Remittance surges at sharpest pace in three decades
Remittance inflow posted 36 per cent growth in the just-concluded fiscal year, the sharpest in 30 years, thanks to the hard-earned money sent by migrant workers amid the coronavirus pandemic.
Bangladeshi diasporas sent home $24.78 billion in 2020-21, the highest on record, in contrast to $18.20 billion a year ago, Bangladesh Bank data showed.
Analysts say that the global hundi cartel, which operates an illegal cross-boundary financial system, has been facing a major disruption since the first quarter of 2020 as the international travelling came to a halt because of the pandemic, fuelling the growth of remittances.
Many nations, including the countries where most expatriate Bangladeshis work, have enforced restrictions on the movement from time to time to contain the spread of the virus.
This has dealt a blow to the hundi system and encouraged the expatriates to send money through the formal channel.
In addition, both the government and local banks have taken some measures, including the introduction of cash incentive, making remitting money through the banking channel attractive.
The growth in the remittance flow in FY21 surpassed the 33 per cent expansion recorded in 2001-02. Migrant workers sent $2.5 billion in the year.
There is, however, no scope to be complacent, said Ahsan H Mansur, executive director of the Policy Research Institute of Bangladesh.
"Manpower export has dropped sharply in the recent period, and the expatriates are in dire straits due to the ongoing business slowdown."
Around 7-8 lakh Bangladeshis used to go abroad every year searching for jobs before the pandemic. But, only 2.17 lakh people found employment in other countries last year and 1.95 lakh so far this year, data from the Bureau of Manpower, Employment and Training showed.
In addition, the migrant workers now face various problems as many employers cut salaries owing to the business slowdown, said Mansur, also a former official of the International Monetary Fund.
"Still, remittance has been on the rise as the expatriates are sending more money using the banking channel due to the collapse of the hundi system."
Remittance transfer may fall sharply once the embargo on movement is withdrawn. "So, the government should take preparation so that manpower export returns to the pre-pandemic level," he said.
Mohammad Shams-Ul Islam, managing director of Agrani Bank, also said the disruption in the hundi system helped accelerate the remittance growth. "The government initiative to pay a two per cent incentive on remittance has had a good impact on the inflow as well," he said.
On top of the government incentive, Agrani Bank itself provides an additional one per cent incentive, taking the benefit of using the formal channel to 3 per cent.
Agrani is the second-largest bank in terms of mobilising remittance, bringing home $2.82 billion last fiscal year.
The state-run lender rolled out a mobile application – Agrani Remittance App – for the remitters last year, allowing them to send money from their offices, factories, or residences to Bangladesh.
The beneficiaries also do not require to visit branches of the bank to collect the money as funds are automatically deposited in their accounts, Islam said.
Annual remittance flow may increase to $30 billion within the next five years if the authorities take appropriate measures, said Shariful Hasan, head of the migration programme of Brac.
The majority of migrant workers are unskilled, and they are facing challenges abroad, he said.
"Their job is vulnerable, and they hardly get any support from Bangladesh's embassies."
The demand for skilled professionals will go up sharply after the pandemic peters out.
"So, the government should take initiatives to provide training to the those who intend to go abroad for jobs," Hasan said.
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