.....(Hal-ku-dhigyo Dhaxal-gal Noqday) = ..... President, C/raxmaan A. Cali: ''Jamhuuriyadda Somaliland dib ayay ula soo Noqotay Qaran-nimadeedii sidaa awgeed, waa dal xor ah oo gooni u taagan maanta (18/05/1991) laga bilaabo''...>>>>> President, Maxamad I.Cigaal:''Jiritaanka Jamhuuriyadda Somaliland'' Waa mid waafaqsan xeerasha u-degsan Caalamka! Sidaa darteed, waa Qaran xaq u leh in Aduunku aqoonsado''...>>>>> President, Daahir R. Kaahin: ''Jamhuuriyadda Somaliland waa dal diimuqraadi ah oo caalamka ka sugaya Ictiraafkiisa''...>>>>> President, Axmed M. Siilaanyo: ''Jamhuuriyadda Somaliland, Boqol sano haday ku qaadanayso helista Ictiraafkeedu way Sugaysaa! Mar dambena la midoobi mayso Somalia-Italia''.....[***** Ha Jirto J.Somaliland Oo Ha Joogto Waligeed *****].....

Thursday, June 23, 2011

Changing the financial landscape..'' With Somaliland receiving ...''

The increasing level of money remittances is a key indicator of a strengthening economy

The region's money exchange and remittance companies are quickly adapting to the rising demand for faster, safer and more efficient methods to transfer funds - a phenomenon brought about by the huge increase of immigrant workers worldwide.

In 2010 alone, the global flow to developing countries reached $325 billion (Dh1.19 trillion), according to the World Bank in its May 2011 report ‘Outlook for Remittance Flows 2011-2013.'

The report went on to state that the remittance flows have quickly recovered to pre-crisis levels, after significant dips in 2008 and 2009.

Remittances are expected to grow at a lower, yet steady rate of 7 to 8 per cent annually to reach $404 billion by 2013.

International remittance

Last year, two of the regions that witnessed the highest rates of remittance inflows were East Asia and the Pacific countries at $93 billion and South Asia at $81 billion.

According to the World Bank, these rates are followed closely by India at $53.1 billion, China at $51.3 billion, Mexico at $22 billion, and the Philippines at $21.4 billion. Other countries with significant remittance inflows are Bangladesh, Nigeria, and Pakistan.

The GCC continues to play a significant role as one of the main sources for money remitted internationally. Flows from the GCC to Asia are increasing due to the rise in oil prices, as well as an expanding economic activity in the region, which has buoyed employment growth.

For example, remittances from the GCC to Pakistan and Bangladesh in the first quarter of 2011 have registered one of the highest growth rates since the global economic downturn.

Local impact

This is particularly encouraging for GCC countries such as the UAE due to its huge expat populations.

Remittance companies in the region are witnessing an uptrend in their business after a slower period during the global financial crisis.

"The financial exchange segment was heavily affected by the global economic downturn," says Mohammad Al Ansari, chairman and managing director of Al Ansari Exchange. "This is because remittances are chiefly made by the expat workforce in the UAE with funds that they usually send home to their families."

Al Ansari states that remittance levels have grown from 10 to 15 per cent over the last three years amidst the crisis. "We're now seeing strong signs of recovery and the emergence of a more vibrant economy as reflected in the increase of employment opportunities, the resumption of stalled projects and the large influx of tourists," he says.

Al Fardan Exchange, a renowned brand and a major player in the UAE's money remittance business, has also witnesseda similar trend.

"The years 2009 and 2010 were surely challenging for most industries but we were still able to continue with ourupward business trend even during the recession period," says Zameer A. Punjabi, spokesperson for Al Fardan Exchange. "We opened 16 new branches during that period and we now have 40 branches across the UAE."

He also says that 2011 has seen an improvement with higher growth rates each month. "We're optimistic and believe that it's going to get even better in the third and fourth quarter," says Punjabi.

"The upward trend is in the remittance and foreign currency business," he continues. "We can see a high foreign currency business in our mall branches - the result of increased tourism in the country."

International remittances are highly significant due to the fact that they make up 10 per cent or more of the GDP of at least 21 countries.

Financial assistance

In receiving countries, around 80 to 90 per cent of remittances are used for food, clothing, shelter, health care, education, savings and investments, according to a recent statement by the United Nations Conference on Trade and Development. It stated that international remittance reduces poverty in receiving countries, encourages entrepreneurship the development of a financial infrastructure. As a result, the UAE remains a major source country for remittances to other Middle Eastnations, as well as South and East Asia.

"The UAE is currently made up of an 80 per cent expat population," Al Ansari says. "With this in mind, money outflows are widely made up of remittances sent to their home countries for family maintenance and savings. Also, remittances are made for commercial payments, medical treatments, education, investmentsand tourism."

Al Ansari goes on to explain that since the majority of the region's expatriates hail from countries such as India, Philippines and Sri Lanka, a large chunk of remittances go to these countries.

Punjabi states that money remitted through Al Fardan Exchange is mostly directed to India, Egypt, Philippines, Bangladesh and Pakistan.

"We target a wide range of customers and provide services to customers from any part of the world,"he says.

The diaspora effect

While the top regions that receive money from abroad are in Asia, a close look at its effect on individual countries shows a different picture.

A Gallup study released in May states that about 3 per cent of adults worldwide live in households that receive remittances - either in the form of money or goods - from someone in another country. Results show that in 35 countries, 10 per cent or more report their households get this type of help with these countries primarily concentrated in sub-Saharan Africa.

According to the Gallup report, Somaliland, the Comoros and Zimbabwe have the highest percentage of households that receive money from abroad due to its large migration, with Somaliland receiving around 40 per cent. However, while money flows to sub-Saharan Africa, the Caribbean, Eastern Europe and Central Asia, these levels are still low compared to Eastand South Asia.

The World Bank stated that remittance inflow to countries in South America and the Caribbean reached only $58 billion in 2010, countries in Eastern Europe and Central Asia received only $36 billion and Sub-Saharan Africa received only $22 billion.

TRANSFER BY NUMBERS

3% - The worldwide total of number of households that regularly receive remittances according to Gallup market research

10% - The percentage of the GDPof 21 countries made up by international remittances in 2011

10% - The increase of remittance transactions in the UAE in the past three years, according to Al Ansari Exchange

80% - The amount of the total remittances used for food, clothing, shelter, health care, education, savings and investments according to the UN

By Arno Maierbrugger (Gulf News Report)

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