Lack of Digital Infrastructure Locks Millions of People in Poverty
By Abdi Ali
Published June 23, 2021
Though mobile remittances increased by 65 per cent in 2020, rising to US$12.7 billion, millions of rural people struggle to access the mobile banking services which could help lift them out of poverty.
Gilbert F Houngbo, President of UN’s International Fund for Agricultural Development (IFAD), has appealed to governments and the private sector to urgently invest in digital infrastructure to in the developing world to ensure rural families are catered for.
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Saying that “Migrants have shown their continued commitment to their families and communities during the pandemic with more remittances transfers made digitally than ever before,” Houngbo, who spoke on the International Day of Family Remittances, expressed dismay that “Families in rural and remote areas – where remittances are a true lifeline – battle to access cash outlets or even more convenient alternatives such as mobile money accounts.”
The surge in the growth of remittances in 2020, IFAD says, is attributed to the switch from cash due to lockdowns that limited informal channels and social distancing rules for senders and recipients alike.
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In spite of the global economic recession due to the pandemic, IFAD says, migrants continued to send money home to their families, with remittances in 2020 reaching US$540 billion – a drop of 1.6 per cent compared to the previous year.
Digital transfers are cheaper than traditional cash transfers, and mobile banking services also provide the opportunity for migrants and their families in their countries of origin to access useful and affordable financial products to better manage their finances, including savings, loans and insurance.
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IFAD estimates that some 200 million migrants regularly send money to their 800 million relatives in rural areas of developing countries where poverty and hunger are highest.
These monies are used in covering basic household needs such as food, housing, school and medical bills, as well as to start small businesses.
“While the pandemic accelerated the adoption of digital transfers and mobile money accounts, it also highlighted pervasive gender inequality,” says Pedro de Vasconcelos, the head of IFAD’s Financing Facility for Remittances. “Research shows that women are 33 per cent less likely than men to have a mobile money account. We must focus on closing the gap by addressing the barriers that prevent women from accessing and using mobile financial services.”
