The digital divide risks leaving millions of rural families in poverty

Despite a massive increase in the number of migrants sending money home via digital transfers due to the COVID-19 pandemic, millions of their rural family members are struggling to access mobile banking services that could potentially affect them. help to get out of poverty. The President of the United Nations International Fund for Agricultural Development (IFAD) calls for urgent investments in digital infrastructure and mobile services in developing countries to ensure that rural families are not left behind.

“Migrants have shown their continued commitment to their families and communities during the pandemic with more remittances made digitally than ever before,” said Gilbert F Houngbo, President of IFAD, speaking on the International Family Remittances Day. “Unfortunately, families in rural and remote areas – where remittances are a lifeline – are struggling to access outlets or even more convenient alternatives such as mobile money accounts. Governments and the private sector urgently need to invest in rural digital infrastructure to solve this problem. “

Mobile remittances increased by 65% last year, reaching $ 12.7 billion. This change was prompted by a shift in cash due to blockages that limited informal channels and social distancing rules for senders and recipients. Despite the global economic recession caused by the pandemic, migrants continued to send money home to their families, with remittances in 2020 reaching 540 billion dollars – a decrease of only 1.6% compared to the previous year

However, in many countries, people living in remote rural areas have limited local access to banking services or limited mobile connectivity. In addition, there is a limited availability of agents offering mobile money services such as cash payments. Often, mobile money service providers are only located in urban centers. This means that millions of the rural poor have to travel long distances to cities, often at a significant cost, to receive the money sent digitally by members of their migrant families.

Digital transfers are cheaper than traditional cash transfers, and mobile banking services also provide an opportunity for migrants and their families in their home countries to access useful and affordable financial products to better manage their finances, including savings, loans and insurance.

Around the world, 200 million migrants regularly send money to their 800 million relatives. It plays a crucial role in their life and livelihood. Almost half of these families live in rural areas of developing countries, where poverty and hunger are highest. Families use the remittances sent by migrant workers to cover basic household needs such as food, shelter, school and medical costs, as well as to start small businesses. These resources can often transform both families and local communities.

“While the pandemic has accelerated the adoption of digital transfers and mobile money accounts, it has also highlighted pervasive gender inequality,” said Pedro de Vasconcelos, head of IFAD’s financial mechanism for remittances. “Research shows that women are 33% less likely than men to have a mobile money account. We need to focus on closing the gap by removing the barriers that prevent women from accessing and using mobile financial services.

Since March 2020, IFAD has been leading a Community Remittance Task Force composed of 41 international organizations, intergovernmental bodies, industry and private sector groups and networks of diaspora organizations to respond to the impact of the COVID-19 pandemic on the billion people directly involved in the shipments of funds.

Among its many recommendations to the public and private sectors, the working group has developed concrete measures to stimulate the digitalization of the remittance market with the aim of boosting the recovery and resilience of migrant families around the world. In line with these measures, IFAD is currently funding private sector mobile solutions that will benefit more than one million people in West Africa alone.

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