The Director of the Institute of Social, Statistics and Economic Research (ISSER), Professor Peter Quartey, has said that Ghana will not be hit with a heavy drop in foreign remittances this year despite the projection of a major decrease in foreign remittances globally this year by the World Bank.
The Bretton Wood Institution in a report released on April 22 projected a sharp decline in global remittances by about 20 percent this year due to the economic crisis induced by the COVID-19 pandemic.
But the Economist in an interview predicted between two and five percent drop in a worst-case scenario in contrast with the 23.1 percent drop projection in remittance inflows to Sub-Saharan Africa by the World Bank.
“We have seen this before when there was a global recession. We in Ghana did not see any major decline in foreign remittance inflows”.
“Yes, COVID-19 seems to be causing a major problem, but I still believe that much as there may be a decline, it will not be as high as predicted by the World Bank,” he said.
Prof. Quartey reiterated that if there should be a decline, it will be between two and five percent by the close of the year in the worst-case scenario, adding that “I will not be surprised if we see the inflows curve even remain flat”.
According to Prof. Quartey, the nature of Ghanaians living outside the country, no matter their situation, would still send money back home to their loved ones for various reasons.
Ghana recorded about $3 billion from remittances transferred into the country in 2018 by citizens in the diaspora.
Global remittance decline
In the wake of the novel COVID-19, the World Bank is projecting a major drop in global remittances by about 20 percent in 2020.
According to the Bretton Institution, the sharpest decline in history is “largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country.”
The Case of Sub-Saharan Africa
In the report, remittances to Sub-Saharan Africa are expected to decline by 23.1 percent to reach $37 billion in 2020.
The report further said remittances to Sub-Saharan Africa registered a small decline of 0.5 percent to $48 billion in 2019. However, a recovery of four percent is expected in 2021.
“The anticipated decline can be attributed to a combination of factors driven by the coronavirus outbreak in key destinations where African migrants reside, including the EU area, the United States, the Middle East and China. These large economies host a large share of Sub-Saharan African migrants and combined, are a source of close to a quarter of total remittances sent to the region,” the report explained.