Money that migrants send to their countries of origin makes up a third of total economic output in some poorer countries. If a poorer country gets into a crisis, many households count on relatives in richer countries. However, the corona virus brought almost all countries into a crisis - and the otherwise reliable, private cash flows stop. Now millions of people are at risk of poverty, and the number of hungry people could double. The World Bank economist Dilip Ratha is researching this relationship. He grew up even in poor conditions in India, today he works at the highest political levels to ensure that migrants can better support each other. In his millions of TED talks, Ratha called the money that migrated people send home "dollars wrapped in love".
ZEIT ONLINE: HerrRatha, a lot has been reported in this crisis about doctors, nurses, the elderly and the sick. In your latest report, you focus on another group: migrants. How are they affected differently?
Dilip Ratha, born in 1963, is a Lead Economist at the World Bank with a focus on migration, remittances and diaspora bonds. He coordinates the working groups for global remittances for the G7 and G20. © World Bank
Dilip Ratha: Millions of migrants who work in informal or low-paid sectors are out of work. However, you cannot move on or go back. Some live in overcrowded shelters without running water, have no access to hygiene products or medication. They are exposed to the virus and can thus pose a risk to the rest of the population. However, migrants are usually not considered in governmental measures. We are also increasingly observing social tensions. Many people are already avoiding family and friends for fear of infection, and they are even more careful with strangers.
ZEIT ONLINE: What size are we talking about?
Ratha: There are about 270 million international migrants and 800 million internal migrants, that makes more than a billion people. Many of them support relatives in their home countries by regularly sending them money, known as remittances. For every migrant there are an estimated two more who depend on him. So we are dealing with two or three billion people out of seven and a half billion people around the world who somehow have to survive if their relatives cannot send money abroad - or less than otherwise. This can have far-reaching consequences: In countries like Tonga, Haiti and South Sudan make up remittances more than a third of the country's gross domestic product. In Egypt, more money comes from remittance than through the Suez Canal. In India remittances are more than foreign direct investment. And in Mexico they are bigger than the income from oil exports.
Top 10 recipient countries by share of GDP
Share of sums of money in gross domestic product that migrants transferred to their home countries in 2019
Source: World Bank © ZEIT ONLINE
ZEIT ONLINE: And the remittances no longer arrive in the pandemic?
Ratha: The most common way to send money is cash-to-cash : the migrant goes to a shop where a money transfer agency is located and gives cash there. The agency keeps a fee and sends the rest to the family, who can also pick up the money in a shop. We estimate that 80 to 85 percent of remittances go through such agencies. However, many stores worldwide were closed with the lockdowns. The migrants were suddenly unable to send money and their relatives cannot pick it up. Overall, we expect remittance flows in low and middle income countries to plunge 20 percent this year, from $ 554 billion in 2019 to about $ 445 billion - more than $ 100 billion.
ZEIT ONLINE: What does this mean for the families of the migrants?
Ratha: Remittances have lifted many people out of poverty. The families use it to buy food and essential goods and send the children to school. Early school leaving rates are lower in families receiving money from relatives abroad. There is less child labor. The mothers are healthier and newborns weigh more. A 20 percent slump will throw many households back into poverty. This is particularly worrying in regions that had supply problems prior to the Corona outbreak. For example, the worst plague of locusts has raged in East Africa for decades: According to the World Food Organization, it threatens the food of around 13 million people in Ethiopia, Kenya, Somalia, Uganda and South Sudan.
ZEIT ONLINE: The United Nations World Food Program warned that the number of hungry people could almost double this year.
Ratha: Unofficial development aid or foreign direct investment cannot compensate for the slump in money flows through migrants. Every country suffers from financial constraints during the Corona crisis. This makes it more difficult to provide more help or to invest, although these investments are urgently needed. Migrants, on the other hand, will try to support each other better during these times. But the pandemic makes it very difficult for them.
ZEIT ONLINE: What do you suggest?
Ratha: The extent of the need is so great that it is difficult to even think of a compensation. But there are measures that could mitigate the situation. First of all, governments must recognize businesses that offer monetary services as systemically important and allow them to reopen. But even then an old problem remains: the transfer fees are sometimes very high. A concrete solution would be to reduce these fees.