Diaspora Briefings
Perspective: “The Future of the Remittances”
Date: 30/03/2021
0 Views

According to the latest data of the World Bank, both Kosovo and Albania are highly dependent on remittances, receiving more than 15% and 10% of GDP on an annual basis respectively. Therefore, it was important to understand the past trends about remittances, before talking about the future.

Mr Banka, a Financial Sector Specialist at the World Bank in Washington, DC, talked more about the importance of the remittances and gave a snapshot of the current situation. Mr Banka mentioned that remittances had become a very important topic to discuss since they have overcome other income flows such as Foreign Direct Investment, Official Development Assistance and in some cases, even Net Exports. He also mentioned some of the main channels used for remittances such as Money Transfer Operators (MTOs) and in-person transfers by mentioning the case of Italy which is a neighbouring country, and it is easy to travel to Albania and send the money in-person. 

Ms Plaza, a Senior Economist in the Finance, Competitiveness and Innovation Global Practice of the World Bank, who is also the co-chair of the Diaspora Thematic working group discussed more in-depth about the trends of the remittances in the developing countries by focusing on Kosovo and Albania. She mentioned that before talking about the future of remittances and on what can be done, it is important to understand the context of each country. Ms Plaza showed that Albania has a quite high emigration rate, relative to its population, at 43%, and a total emigrant population of about 1 million, and this is important to understand for the type of products that countries create for the diaspora. Similarly, Kosovo has 500,000 emigrants who are about 30% of its population. Also, Ms Plaza mentioned that the destination from where the remittances come is of high importance as well and 88% of the remittances in Albania come from Greece and Italy while in Kosovo 94% come from Germany and Switzerland. The interesting part to see was the trend of both countries which were very similar in the last 15 years. 

Ms Plaza showed that there were some fluctuations because of the past crisis; however, due to time constraints, there was not much time to discuss in-depth why Kosovo and Albania had a decrease in volumes of remittances in certain years. Ms Shkodrani as part of EasyPay SHPK, in the position of Chief Operations Officer, shared the trends of remittances in Albania by also mentioning that there was a decrease of remittances in 2013 and then they had a continuous increase up to 2019. The previous fluctuations indicated that the sustainability of this source of finance is questionable; however, Ms Shkodrani shared that they had positive expectations on the trends of the remittances since 2013 and especially after the high increase in 2019. 

Reducing the costs of remittance is a vital element of the Financing for Development strategy. This issue has been incorporated as a target in the Sustainable Development Goals, which aims to reduce the cost to less than 3% and to eliminate remittance corridors with cost higher than 5% by 2030. Both Ms Plaza and Mr Banka mentioned that the costs of transferring money are very high in Kosovo and Albania compared to other countries in the region, especially after COVID19 pandemic. Therefore, it is important to understand why the remittance costs are very high in Kosovo and Albania even if the money is travelling from the neighbouring countries, and what should be done to reduce the costs. There is a need to increase competition on the service providers, and since of the lessons learned from the pandemic, there is a need to start shifting to more digitized services. However, Ms Plaza stated that not always the digital services are the fastest in certain countries since it depends on the payment system of that country. 

Despite the stable flow of remittances to Kosovo and Albania, they marked a decrease in the last global economic crisis. Therefore, it remains to be seen how the effects of the pandemic crisis are to be manifested in economies where our diaspora is concentrated (Italy, Germany, Switzerland, and the US) to have a more thorough assessment for the remittances this year and over the medium-term.

All panellists agreed that the pandemic had an impact on remittances directly or indirectly. Ms Plaza stated that it is hard for organizations and institutions to predict the impact of the pandemic on the volume of remittances, especially for Kosovo and Albania since there is a lack of high-frequency data. I agree with this point since data collection is key for policymakers, especially since the volume of remittances in Kosovo and Albania are important for economic stability. Also, Ms Plaza and Ms Shkodrani stated that the impact of the pandemic was greater from April-June when a lot of business had to close due to lockdown and distance, and there was a recovery in the July-September because of slight recovery on employment levels. Ms Shkodrani mentioned that EasyPay-Ria Money Transfer experienced 2.5 times higher remittance inflow in September 2020 compared to last year. 

Most importantly, all panellists mentioned that there was a shift to formal channels during pandemics since emigrants were not able to travel and send money in-person. Nevertheless, Mr Banka stated that since MTOs and other formal channels were not considered essential before the pandemics, this presented many lags in the flow of the remittances at the beginning of COVID19 crisis. Therefore, the choice of the remittance channels was limited, especially when many emigrants who send money back home had to go through customer due-diligence requirements remotely and many service providers in developing countries were not prepared for that. 

Digital remittances are contributing to broader financial inclusion and financial integrity objectives. For instance, mobile money represents a powerful tool to digitize large flows of informal transfers. Mobile money can foster financial inclusion for both remittance senders and recipients, allowing them to join the digital financial ecosystem and to access a broad range of digital financial services beyond remittances. However, Mr Banka mentioned that this could become a challenge for migrants since some do not have proper documentation, therefore do not have access to digital financial services. In addition, MTOs need to collect identity documents remotely and make sure that customers are protected against financial crime and fraud and comply with many international regulations. 

The part of digitalization was mentioned by Ms Shkodrani where she stated that EasyPay is one of the leading financial institutions in Albanian that are working in that direction even though there are still a lot of barriers, mainly because the Albanian society is highly attached to cash and transfer money physically. Therefore, what MTOs in Albania and Kosovo are trying to do is to educate the customer on how to use the digital wallet, even the underserved and vulnerable population. I fully agree with Ms Shkodrani that both countries need to find tools on how to educate people on digital financial services through mass media communications, tutorials, focus-groups, etc. However, as Ms Shkodrani mentioned, to reach a high-level of digital financial services, there is a need for better cooperation between all financial actors including banks. 

Ms Plaza also gave valuable inputs with regards to the digitalization of remittances, and she pointed out that countries need to declare remittance service providers as essential services. She also stated that there is a need for simplification for Anti-money laundering – combating the financing of terrorism (AML/CFT) requirements to mitigate the factors that prevent customers from using digital financial services for remittances. In addition, it is important to improve the financial access in receiving and sending money for the vulnerable population as mentioned by other panellists as well. Lastly, Ms Plaza stated that the Central Bank needs to assess the usage of electronic know-your-customer (eKYC) for the online opening of payment accounts which can make the process of usage of digital financial services easier. 

The panel was very consolidated and informative, and all the panellists had expertise and were highly informed on the topic and on the next steps that should be taken. I wish we had more time to expand more on the policy-side that both countries should take in regard to the future of remittances.

This panel took place after the outbreak of the coronavirus, which was good timing to brainstorm about the impact that the crisis had on the flow of remittances as well as about the opportunity it created with regards to the digitalization of remittances and the decrease in the cost of transfers. 

 

About the author: Hana Bacaj is an experienced Research Analyst with a demonstrated history of working in the development sector. Skilled in Economic Development, Data Analysis, Analytical Skills, Quantitative Research, and Development Policy. Strong research professional with a Master’s degree focused in Economic Development from Vanderbilt University.

latest
Related News
Explore the latest developments, initiatives, and discussions shaping advocacy and diplomacy within the diaspora community.
Diaspora Briefings
Youth and Student Organization and Networking in the Diaspora
The organization and networking of Albanian youth and students in the diaspora has been and remains the foundation of community organization in the diaspora and the source of activism for the country of origin. Young people and students in the diaspora play an important role in intergenerational relations within the diaspora and in links with organizations and institutions in the homeland. Despite this great potential, a series of structural, social, and political challenges currently limit youth and student organization in the diaspora. The lack of coordination and institutional support, communication problems, and "space-time" barriers make it difficult for youth to collaborate and build sustainable networks. This limits the impact they can have on the community and their connection to their country of origin.   Current Challenges Albanian youth and students in the diaspora face a number of challenges that hinder their sustainable organization and effective networking. One of the most noticeable problems is the lack of sustainable structures in areas where there has been no tradition of community organization. Although interpersonal connections exist and students often maintain contact with each other, the lack of a shared entity or platform makes it difficult to coordinate activities and projects. Individual efforts often remain fragmented and fail to have the desired impact on the community or on links with the homeland. In some cases, even where there are community associations and organizations, their structure is often weak, and the lack of institutional and financial support exacerbates the situation. In some countries, such as Switzerland, the diplomatic representations of Albania, Kosovo, and North Macedonia have played an important role in supporting student communities. But in other countries, diaspora representations have been reported as often having no right to participate in public activities, leaving organizations without a trusted institutional partner. Moreover, the lack of financial support from Albanian entrepreneurs and individuals, as well as from state institutions, has created significant gaps in financing projects and activities that could help the community. This situation also appears in the case of Albanian schools in the diaspora, which often operate with limited resources. Another important challenge is the impact of politics on student associations and organizations abroad. The involvement of political parties from Kosovo and Albania has created a polarizing and fragmented environment, often resulting in strong divisions that hinder joint activities. Various associations have become arenas for political party support, pushing away young people who want to contribute independently. An example is the association in Geneva, where its members were closely linked to a political party. This association not only temporarily removed the terms "apolitical" and "nonpartisan" from its statutes but also continued to use the organization's social platforms for political activities, even after the departure of its members. Similar situations have been reported in Lausanne and in the Albanian student federation in Switzerland, where political divisions have hindered cooperation and created an unsafe environment for organizations aiming to maintain an independent and unified stance. Additionally, divisions between Albanians from different regions of the nation represent another challenge. Albanians from North Macedonia, the Presevo Valley, Montenegro, and Cameria often feel left out by Albanians from Albania and Kosovo. This feeling of exclusion comes from the lack of their inclusion in activities by organizations or any institutional support addressing them directly. This challenge highlights the need for a more inclusive approach from all parties to ensure that every Albanian, regardless of regional origin, feels part of a common and equal nationality.   Creating a Unified Platform The role of technology is a very important theme for the diaspora. A large number of Albanian students are oriented towards information technology (programming, engineering, etc.), and it is in the national interest to use their skills as solutions to our challenges. Technology can help overcome geographic and time barriers. Using digital platforms and mobile applications can facilitate collaboration between Albanian students in different countries around the world. A great example of organizations that have created virtual platforms to support students worldwide is "NAYORA" – The National Assembly of Youth Organizations of the Republic of Azerbaijan and the Lithuanian World Youth Association "Pasaulio". Through these platforms, these organizations have built communication and collaboration bridges, offering educational resources and support for youth, no matter where they are located. These initiatives have helped strengthen connections between students and promoted equal access to global educational opportunities. Furthermore, Albanian organizations also used virtual platforms during the pandemic for national and cultural activities, bringing Albanians together in a virtual environment. However, technology is not a sole solution. The lack of a unified platform for all Albanian students in the diaspora remains a major barrier. A mobile application dedicated to networking and coordination would be extremely useful in uniting Albanian youth around the world.   Recommendations To address the challenges of youth and student organization in the diaspora, here are several concrete recommendations that can contribute to strengthening networking, collaboration, and the positive impact of Albanian youth and students in the diaspora:   Creation of a Unified Platform for Albanian Youth and Students in the Diaspora: One of the main challenges identified is the lack of a sustainable and inclusive structure that unifies the efforts of young people. Therefore, it is vital to create a unified platform that will serve as a forum for all Albanian youth and student associations. This platform should: Allow the sharing of experiences and resources. Create spaces for the development of joint projects and activities that strengthen academic, social, and cultural ties. Provide opportunities for members to meet (even when traveling in a city).   Development of a Mobile Application and Digital Platform for Albanian Diaspora Youth Networking: To overcome geographical and time barriers, a mobile application could serve as an effective solution for bringing Albanian youth into a shared space. This application should offer: Easy registration for Albanian students and youth worldwide. Space for virtual events, thematic discussions, and sharing experiences. Opportunities for professional, academic, and social networking. Features that allow collaboration on joint projects, resource sharing, and building strong connections with countries of origin.   Preservation of Organizational Independence from Political Influence: One of the major problems identified is the interference of political parties, which has led to the polarization of associations and weakened cooperation among youth. To prevent this, it is recommended that: The statutes of student organizations clearly emphasize political neutrality and prohibit political interference. Oversight mechanisms be created by parent organizations to ensure the independence of associations and new organizations. State and diplomatic institutions provide support but maintain a neutral political stance in relation to these organizations.   Increasing Inclusion of Albanians from All Regions (Albania, Kosovo, North Macedonia, the Presevo Valley, Montenegro, and Chameria): To address divisions and feelings of exclusion among Albanians from different regions, it is essential for organizations to be inclusive. This can be achieved by: Creating internal rules that promote diversity and inclusion. Providing equal opportunities for all Albanians, regardless of regional origin. Undertaking special initiatives to encourage the participation of Albanians from North Macedonia, Montenegro, and Chameria in national and international activities.   Encouraging Academic Links through International Programs like Erasmus+: International programs such as Erasmus+ can play a key role in strengthening connections between Albanian students in the diaspora and institutions in the countries of origin. For this: Albania and Kosovo should intensify efforts to involve more Albanian students in these programs. Student associations in the diaspora can create partnerships with local universities to promote opportunities for academic exchanges.   Drafting a Manual for New Organizations: The establishment of new organizations often faces numerous challenges. To ease this process, a manual or guide could be created containing: Recommendations for structuring and managing associations. Guidelines for accessing financial support and resources. Proposals for ways to collaborate between existing and new associations.   Raising National Awareness for Youth in the Diaspora: To avoid divisions and the sense of "marginalization," it is crucial that every organization, institution, and individual works to promote a sense of national belonging. Activities and projects should emphasize common values and traditions, encouraging greater unity among Albanians. These recommendations offer a comprehensive approach to addressing the challenges and leveraging the extraordinary potential of Albanian youth in the diaspora. Through cooperation, organization, and sustainable support, these initiatives can have a strong and lasting impact on the development of the Albanian community both within and outside the country. Co-authors: Arbër Gashi, Representative of the "Shoqëria e Re" Association, Switzerland. Andi Zhaveli, President of the Albanian Student Organization "Vlera," Belgium. This article was created with the support of the regional project “SMART Balkans – Civil Society for Shared Values in the Western Balkans” implemented by the Center for the Promotion of Civil Society (CPCD) in collaboration with the Institute for Democracy and Mediation (IDM) and the Center for Research and Policy Making (CRPM), and financially supported by the Norwegian Ministry of Foreign Affairs (NMFA). The content of this article is the responsibility of the authors alone and does not necessarily reflect the views of the Norwegian Ministry of Foreign Affairs (NMFA).
Date: 03/12/2024
0 Views