The number of money transfers sent to Jamaica fell by $1.3 billion over four months up to April, the first decline in many years.
However, the data aligns with predictions that were made by experts that the remittance sector would experience a decline, due to the coronavirus spread. Jamaicans have been using remittances primarily to pay for living expenses and not as a form of investment, the decline is more likely to impact vulnerable groups because of this.
A total of $105.5 billion or US$748 million which was down by 1.2%, between January and April, for remittances inflows according to the Bank of Jamaica in its newly released monthly remittance report. That decline equaled US$9.3 million.
Don Wehby revealed that “their digital channel is growing significantly at over 100 per cent year over year,” He is the Group CEO of conglomerate Grace Kennedy Limited, which controls the Western Union money transfer franchise in many of the Caribbean island.
Most of the remittances were transacted via six remittance companies and Western Union was the leading one. The franchise experienced a decline in transfers but reported that there was somewhat of a recovery since May, and a growth was evident in online transactions, which increased by 184 % that month.
Wehby expects digital transactions to surpass in-branch transactions as the primary method customers will be doing money transfers in the future.
Turn Around in May and june
Western Union’s decline before April was just below the market, and there’s been a “significant turnaround” in May and June – an indication, Wehby added, it is possible that the overall market could see some recovery in later months, if the economies reopen.
For now, however, the official predictions are, remittances will fall from where they were before COVID with levels of US$2.3 billion to US$1.9 billion for the Jamaican market, after COVID, in 2021.
Tourism and remittances flows account for the largest inflows of foreign exchange for the island. Tourism is projected to fall even more than money transfers, from $3.1 billion pre-COVID to US$995 million post-COVID as there has been a near total, lockdown of the hospitality and travel markets even though it is expected to be temporary.
The World Bank indicated that Latin American and Caribbean countries could see a double-digit drop in remittances in April due to the economic crisis caused by the COVID-19 pandemic and the related shutdowns.
The World Bank cited a fall in wages and employment from the source markets for remittances, such as the USA, Canada, the United Kingdom and Spain. Remittances to low and middle-income countries, or LMICs, were projected to fall by 19.7 percent to US$445 billion, which would represent a loss of financing of lifelines for many vulnerable households by the organization.