July remittances drop 7 percent in Saudi Arabia
Saudi Arabia saw a 7 percent drop in personal transfers by non-Saudis in July, according to latest central bank figures, but optimism for the remittance industry is strong.
In its monthly bulletin, the Saudi Central Bank showed remittances falling from SR13.5 billion ($3.6 billion) in June to SR12.52 billion in July — a drop of almost SR1 billion.
The COVID-19 pandemic that paralyzed industries and halted international travel contributed to this short-term decline, remittance expert Praveen Chandiramani said, but a rebound is expected.
“The remittances in this quarter — starting from July to September — is definitely going to rise,” he told Arab News, attributing it to the return of migrant workers to the Gulf.
Chandiramani, who has worked over two decades on the Gulf ’s money transfer sector, added: “Expatriates who were stuck back home are slated to come back as borders reopen, and hopefully that will drive remittances.”
Global remittances in 2020 dropped 1.6 percent below pre-COVID levels, according to data from the World Bank, but experts remained optimistic about the recovery of the industry given that personal transfers provide a “critical lifeline” to families in low-income countries.
In fact, in the Middle East, countries such as the UAE and Saudi Arabia remained to be the largest sources of remittances during the year.
Future of remittance
Aside from remittance figures, Chandiramani also highlighted the ongoing developments in the Gulf’s financial technology scene — which includes innovation for the money transfer sector.
“I think in the next three to five years, blockchain is going to be the order of the day. With this technology, the settlement time and cost will come down,” he said.
His company, WorkerAppz, is already using blockchain technology in some of the markets they serve — but its real potential will rely on banks and governments joining the system.
“While some banks in the Philippines, India, Pakistan, and Nepal have gone on blockchain, you require the entire system to follow suit — that’s how it would really show the advantage of blockchain,” he explained.