Moroccan Diaspora Remittances Show Resilience Amid COVID-19 Crisis

Several reasons explain this unexpected resilience of MRE transfers to the crisis. Iñigo Moré, a teacher at Berkley and founder of REMESAS.ORG, believes that this 3% drop recorded at the end of July is not at all surprising. "The August statistics will be even more positive," he tells Médias24. He analyzes the evolution of transfers to Morocco. He identifies two distinct phases: the confinement phase in Europe and the post-confinement phase.

"In March and April, MRE transfers experienced a sharp drop. But this is not due to a crisis in demand, but essentially because of the closure of money transfer centers, decided by the authorities of European countries. It was simply difficult to transfer money. I’m talking about the local networks that have practically all closed, and that’s where most of the money transfers take place," he explains. This was the period of total confinement.

MRE transfers recorded an increase just after the reopening of these networks. Thus, the trend experienced a major inflection from the month of May according to the foreign exchange office. The decline was -1.6% in May. From June onwards, there were double-digit increases: +21.8% in June and +14.2% in July, which reduced the 3% drop initiated from March.

According to Mr. Moré, two other elements explain the explosion of transfers from June. There is the "non-return effect". "Every year, there are more than 2 million Moroccans who return to the country with gifts and money that they distribute to their families. Since there was no return this summer, these gifts have been replaced by money transfers," he explains. There is also the impossibility of informal flows that did not enter the official transfer statistics before.

The expert also warns of a drop in transfers from September. "This is a summer gift that Morocco has benefited from, but we cannot count on the continuation of this trend. From September, transfers will resume a downward trend," he says. To somewhat mitigate the effects, he proposes to abolish the monopolies in the money transfer sector. "If we grant more licenses and have thousands of operators, the cost will go down and it will encourage people to transfer more. Digital can also play a role in making transfers less expensive. Now is the time to act on this issue globally," he suggests.