Arab News, Wednesday, Sep 1, 2021 | Muharram 24, 1443
July remittances drop 7% in Saudi Arabia, but industry optimism remains intact
Saudi Arabia:
Saudi Arabia saw a seven
percent drop in personal transfers by non-Saudis in July, according to latest
central bank figures, but optimism for the remittance industry is strong.
In its monthly bulletin, the Saudi Arabian
Monetary Authority (SAMA) showed remittances falling from SR13.5 billion in June
to SR12.52 billion in July – a drop of almost SR1 billion.
The COVID-19 pandemic that paralyzed industries
and halted international travel contributed to this short-term decline,
remittance expert Praveen Chandiramani said, but a rebound is expected.western
union
“The remittances in this quarter – starting from
July to September – is definitely going to rise,” he told Arab News, attributing
it to the return of migrant workers to the Gulf.
Chandiramani, who has worked over two decades on
the Gulf’s money transfer sector, added: “Expatriates who were stuck back home
are slated to come back as borders reopen, and hopefully that will drive
remittances.”
Global remittances in 2020 dropped 1.6 percent
below pre-COVID levels, according to data from the World Bank, but experts
remained optimistic about the recovery of the industry given that personal
transfers provide a “critical lifeline” to families in low-income countries.
In fact, in the Middle East, countries such as the
UAE and Saudi Arabia remained to be the largest sources of remittances during
the year.
“The pandemic didn’t stop me from sending money to
my family in the Philippines. I even had to increase my monthly transfer because
I knew their situation was much worse,” a Dubai-based Filipino waitress, who
wanted to stay anonymous, told Arab News.
Chandiramani said recovery in remittance flows was
expected as countries slowly cope with the changes brought by the pandemic.
“The entire world felt the tremors of the pandemic
– people started working from home, there were lockdowns and other knee-jerk
reactions from governments, but in the end, it was important to save a life,” he
said.
He added: “In spite of the fact that the salaries
were a bit bad in certain cases in the initial part of the COVID-19 pandemic,
over a period of time, it has just picked up.”
Future of remittance
Aside from remittance figures, Chandiramani also
highlighted the ongoing developments in the Gulf’s financial technology scene –
which includes innovation for the money transfer sector.
“I think in the next three to five years,
blockchain is going to be the order of the day. With this technology, the
settlement time and cost will come down,” he said.
His company, WorkerAppz, is already using
blockchain technology in some of the markets they serve – but its real potential
will rely on banks and governments joining the system.
“While some banks in the Philippines, India,
Pakistan, and Nepal have gone on blockchain, you require the entire system to
follow suit – that’s how it would really show the advantage of blockchain,” he
explained.
The popular fintech buzzword could offer broad
advantages to the remittance industry, the expert said, including the security
of payments.
Industry experts said blockchain’s decentralized
nature makes it “practically impossible” to hack.