COVID-19’s impact on migration

COVID-19 and remittances in Bangladesh

Major impacts on populations

Despite living beyond the country’s borders, Bangladesh’s diaspora plays a key role in its development. The World Bank estimates that the emigrant population together sent home over USD 18 billion in 2019, with 73 per cent coming from Bangladeshi labourers working in predominantly “low-skilled” jobs in the Gulf Cooperation Council (GCC) countries. These remittances, which account for over 6 per cent of GDP and represent the country’s second-largest source of foreign income, are a lifeline for many Bangladeshis. Remittances account for 85 per cent of daily expenditures for the families of overseas migrants, with 60 per cent of these families totally dependent on remittances for their daily expenses.

Disruptions induced by the COVID-19 pandemic posed a serious threat to the financial security of dependants back home. The World Bank initially projected a 20 per cent decline in total remittances to Bangladesh, and in the months of March, April and May 2020 these projections were confirmed. Yet in contrast with pessimistic predictions, international remittances to Bangladesh rose overall between January and October 2020; for example, they were 17 per cent higher than over the same period a year earlier, and a record figure of USD 2.6 billion was remitted in July 2020. This was in contrast to the wider South Asia region, where remittances were forecast by the World Bank to fall by 4 per cent in 2020 and around 11 per cent in 2021.

Since the surge in May and June 2020, the remittances flow accumulated above USD 2 billion monthly for the remainder of 2020. As recently as March 2021, the Bangladeshi diaspora were reported to have sent USD 1.91 billion, up 50.16 per cent from the same month the previous year, owing to government and central bank initiatives to boost remittances, as well as Bangladeshi expatriates sending more money to relatives who have lost their sources of income. The long border between Bangladesh and India posed challenges for containing the highly infectious Delta variant, with Bangladesh regions bordering India being the first to report major surges in infections due to cross-border movement. Further, and despite internal travel restrictions, the rapid rise in infections caused thousands of internal migrants living in the capital Dhaka to return to their villages, prompting further concerns of transmission.

Key challenges for authorities and practitioners

The surge in international remittances was unexpected and made it difficult for the government and financial institutions to determine the correct policy response. Although the headline figure was positive, it was suggested that this was caused in part by a diversion of remittances from informal to formal channels, due to difficulties carrying money by hand under COVID-19 travel restrictions and a narrowing in the discrepancy in exchange rates of U.S. dollars between the two channels.

More significant, however, was the suggestion that remittance growth was due to migrant workers repatriating their savings before returning home, implying not only a longer-term decline in remittances, but also signaling an intensification of unemployment in Bangladesh: before borders closed in Bangladesh in March 2020, approximately 400,000 workers returned, mostly due to the pandemic. Among migrant workers who had returned from abroad since the onset of the pandemic, a July 2020 report found that 70 per cent were unemployed. Unemployment within Bangladesh and abroad is reflected in the disruption to migrant outflows, where the number of emigrants between January to May 2020 was only 181,200 compared with 302,400 for the same period in 2019. The prolonged lockdowns and consequential unemployment will impact migrant workers’ incomes and their ability to send remittances, making families in Bangladesh vulnerable and potentially unable to meet immediate needs such as food, clothing and education.

Good practices

While the growth may have been due (in part) to shifts between remittance channels, it was also the result of actions by policymakers to encourage and facilitate the sending of remittances. The most significant driver of international remittance growth was the agency of migrants themselves. While interest rates on deposits in the United States and European countries fell to around zero, the 5 per cent rates offered by Bangladeshi banks became more appealing, as did Bangladeshi land. Expatriates also sent money to support relatives who had suffered a loss in their income due to the pandemic or had been impacted by the severe floods that followed Cyclone Amphan in May 2020, inundating a quarter of Bangladesh’s landmass.