The UAE has long been a land of expats. Here, we celebrate the extraordinary strength and sacrifice of millions of employees who send money home. Remittances i.e. the money or their salary that migrants send to their home countries, is a crucial source of income for many families and this also plays a huge role in the economic growth of countries.
Who sends remittances?
Remittances are typically sent by foreign or expatriate workers or individuals with familial ties abroad. These funds are sent to support household income in the recipient’s home country.
Significance of remittances
Remittances go beyond just being financial transactions. They take care of food, clothes, books, healthcare, and children who might otherwise have limited access to education. They empower small businesses, and significantly contribute to the economies of developing nations. Remittances also stand for a deep affinity towards family. They are a testament to the unwavering commitment that migrants have for their loved ones, even when they live miles away.
These are the ways in which remittances have a significant impact on developing economies:
- Poverty Reduction: Remittances provide a direct source of income for families, helping them meet basic needs like food, shelter, and healthcare. Studies show a strong correlation between remittance flows and a decrease in poverty rates.
- Education and Healthcare: Remittances can be used to invest in education and healthcare, improving the overall well-being of families and communities.
- Entrepreneurship: In some cases, remittances provide capital for small businesses and entrepreneurial ventures, stimulating local economies.
- Financial Stability: Remittance flows tend to be more stable than other forms of foreign capital, offering a buffer during economic downturns or natural disasters.
So how is this celebrated?
The International Day of Family Remittances (IDFR) is a universally recognized event adopted by the United Nations General Assembly and is observed on 16 June, every year. The day recognizes the contribution of over 200 million migrants, who send remittances home to improve the lives of their 800 million family members.
According to the IDFR 2023-2024 brochure by IFAD, United Nations, “Over one billion people are directly impacted by remittances annually, either as senders or as recipients. It is estimated that half of the annual flows go to rural areas, where poverty and hunger are concentrated and where remittances count the most. 75% of annual remittance flows address the immediate needs of recipients in terms of food security, access to health, education, housing and sanitation. The remaining 25% is either saved, invested, or used to set up businesses, among others.”
This year, the UN’s theme for IDFR 2024 highlights the growing importance of digital remittances. In light of this, let’s take a look at some key benefits of shifting from traditional money transfer services to digital platforms:
- Reduced Costs: Traditional services often charge high fees, eating into the already limited funds migrants are sending home. Digital platforms can significantly lower these costs, further stretching those hard-earned dirhams.
- Financial Inclusion: Digital remittances connect families to a wider financial ecosystem. Access to mobile banking and online services empowers recipients, particularly those in underserved communities, to manage their finances more effectively.
- Transparency and Efficiency: Digital transfers are faster and more transparent, allowing families to track their money and receive it in a timely manner. This peace of mind goes a long way in supporting families separated by distance.
En bref
Despite the challenges, migrants are often highly skilled and contribute immensely to the economies of their host countries. They fill labor shortages, boost innovation, and enrich communities with their cultures. That’s why we call them ‘Champions’.
At Edenred, we are committed to playing our part in this critical story. We believe in ensuring that all workers are paid on time and fairly, so they have the resources to support their families back home. On the occasion of International Day of Family Remittances, we would like to celebrate and acknowledge the power of family. Let us recognize the vital role remittances play in building a brighter future for millions and strive to foster supportive environments for both migrants and their families.
