NNA - The United Nations Development Programme (UNDP) has launched a comprehensive report on "The Increasing Role and Importance of Remittances in Lebanon" in a press conference held earlier today at UNDP offices in Beirut. The report sheds light on the flow of remittances, their origins, and their use by recipient households over the past decade. It also examines the macro and micro determinants of these flows and their evolving role amid the current financial crisis.
In 2022, Lebanon's remittances stood at 37.8% of GDP, which represents the highest ratio in the MENA region. In absolute value, Lebanon is ranked as the third highest recipient of remittances within the region, after Morocco and Egypt. In contrast, the average cost of sending remittances to Lebanon is one of the highest in the world standing at 11%, which is significantly higher than the global average of 6%, and exceeding the average reported in other countries in the region.
The report also explores the changing role of remittances before and after the 2019 economic and financial crisis. Before the crisis, remittances were used by households to invest in building human capital, such as health and education. Following the outbreak of the crisis, the role of remittances has changed. They are now primarily used to meet the basic and survival needs of recipient households. These needs include food, rent, and electricity bills. Today, remittances in Lebanon serve as a social safety net for these households. In the absence of a well-developd and inclusive social protection system, remittances are used to comepensate, in part, for the losses in the real value of income triggered by currency depreciation and rising inflation.
The report confirms that the steady flow of remittances and other financial transfers (e.g. non resident deposits, diaspora investments and support to communities) indicate a strong connection between the diaspora and Lebanon. This is an opportunity for the Lebanese diaspora to channel these financial flows into investing in local development and recovery initiatives,and to play a pivotal role in reversing development losses and shaping the country's development path.
For remittances to contribute to development in Lebanon, the reportemphasizes the need for an appropriate governing framework to channel diaspora funds, more efficiently, towards local development and recovery initiatives that respond to community needs. The pillars of such a framework consist of: 1) understanding better the magnitude and frequency of financial flows through better definitions and accurate data; 2) restoring confidence in the Lebanese economy by improving the business environment; 3) developing transparent mechanisms for channeling diaspora funds into local investments (diaspora bonds could be an option); 4) facilitating and promoting alternative and affordable solution for these transfers such as digital solutions; and lastly 5) working on reducing the cost of transfers.
" Exploring remittance trends is important for UNDP as they constitute a significant part of the Lebanese economy. The detailed insights gathered from this research provide a clear picture of how remittances are being used and their impact on Lebanese households and the economy at large. Understanding these dynamics allows us to create more effective strategies and policies that can leverage these funds for sustainable development and economic recovery" Melanie Hauenstein, UNDP Resident Representative in Lebanon.
UNDP is working in Lebanon since 1986 as a development partner supporting economic recovery, including working with municipalities to deliver basic services to host communities, promoting clean energy and solid waste management, strengthening governance and rule of law, providing support to elections, and working on empowering women and youth.
The full report on "The Increasing Role and Importance of Remittances in Lebanon" is available for download from the UNDP's website.
=====================
