Sunday, Aug 17, 2008

Dubai: Remittances into the Middle East and North Africa (Mena) region are estimated to have reached $28.5 billion (Dh104.59 billion) in 2007, according to a World Bank report. Remittances from the region reached $8.8 billion in 2006, the report said.

Remittances to the region were driven by the large population of Arab professionals abroad, representing about 3.9 per cent of the Mena's GDP in 2006, the World Bank said.

A large number of Arab immigrants in Europe and North America remit money back home.

Remittances from the Mena region increased just eight per cent in 2007 compared to 2006, but grew 89 per cent between 2002 and 2007.

"The true size of remittances, including unrecorded flows through formal and informal channels, is believed to be larger," the report said.

According to Jean Claude Farah, a regional vice-president at Western Union Financial Services, remittance outflows from the Gulf region were high in 2006, with $17 billion leaving Saudi Arabia alone an amount second only to the US with remittance outflows of $35 billion.

Farah said there were a number of figures for the UAE but Western Union had "adopted" outbound figures of between $6 billion and $6.5 billion.

Remittances out of Kuwait and Qatar stood at $5 billion each, he said.

Sudhir Kumar Shetty, general manager at UAE Exchange said while the remittance outflows from the region were very high, the ticket sizes or the amount of money per transaction, was lower compared to other parts of the world.

He attributed this to the nature or type of workers attracted to the region.

"The Gulf attracts a large workforce from all over the world and they keep their family away so remittances are high. Most of the people who are in the working class category have to remit every month. The money earned by construction workers is lower compared to workers from other parts of the world," he said.

Inflation woes

Given the high rate of inflation in the Gulf, the amount being sent per transaction had decreased by about 15 to 20 per cent lower as workers required more money to live on, said Farah.

"Given inflation in Gulf the amount has come down by 15 to 20 per cent but the number of transactions is more. The number of immigrants increased but they need more money to survive," he said.

Remittance into the Gulf region was low, especially into Saudi Arabia. An exception would be the UAE although this would likely be for business purposes.

Remittances to the Philippines, Pakistan and Bangladesh continued to grow robustly in 2007.

According to the bank's Migration and Remittance Factbook for 2008 in Qatar 78 per cent of the population were migrants, 71 per cent in the UAE, 62 per cent in Kuwait, 41 per cent in Bahrain, 26 per cent in Saudi Arabia, and 24 per cent in Oman.

India was the top receiver of remittance in 2007 at $27 billion. India was followed by China, with $25.7 billion, Mexico with $25 billion, the Philippines at $17 billion and France with $12.5 billion.

The top remittance recipients in the region in 2007 was Egypt, with $5.9 billion, Morocco at $5.7 billion, Lebanon with $5.5 billion, Jordan with $2.9 billion, Algeria at $2.9 billion, Tunisia receiving $1.7 billion, Yemen $1.3 billion, Iran, Syria, West Bank and Gaza, according to the World Bank.

According to the bank, as money transfers were being subjected to intense scrutiny, the remittance industry has experienced a shift in remittances from informal to formal channels. However, these regulations had increased documentation for opening bank accounts, it said.

"Large money transfer operators have benefited from the shifting flows. The remittance industry has also seen the introduction of cell phone-based remittances and several pilots involving remittance-linked financial products," the report said.

These changes may imply a shift from cash-based remittances to account-based remittances in future.

By Natasha Marrian

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