Remittances by foreigners majorly contribute to the economy of the country. In today’s world, the boundaries can be crossed by migrating abroad. Many people settle outside their country of birth. The analysis is backed by the latest United Nations Data of Pew Research Center.
What is Inward Remittance?
The word remit means ‘send back’. People that migrate cross borders tend to send their earnings back to their home country, therefore, cross-border money transfer is referred to as inward remittance. Migrants live and work in developed countries. While the world settles in these countries where they get luring compensation for their work, they tend to send money back to their country. Their people, relatives, family deserve a piece of their pie while they are out there getting the best payback for their skills.
In simple words, Inward Remittance is the money received by people of one country from the people who migrated to another country.
There are multiple reasons for inward remittance in a particular country:
- The migrant might send a donation.
- The migrant might have sold a property and sends back the money.
- The migrant works and sends a small amount of its earning.
But, remittance comes with the tax implication that has to be borne by the recipient. The recipient will have to bear a Donations Tax, disclose the nature of the income or prove a certain buyout in South Africa in order to keep the remittance legal.
The remittance can be made using the following channels:
- Bank-transfer also is known as Wire-transfer
- Electronic Payment System
As remittance has become one of the largest sources of income for the people of developing nations. Remittance has majorly affected the GDP of the country, in the same way, industrialization would. So, due to the growing population and the sustained development in the country, the GDP of Africa is at 2.9% of growth in 2019 and can scale up to a percentage of 3.2 by the end of 2020.
The migrants caused the remittances in Sub-saharan Africa to grow from $37.8 billion in 2017 to $39.6 billion in 2019. According to the World Bank, the remittances in Sub-saharan Africa are projected to increase in the coming years. The potential growth in population will cater to migration which then, in turn, will cater to remittances in the region.
The Pew Research Center clearly states that remittances are the major economic asset for developing countries. Therefore, remittance has caused economic changes in countries like Africa and India.