Remittance inflow to Bangladesh declined 8 per cent year-on-year in August to $1.8 billion, the lowest in the past six months, as money transfers through informal channels such as “hundi” have increased. August was the third consecutive month when remittance showed a downward trend. With the latest decline, the total remittance inflow fell 19 per cent to $3.68 billion in fiscal 2021-22 from $4.56 billion in the year before.
Due to recurring government restrictions at home and abroad to curb the spread of Covid-19, the flow of funds through the informal channels took a hit, which was one of the reasons why inward remittance had increased in the previous year. Inward remittance hit its highest point of around $25 billion in the previous fiscal with analysts suggesting that the surging inflow was a result of a transfer of savings by returnee migrant workers and a reduction in illegal money transfers. The flow of remittances through formal channels has decreased as the informal money transfer market is again up and running.
The 2% incentive offered by the government on inward remittances coupled with the central bank’s initiatives to ensure a time and cost-effective money transfer process encouraged Bangladeshi migrants to send home more money even amid the pandemic. Remittance has already changed our livelihoods as well as our economic growth. Moreover, remittance has an effective role in rural infrastructural development. The migrant workers, who send money from foreign countries, are accelerating economic growth and development. Thus remittance has turned into the second largest financial inflow to our country.
The government now should find out how to improve the remittance inflow as the source of income is generated without adequate investment. The formal channel should be strong enough to rule out the informal channels. However, the most challenging aspect of Bangladesh’s remittance is still the unskilled workforce, where we have no investment. The government, for the sake of the economy, should take comprehensive policies and action to improve the remittance inflow involving diplomatic missions, educational institutions, financial institutions, and manpower recruiters.
