This brief is brought to you by the Financing Facility for Remittances (FFR) of the International Fund for Agricultural Development (IFAD)
Issue 2 - 20 April 2020
In this brief:
> COVID-19: impacting rural families
> RCTF19: responding to COVID-19
> News from the field 
> Expert insights 
> Related articles
> Recent and upcoming events
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COVID-19: impacting rural families 
In only two months, the COVID-19 pandemic has taken a terrible toll, silently crossing national borders, and swiftly mutating from concern, to crisis, to potential catastrophe. While we share a common vulnerability to this disease, our ability to cope with the economic and social impacts of this disaster varies widely. This virus and the resulting shutdowns are hitting remittance families everywhere in multiple ways. Both international and domestic migrant workers and their families are disproportionately affected by this pandemic.

Construction, tourism, hotels, and restaurants – all important sources of migrant labor employment – are essentially shut. Migrants are not able to work remotely, nor can they generally rely on any form of a “safety net.” But there is one major industry that cannot be shut, deferred, or postponed: FOOD -- planting, harvesting, processing, and distributing. Access to food is more vital than ever, a major reason why the role of agriculture migrant workers is now being officially recognized as “essential” in some countries.
Migrants abroad...
Labor shortages. As borders are closed, many farms and processing plants in developed countries are left without agriculture workers. “Measures affecting the movement of people (internally and internationally) and resulting labour shortages will have an impact on agricultural value chains, affecting food availability and market prices globally. (…) In European countries, this possible shortage could affect a wide range of crops, especially the labour-intensive ones (e.g. tomatoes, cucumbers, peppers, strawberries, cherries, potatoes, and asparagus)”. (FAO, 7 April 2020)
FAO reports that, “there may be an estimated shortfall of about 1 million seasonal agricultural workers in Europe, mainly coming from Eastern Europe and Northern Africa. In Australia, it is estimated that about 50 per cent of the labour force in vegetable farms and 30 per cent in fruit and nut farms are seasonal and temporary migrant workers. Canadian farms and food processing operations rely on 50,000 to 60,000 migrant workers, while 30 per cent of the workforce in the seafood industry is made up of foreign workers. Migrant workers in the United States of America, hired to fill temporary or seasonal agriculture jobs, make up 10 per cent of crop farmworkers; while the seafood industry, particularly in Alaska, brings in more than 20,000 migrant workers annually”.

Remittance flows back home. Even where migrant workers have savings, the current lack of steady income will impact their decisions on sending money home. Those who can afford to send remittances home do so either through (i) transfer offices that have remained open, sometimes because countries have deemed these services “essential”, or through (ii) digital services. Nonetheless, the use of mobile transfers is not currently widespread.

Many migrants in developed countries now face a dual dilemma. Their jobs have disappeared, they are without income and social benefits, but return to their home countries is very difficult given onerous travel restrictions. Job losses and reduced mobility have resulted in a sharp reduction of remittances families back home, with declines ranging from 10 to 30 per cent across the globe.
Rural areas back home... 
Job losses, business closures and lockdowns threaten the financial security of hundreds of millions of people around the world. Many cannot meet expenses in urban areas. Lockdown conditions, particularly in large cities, force many informal workers to return to their rural homes of origin. In India, for example, migrants in major cities cite access to food as the primary reason for returning to their rural homes during the lockdown. While many rural families are able to keep food on the table, this may not last for long.

Meanwhile, many internal migrant workers in the growing cities of Asia, Africa and Latin America are trying to return home to rural areas, sometimes walking long distances because railroad and bus systems do not operate during the lockdown.

This “return diaspora“ will have an enormous impact on poor rural communities, transcending economic considerations alone and testing the social infrastructure and adaptive capacity of developing countries. Food security and the disruption of supply chains that link rural production to urban markets may be a secondary concern, only to the health threat posed by COVID-19 in developing countries.

The weak resilience of small-scale food producers in developing countries also poses a serious concern. The sudden reduction or outright halt in remittance flows may create a longer-term crisis. As reported by the International Organization of Migration (IOM), without regular remittances, receiving families in rural areas, many of them poor, often cannot buy seeds and inputs for the next agricultural season.
Food security is vital and agriculture and food production are essential sectors. Migrant workers employed in these activities face enormous challenges, but at the same time, them and their rural families back home are important actors in maintaining the food security of many countries.
Over the last weeks, the Remittance Community Task Force (RCTF), comprised of 27 leading civil society, government, inter-governmental, international development, private sector, and research organizations and agencies, have come together to help give voice to remittance families during this historical crisis.
This is the second News Brief issued in response to information needs.

RCTF is focusing on priority action areas leading to recommendations in response to the worldwide COVID-19 outbreak and its impacts on remittances families. The Task Force is now collaborating on four action areas:
  • Remittance families: senders and recipients, how to access information, services as well as support to families depending on remittances;
  • Private sector action: towards identified innovations that can tackle crisis issues faster
  • Enabling environment to address current barriers to facilitates and insure an environment conducive to safer, faster and cheaper remittances.
  •  Identify and promote digitalization opportunities and priorities for wider use of digital remittance transfers.
The Task Force is also taking a geographical approach, focusing primarily on countries with a high reliance on remittances.

The first outcome of the Task Force will be the RCTF Global Call for Action with short-term recommendations.
This section includes recent news from all continents, as well as insights collected by IFAD from its projects and partners worldwide.
Early central banks´ figures on remittances to Latin America and the Caribbean (LAC) by René Maldonado G.

Importance of remittances for receiving households. Based on 32,000 surveys of migrants from 8 countries in Latin America between 2017 and 2020: 73 per cent of remitters believe that the remittances that they send constitute an important component of the income of the receiving households. For 22 per cent of remitters, these resources sent home represent the most important source of the household income. Therefore, a decrease in these resources can be catastrophic in the households that receive these flows.

Remittance flows during the crisis. Seven countries in the LAC region: Bolivia, Colombia, Dominican Republic, El Salvador, Guatemala, Honduras and Mexico, account for 78 per cent of the total remittances received in the continent. Comparative data from the central banks of these countries for the first quarter of 2019 and 2020 show that:

- In February there was an increase in remittances of 3 per cent on average in 2020, most likely related to advance transfers motivated by anticipated impacts of COVID-19 on receiving families or due to the return of some migrants to their countries of origin.

- In March, based on limited data from some countries, a significant drop in remittances has reached 22 per cent on average.
Despite the drastic drop in remittances, currency depreciation in recipient countries may temporarily benefit some households to receive more money in terms of local currency. However, data for April and May will present a clearer picture about the impact of this crisis. Nonetheless, mitigating factors are being analyzed.
Southern African Development Community Region

As of April 15, there were 3,306 total recorded cases of COVID-19 in the SADC region. South Africa accounted for 75 per cent (2,506) of the total. The pandemic has led governments in the SADC region to follow global guidelines to limit the impact on economic and social welfare. Economic lockdowns and travel restrictions cause households and businesses that are outside of the “essential goods and services” realm to manage serious cash and risk management challenges. It is expected that economic immigrants in South Africa from the rest of SADC will struggle to earn a living in order to support families in their countries of origin. Moreover, 80 per cent of the estimated 3.7 million SADC immigrants in South Africa work in the informal, low skilled economy (due to their immigration status). Informality prevents access to potential government transfers due to non-eligibility and identity verification hurdles. There will be a drop in the volumes and values of cross border remittances from South Africa to the rest of SADC. In 2018 these flows were valued at US$1.6 billion for both formal and informal outflows.

The non-bank remittances service providers have a majority share (about 90 per cent) of the total formal cross-border remittances market, estimated at US$ 0.7million in 2018. These non-banks require extensive networks of stationary and roving agents as access points. Given movement restriction and the enforced lockdown of businesses that are not deemed “essential”, it has been reported that agents have experienced as much as a 50 per cent drop (since the end of March 2020) in income earned from commissions. This could be as high as 90 per cent by the end of April 2020. As a result, cash-based transfers (with formal providers) from SA to the rest of SADC will decline drastically, considering that over 70 per cent of the formal cross border payments happen over non-digital rails. For corridors outside of the SADC Common Monetary Area (CMA), the weakening ZAR to US$ exchange rate (about 25 per cent depreciation in the first quarter of 2020) has increased the exchange rate cost component of cross border payments, potentially discouraging sending customers to worsen the projected decline in market value.

FinMark Trust (FMT) is currently working with multiple stakeholders in South Africa and the rest of SADC to gather evidence in order to inform advocacy for public, private and donor policy responses to the pandemic. As most countries look inwards, initiating policies against economic collapse, there is an opportunity to forge benchmarks of what an inclusive financial and economic system should look like without compromising regional integration.

As immigrants are less likely to be recipients of relief packages, such as government and donor transfers, FMT is looking to facilitate an Income Support Fund targeted at SADC immigrants in South Africa that are using formal remittances platforms. The intention is to work through remittance service providers which can identify and verify senders and recipients based on customer ID and their transaction histories. The objective is to have formalised institutional income support for SADC immigrants.
Emergency savings - a safety net for cooperative members in the Philippines
The National Confederation of Credit Cooperatives (NATCCO) is the biggest federation of co-ops in the Philippines in terms of geographical reach, membership, financial capacity and array of services. Through their partnership with an IFAD-funded grant, NATCCO’s diaspora partner co-ops, which currently serve around 37,000 overseas Filipinos (OFs) and their families, received training to enhance existing financial products targeted to migrant workers and their recipient families, and to improve their financial education programmes.

NATCCO has recently reported on the critical role of these diaspora co-ops in support of remittance families during the COVID-19 pandemic, when it is expected that at about 300,000 to 400,000 OFs will be affected by pay cuts and job losses. Diaspora co-ops offer customized products, such as their emergency savings product which makes it easier for remittance-receiving families to build financial safety nets to tap into in difficult uncertain times. By the end of the three-year implementation period, the project promoted the opening of almost 17,000 new savings accounts from OF and their families, mobilizing over US$ 17 million in savings.

Besides financial support, diaspora co-ops are also supporting the distribution of food packs to most affected communities, and have recently included the psycho-social component to their diaspora program that includes basic counselling and support to the OF families to strengthen the social and emotional bond of the families and the OFs.
COVID-19 and postal networks
By Johannes Petrus Boon
Postal networks are an essential infrastructure emerging as a lifeline to the vulnerable to access cash, public services, pharmaceuticals, groceries and other basic services. Like so many businesses, the post office has been hit hard by the COVID-19 pandemic.  
Mail volumes are down – in some cases by 33 per cent, and up to almost 100 per cent, due to the halt in flights towards/from countries under lockdown.This is especially the case of smaller developing economies in Africa, Asia and Eastern Europe.
For over seven years, de-risking has been a major issue for most money transfer operators (MTOs). A solution has not yet been found for this issue. Indeed, it appears that the status quo has been accepted by many stakeholders. Despite the best efforts of the European Union to address de-risking through the Payment Services Directive -PSD2 (the European regulation for electronic payment services which increases payment security, boosts innovation and helps banking services adapt new technologies), minimal progress by the private sector has been made. Banks continue to decline account applications without providing reasonable explanations. It appears that risk avoidance is growing and that the profit that can be made by remittance companies is outweighed by perceived risk.

COVID-19 has exacerbated this problem for a number of MTOs, especially those that are cash-based. MTOs have developed good coping strategies but some of these are being severely impacted. In Europe, cash-based transactions have reduced significantly due to geographic lockdowns. It is known that some firms that have been de-risked have online services ready to turn on. However, they need a bank account that allows them to collect funds from their customers’ debit/credit cards, or bank account transfers. “Without a bank account to receive these payments, they cannot serve their countries”, says Leon Isaacs, CEO DMA Global Ltd. This is affecting perceived high-risk customers, which leaves the senders with few options except to use informal channels.

Governments could step in to address this, by insisting that banks provide accounts under specific criteria or potentially through a central bank, if all else fails.
Leon Isaacs, CEO DMA Global Ltd.
The importance of information
By Leon Isaacs, CEO DMA Global Ltd.
In times of great uncertainty such as these, obtaining reliable and current information is critical. Migrants who have money to send are often already concerned about their future income streams and their ability to support their families back home.
If they are in a lock-down situation that only exacerbates their situation, especially if their regular money transfer agent is closed.They need to know how they can send money and also whether the place they send it to has any restrictions.

Money transfer companies are working incredibly hard to keep their websites updated on any changes to the availability of their agents and those who have online services are advising clients to use these.

However, those who cannot use their traditional cash outlet are often wary of digital means and require a significant amount of information and trust building exercises to engage in digital transactions. This type of service is new to them and many need reassurance that the service is legitimate and protected against cybercrime. There is, therefore, a strong case for a trusted source of reliable data to be made available to those who need reassurance. Such a service could also be used to provide education on what is required to use digital services.
Here below you can find a non-exhaustive lists of all recent relevant articles on the impact of COVID-19 on remittances appearing in the news during the last two weeks.
USA agriculture migrant workers
From Business-humanrights > Workers in agricultural supply chains are among groups most at risk of COVID-19 infection

Being prepared for the worst is nothing new for immigrants during Covid-19
From The Guardian > The "resilience" of migrants and their families

Southeast Asia could be the next coronavirus hot spot — these charts show why
From CNBC > article

From the Center for Migration & International Relations > Weekly newsletter

Coronavirus numbers have more than quadrupled in the past two weeks, propelled by a surge in Covid-19 infections among its migrant worker population living in dormitories.
From the South China Morning Post > article 
On the same topic from the Bangkok Post > article 
Many of the Tajik migrants whose remittances make up a bulk of the nation's cash inflows have had to return home over the past few months as the countries where they worked lurched towards recession, Tajikistan's government said on Friday.
From The New York Times > article

At the EU level, there is growing awareness on COVID-19’s impact on migrant communities is rising.
MENA region
Lebanon orders money transfer services paid out in local currency. Lebanon's deep financial crisis and hard currency shortage have prompted banks to impose tight controls.
From Aljazeera > article

Western Union Money Transfers Now Delivered Home in Jordan
As the government implements COVID-19 curfews and restrictions on movement to ensure safety of residents, select Western Union Agents will deliver money to receivers at their homes.
From Businesswire > article 
Thursday, 23 April, 11h00 GMT +2
World Savings and Retail Banking Institute
Webinar: Measures of COVID-19 in Africa (in French) > to register
Friday, 30 April, 13:00 GMT
Webinar: Impact of COVID-19 in one of the most remittance-reliant countries: Nepal.

Wednesday, 6 May, 13:00 GMT
Webinar: Impact of COVID-19 in Senegal.

Friday, 8 May, 13 GMT
Webinar: Impact of COVID-19 in Ghana.

Wednesday, 13 May, 13 GMT
Webinar: Impact of COVID-19 in The Gambia.
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