries will reach $0.55 trillion, exceeding the inflow of foreign direct investment. Russia is among the largest senders, and the cost of transfers from Russia is the lowest in the world.
2015: World average commission 7.7%
The last thing a construction worker from India wants after a difficult day in the scorching sun of Dubai is to donate part of the salary to a bank or money transfer service. However, this is exactly what he has to do.
On average, 6.9 cents of every dollar sent to India from any other country goes to commission and foreign exchange rate differences, the World Bank says. But Indians are not yet paying as much as others. Migrants from Sub-Saharan Africa lose about 9.7 cents[1]
In 2009, G8 leaders promised to reduce the average cost of international migrant transfers to 5% of the amount sent over the next five years.
Since then, the fee has decreased, but not very much: in 2015, the average commission is 7.7%, notes the British magazine The Economist.
Partly guilty of this situation are exclusive agreements signed by banks and companies that offer services for the transfer of migrants' funds, said Dilip Rasa from the World Bank.
Reduced competition leads to the maintenance of unreasonably high prices.
Some countries, including India, have banned such agreements, but they are still common in Africa.
In 2014, the Institute for the Development of Foreign Countries estimated that if the average fee for transferring funds to Africa was reduced to 5%, the continent would receive an additional $1.8 billion every year.
Nevertheless, Dilip Rasa looks at the state of affairs with optimism.
More and more firms are emerging (primarily in London), which are beginning to successfully compete with banks and other large companies in the money intermediary market.
Venture capital-backed "newcomers" actually prove that modern technologies can significantly reduce prices.
TransferWise, originally established as a service for foreign exchange between individuals in a wealthy world, now works with customers in India, with the country becoming one of the most popular destinations, says one of the company's founders, Taavet Hincus.
According to him, in the near future the money can be transferred to Mexico.
Transferring funds abroad itself is a relatively simple task.
The problem is getting money from a spouse or parents in poor countries who, as a rule, do not have bank accounts or live far enough from the nearest branch of a financial organization.
Large money transfer systems such as MoneyGram and Western Union (Western Union) have hundreds of thousands of representative offices around the world, giving them a significant advantage in the market. However, Ismail Ahmed of WorldRemit, an online money transfer service, believes the rapid development of mobile payments in countries such as Kenya, Somalia and Zimbabwe is reducing the dominance of big players.
Most of the money sent to Africa through WorldRemit goes to the recipient's mobile accounts.
But technology is not yet able to overcome another problem.
Anti-money laundering and anti-terrorism laws prevent banks from transferring money to countries where there is war or a high crime rate (such as Somalia), but whose residents are very dependent on migrant money.
According to Odilon Almeida of Western Union, this situation reduces competition and leads to higher prices.
In addition, it forces migrants to resort to illegal channels of money transfer, which is bad for everyone.
2014: Russia No. 8 in the world
Money is sent around the world, millions of operations are carried out daily, and a total of $583 billion was transferred worldwide in 2014. This is more than, GDP Sweden Poland or Argentina. And twice the size of the economies of Ukraine and Greece combined.
The country from which the largest number of remittances are sent is America. The United States accounts for approximately $131 billion in cross-border transfers.
Saudi Arabia ranks second with an indicator of $45 billion, the UAE - third: in 2014, the volume of transfers from there amounted to $29 billion.
Russia is in 8th place with a total amount of $21 billion.
Notes
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