The remittance industry has been part of the acceleration of digitalization, which is observed in many dimensions of life during the COVID crisis 19.
Starting in June 2020, remittance flows through digital channels have increased, according to a new World Bank report, particularly for migrants with access to bank accounts and credit cards.
The report shows that Albania ranks in the top ten recipients of remittances in Europe and Central Asia, although in lower figures than the region.
According to the report, the main beneficiary of remittances in Europe has been Ukraine, followed by Russia and Uzbekistan. Albania, last with 1.5 billion dollars in 2020, while in relation to GDP, 9.7%.
The report explains that, in the face of a severe labor shortage in key sectors (such as agriculture, construction, hospitality and care services) amid the COVID-19 crisis, the German government decided to extend the Western Balkans regulatory program under which citizens of Albania, Bosnia and Herzegovina, Kosovo, Montenegro, Northern Macedonia and Serbia enjoy privileged access to the German labor market.
“In addition, the citizens of the Western Balkans benefited the most from the new Immigrant Workers Immigration Act. “Of the 30,200 high-skilled visas issued in 2020, a total of 2,024 were issued to Serb citizens, 1,159 Bosniaks and 778 Albanian citizens,” the report said.
In terms of sector digitalisation, the report shows that many major money transfer operators reported double-digit increases in their digital services, in stark contrast to the decline in their remittance services. The transition from cash to digital channels appears to have continued throughout 2020. Recent data showed that cross-border remittances increased by 65% in 2020 (from $ 7.7 billion in 2019 to $ 12 billion in 2020), reaching over 1 billion dollars in transactions sent and received each month (Andersson and Naghavi 2021, GSMA). “It is believed that there has been a large shift in flows from informal to official channels in 2020,” said the WB.
Since digital remittances are better recorded than cash remittances, especially those made by hand or sent through other informal channels, official data is likely to record more remittances even if the true size of remittances may decline. . This observation is consistent with the fact that a large number of households surveyed in Q2 reported receiving lower remittances since the start of COVID-19 in Mexico (35%) and the Dominican Republic (54%) even when central banks registered higher inflows.
The true size of remittances, which includes official and informal flows, is believed to be larger than officially reported data, although the extent of COVID-19’s impact on informal flows is unclear, the Bank notes./ D.Hyka