As the global landscape of migration and financial flows evolves, international remittances have emerged as one of the most powerful forces driving economic growth and human development.
With an estimated 281 million international migrants worldwide, remittances have surged dramatically, increasing by 650 percent from 2000 to 2022 to reach $831 billion, where a significant portion is sent by expatriates to countries considered “developing” in terms of income, making a substantial impact on their GDPs. In 2022, the number actually surpassed foreign direct investment (FDI) for the first time ever.
A changing landscape
While India, Philippines and Egypt all feature on the top five list of remittance recipients, the remittance landscape has undergone a notable shift, particularly in the Middle East. Traditionally dominated by Western economies like the UK, France and Germany, the dynamics have changed with countries like the UAE and Kuwait rising in prominence by 2020 to join Saudi Arabia’s lofty position as a top remittance source.
This shift, largely attributed to the growing economic influence of these high-income nations, can also thank an increase in labor market opportunities, as well as a welcoming stance towards expat workers of all skill levels.
MENA a top destination
The Middle East and North Africa, in fact, have now become top destinations for international migrants, where not only labor migration, but high-skill migration – on the back of Gulf governments actively working towards attracting and retaining exceptional individuals from around the world – have contributed to overtaking the Asia Pacific region as the go-to destination for jobseekers.
This migration influx has resulted in substantial outward remittances from countries like Saudi Arabia and the UAE, no surprise given the latter’s population comprises almost 90 percent expats. In Saudi Arabia, remittances account for about 4 percent of the GDP, while in the UAE, they make up approximately 8 percent. These figures underscore the critical role these funds play in the economies of the sending and receiving countries.
Saudi Arabia and the UAE are now major players in the global outward remittance market, ranking second and third, respectively. This financial support is not just a lifeline for individuals but also a significant economic force, with research indicating that remittances support various needs, from humanitarian aid and emergency costs, to education and health expenses.
Why speed and security matter
The role of remittances, though, extends beyond regular financial support. A significant portion is sent to help people in immediate crisis, and to cover largely unexpected and imminent expenses, highlighting the essential function of remittances in providing emergency aid. This underscores the need for fast, secure, and reliable money transfer solutions.
High fees and unfavorable exchange rates inevitably pose challenges for those sending money home, however, and there is a pressing need for more transparent and cost-effective remittance solutions to ensure that more people can stay connected with their loved ones worldwide.
Digital shift
This is where digital solutions like Careem Pay come into play, increasingly favored for remittance practices, driven by ease of use and enhanced security. In the UAE and Saudi Arabia, for example, over 50 percent of residents use digital apps rather than the traditional method to send money abroad. These one-stop money solutions facilitate seamless and secure cross-border transactions, acting as a financial lifeline for millions, where digitization has revolutionized how funds are sent and received, offering unprecedented accessibility and efficiency.
Careem Pay’s impact is evident in its ability to process transfers within an average time of just seven minutes, with its users able to send money to a new beneficiary in minutes, compared to the four-hour waiting period required by most other providers. When speed and efficiency are crucial, especially in emergencies, time is of the essence.
The continued shift in migration patterns towards economic hubs like the Middle East is undeniably reshaping remittance flows, demonstrating how local money can empower global economies. Added to the growing digitalization in the region, and coupled with platforms like Careem Pay, this transformation of remittance practices makes it easier and more secure for people to support their families and communities back home.
Remittances from the Middle East, then, are not just financial transactions, nor are they solely the result of successful investments or larger salaries. They are lifelines from every echelon of the employment scale that foster global economic empowerment.
As migration trends continue to evolve and digital solutions become more integrated into our financial systems, the significance of these cross-border funds will only grow, further bridging the gap between economies and enhancing the lives of millions worldwide.
Source: Economy Middle East
