Cross-Border Remittances in Times of COVID-19: Issues and Policy Solutions – Opening Remarks by Norbert Mumba, Deputy Executive Director, AFI

Ladies and gentlemen,

Warm greetings and welcome to everyone. I hope you are safe and in good health as you join us for yet another important webinar.  This webinar comes at as the world is racing to find a solution to the global health pandemic that is spreading across continents. As the world races to find a solution to halt the global pandemic, there is need for us to race to find effective policy solutions to halt the impending global economic downturn. Global problems require global solutions and there is no better time than now to discuss cross-border remittances as these are key to the recovery process.

I would also like to appreciate our partners; the Department for International Development (DFID), for their important contribution to the delivery of this webinar. We recognize that the technical and practical import of this collaboration is timely and appropriate as the UK is an important country in terms of remittance origination, with over USD10 billion in annual outflow in 2018, therefore, DFID is pivotal to the discussions today on practical policy interventions, digital innovations and cross-country collaboration to overcome immediate challenges linked to COVID-19 and medium to long term actions to improve on cross-border remittances.

As the world makes the welcomed turn towards recovery, I believe we echo the commonplace consensus on the expectation placed on policymakers and regulators to provide leadership and guidance, as many countries begin the necessary journey of economic recovery and actively stem the adverse ripple effects of the current global situation, especially in the lives of the vulnerable: women, elderly, informal sectors, micro, small and medium enterprises.

First of all, we recognize the path to recovery might present several options and opportunities. Interestingly, cross-border remittances are identified as an important tool that can contribute to economic growth and sustained financial inclusion. In 2018, AFI member countries received more than USD380 billion in remittances, with research indicating it had a greater impact than official development assistance and foreign direct investment.

Secondly, as the consequences of the COVID-19 pandemic begins to unravel and its impact on different facets of life becomes increasingly glaring, cross-border remittances is not spared. The World Bank forecasts that the crisis will cause global remittance flows to decline by around 20 percent to USD445 billion in 2020, compared to USD554 billion in 2019, making this the sharpest decline in recent history. Apart from loss of income owing to lockdowns or movement restrictions, another reason may be due to the challenges in sending money back to home countries amid shutdowns that have caused agents to close thus making sending and receiving remittances difficult and nearly impossible where digital options are unavailable. Looking beyond the gloom, we believe this presents an uncommon opportunity for regulators to address longstanding challenges and proffer policy solutions to ensure an efficient, affordable and inclusive remittance ecosystem.

Further to this point, it is our hope that this webinar will serve as a platform for us, as a collective of regulators, developed country partners, industry partners and actors, to present policy and financial inclusion related interventions targeting service providers, the poor, migrants, remittance-depended populations and other vulnerable groups, including women and youth, as captured in the following buckets:

1. Regulations:

We hope through the deliberations and insight shared today, we begin to see clear pathways toward harmonization of regulations and deepened co-operations between sovereign states on both sides of the remittance spectrum on key policy areas such as  anti-money laundering and countering the financing of terrorism concerns, currency exchange, consumer protection, awareness and digital financial literacy both for the immediate term to cushion the current burden on remittance dependent populations and also for the medium to long term.

2. Infrastructure:

We encourage all participants to contribute thoughts and ideas on opportunities to build synergies for domestic and cross-border interoperability to facilitate efficient and cost effective movement of remittance funds, yet, upholding the tenets of stability, security and resilience of the cross-border remittance system.

3. Market considerations:

As we explore solutions to address challenges exacerbated by the sudden drop in remittance flows on the most vulnerable groups – women, elderly, migrants etc. –  I encourage we consciously empathize with these groups and put forward time-bound, robust and innovative, technology-based business models to address the key pain points related to cross-border remittances such as cost, convenience, transparency, privacy and safety – especially in the context of restricted mobility and physical distancing.

Lastly, allow me to emphasize that cross-border remittances, sustained financial inclusion as well as broader recovery from the global emergency will continue to be shaped by technology. The digitization of cross-border remittances should therefore maintain high priorities on our agendas. Specifically, the use of proven DFS solutions such as mobile money services and other such innovations, to reliably offer an affordable, convenient, secure and efficient way of sending and receiving remittances.

This can be realized through an enabling and inclusive policy and regulatory environment around digitally enabled remittance solutions that considers the peculiar needs and behaviors of the different segments of every market. This is also consistent with the call to action by the UK through its Action Group on Cross Border Remittances and some of AFI member countries – such as Egypt, Mexico and Nigeria – towards the direct benefit to migrants, their families and local communities from these initiatives.

Ladies and gentlemen,

Finally, I encourage all to ponder on ways to harness innovative regulatory approaches and technology to address present issues around the access, usage and quality of remittance services, sustained financial health of vulnerable groups and how these insights can be drawn upon to enhance broader regulatory harmonization, consumer protection and market conduct.

I wish you all fruitful deliberations. Thank you.