November 12, 2022 21:48:46
It is good to see policymakers, experts and economists agree on the vital role mobile financial services (MFS) can play to increase the rapidly declining remittance inflow through formal channels. As it stands now, it is estimated that around half of all inward remittances are made through illegal channels and this is costing the government billions in lost foreign exchange earnings. Policy makers and experts were on the same page at a recent round table organized by the Economic Reporters Forum, which laid stress on taking immediate steps to encourage our expatriate workers to use official channels that would see their precious earnings take the legal route to Reach the money to their dependents back home.
The country currently has some tried-and-tested MFS, but getting the news to our expatriate workers abroad has not been done. Bangladesh has missions in all the main foreign labor markets where economic migrants work and it is necessary to engage embassy and high commission officials to spread the possibility of using MFS to send their earnings safely to the country. If you look beyond the modalities involved, the issue of the wide gap between what is offered in terms of exchange rate by the government and hundi (unofficial channel) operators must be addressed. Expatriate workers will not be turned away from hundi operators if the difference remains TK 5 to TK 6 against 1 US. it. One way could be to increase the cash incentive to the point that it makes the difference and the cash back process must be instant, ie built into the MFS platform.
The majority of Bangladeshi workers who go abroad are blue-collar workers who are not sufficiently educated. However, they understand smartphones and are generally well versed with digital devices. Smart phones are used to keep in touch with family at home through online voice/video services. This makes the transition to digital payments, such as MFS, easier, if a well-thought-out campaign is designed and executed to make them aware of such a service that only takes a few clicks on their mobile phone devices.
If this can be done, the country will receive an additional $10 to $12 billion in remittances that are currently lost to informal channels. Even if half of the illicit transactions can be brought through formal channels, the remittance basket is to gain at least $5 billion per year. This will be very helpful for the economy. Because as it stands now, the war in Europe has destroyed the purchasing power of European consumers who have less to spend on our primary export products, namely clothing. With a general downturn in the global economy, there was a corresponding loss of exports for the country, and therefore the boost remittances became all the more important.
With forex reserves declining at the rate of about $1 billion per month, it is now a matter of national priority to launch an exhaustive campaign to reach the migrant workers. Without taking into account their issues and tribulations, it will be an uphill task to get them to use formal channels to send their hard earned forex. The inputs received must go into the design of the digital platform that will potentially be used by MFS to channelize remittances to the country.