Mena remittances fall as Egyptians swerve official channels

Reuters/Hamad I Mohammed

• Money transfers down 5.3%
• Egypt is Mena’s biggest recipient
• Moroccans abroad buck trend

Remittances to Middle East and North African countries are forecast to fall by 5.3 percent to about $61 billion in 2023.

The drop in the World Bank’s figures is driven by a sharp decline in recorded money transfers to Egypt, which is the region’s largest recipient.

A “large part of remittances” to Egypt probably went unrecorded, according to the World Bank, because of the significant gap between Cairo’s official exchange rate and the parallel market.

Its latest Migration and Development Brief, published on Monday, also pointed to a slowdown in outward remittances from Saudi Arabia and the UAE. Remittances to Mena countries fell by 4.5 percent in 2022.

• Fitch downgrades Egypt on growing government debt
• Remittances from UAE to rise as Indian rupee weakens
• Opinion: Let’s make it faster and cheaper to send money home

Remittances to Egypt for the full-year 2023 are expected to slide to $24.2 billion. In the first half of the year, inflows fell by 38 percent to $10 billion. This was the lowest level recorded since the first half of 2017, according to data from the Central Bank of Egypt. 

Remittances, a key source of foreign currency, faltered as the central bank reverted to a fixed exchange rate in March. High and rising inflation and ratings agency downgrades have exacerbated the problem.

In an effort to encourage Egyptians working abroad to use formal channels for their money transfers, the Cairo government has said there is no plan to tax remittances.

Banks are also planning to launch savings products and funds that do not levy commissions on members of the Egyptian diaspora.

Money transfers to Jordan, Lebanon and Tunisia are forecast to dip as a result of weak economic growth in the euro area – a key remittance source. 

In contrast, remittances to Morocco are expected to reach another record high, as Moroccans living overseas respond to the devastating earthquake in September.

In Lebanon, remittance receipts represent 27.5 percent of GDP, the World Bank said. It remains the most vulnerable economy in the region, facing debt restructuring, hyperinflation without reforms and a sharp devaluation of its currency. 

Deficits in both Egypt and Lebanon have heightened pressure on the currencies and foreign currency reserves, the report said. 

Globally, remittances to low and middle-income countries grew by an estimated 3.8 percent in 2023 to reach $669 billion. The World Bank is forecasting a global increase of 2.1 percent for 2024.

The world's largest recipient of money transfers is India, followed by Mexico, China, the Philippines and Egypt.

India is forecast to receive $125 billion this year, a rise of 12.4 percent.

Its remittances outlook for 2024 will hinge on developments in the Gulf as almost 29 percent of the flows originate from migrants employed in the region, the World Bank said. 

The UAE accounts for 18 percent of India’s total remittances and is the second-largest source of them after the United States. 

“Remittances are one of the few sources of private external finance that are expected to continue to grow in the coming decade. They must be leveraged for private capital mobilisation to support development finance,” said Dilip Ratha, the report's author. 

“Remittance flows to developing countries have surpassed the sum of foreign direct investment and official development assistance in recent years, and the gap is increasing.”