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Overseas lifelines to decline for Samoan families

Samoan families are predicted to lose out on a substantial portion of their income as money sent home from overseas is projected to fall significantly amid the coronavirus-led economic crisis. 

The World Bank has predicted this week that global remittances are projected to decline by about 20 per cent this year, the sharpest decline in recent history.

The fall in the Pacific region is expected to be slightly less than the international average but still significant at 13 per cent. 

This is largely due to a fall in the wages and employment of migrant workers, who tend to be more vulnerable to loss of employment and wages during an economic crisis in a host country. 

New Zealand is still Samoa’s largest source of remittances, followed by Australia, American Samoa and America.

Data for the 2018-2019 Financial Year shows Samoa accumulated more $530 million tala in money being sent home from overseas. This is a 10 percent increase from the previous Financial year.

 Although this is expected to contract by almost $70 million tala over the next year, according to the World Bank modelling. 

Robert Kirkby, a macroeconomist from Victoria University of Wellington said the distribution of this decline may be felt differently amongst the "average" Samoan family in the form of remittances. 

"With both Australia and NZ looking to loosen their 'lockdowns' in the coming weeks that will certainly be good news for Samoa in terms of remittances," he said.

"I would guess at construction and agriculture to be two major employers [of Samoans in New Zealand]. Construction is set to restart on Tuesday. Agricultural sector has operated right through albeit with difficulty.

"So it is possible that Samoans have already seen the worst in the month just gone in terms of reduced remittances, or it might be that the worst will be over the next few months when Samoans who had intended to go to Australia or New Zealand on temporary visas to work will be unable to do so."

Remittance flows are expected to fall across all World Bank Group regions, most notably in Europe and Central Asia (27.5 per cent), followed by Sub-Saharan Africa (23.1 per cent), South Asia (22.1 per cent), the Middle East and North Africa (19.6 per cent), Latin America and the Caribbean (19.3 per cent), and East Asia and the Pacific (13 per cent).

“Remittances are a vital source of income for developing countries. The ongoing economic recession caused by COVID-19 is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies,” said World Bank Group President David Malpass. 

"Remittances help families afford food, healthcare, and basic needs. As the World Bank Group implements fast, broad action to support countries, we are working to keep remittance channels open and safeguard the poorest communities’ access to these most basic needs.”

According to a World Bank statements , the large decline in remittances flows in 2020 comes after remittances to lower-middle-income countries reached a record US$554 billion in 2019. 

In 2021, the World Bank estimates that remittances to LMICs will recover and rise by 5.6 percent to $470 billion. The outlook for remittance remains as uncertain as the impact of COVID-19 on the outlook for global growth and on the measures to restrain the spread of the disease.  

Last year, the Governor of the Central Bank of Samoa, Maiava Atalina Ainuu-Enari said remittances are not only important to low-income families living below the poverty line, but it has also been an “economic stabiliser” for Samoa. 

One of the major contributing factors to the development of Samoa’s economy is remittances from New Zealand and Australia under the seasonal workers' scheme.



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