UAE expat remittances surge during festivals

The UAE is the third largest sender of remittances in the world and the second largest within the GCC.

Special occasions such as the Holy month of Ramadan and the Eid break that follows are a time of celebration for the whole family. For expatriates in the UAE, who are away from their families, the occasion is perfect for sending money to their relatives and friends.

"Festivities and culture are the strongest aspects that connect expats to their homeland. Even though they may not be physically present, expats working and living overseas play their parts during festivals by sending money back home for their families to partake in the traditions of these festivals. During Ramadan especially, we see a typical surge in remittances. Last year, we saw a 15 per cent increase in remittances during the Holy month of Ramadan," said Sudhesh Giriyan, COO of Xpress Money.

Promotions
Like Giriyan, Promoth Manghat, CEO of UAE Exchange, noted that remittances increased during Ramadan.

"The highly competitive remittance market [in the UAE] offers customers various promotions with opportunities to win exciting prizes for sending money home. These promotions too play a major role in encouraging expatriates to send more money home during the period," he said.

The UAE is the third largest sender of remittances in the world and the second largest sender within the GCC. In 2015, the UAE sent approximately $29.5 billion to different countries across the world.

"Over the last few decades, the UAE has been an attractive destination for expats looking for lucarative career opportunities. Today, its advanced infrastructure, booming economy and thriving business environment continue to attract talent from across the globe. Increase in remittances is directly proportional to the increase in migration. Therefore, we will continue to see a sizable increase in remittances sent from the UAE this year as well," said Giriyan.

Remittances from the UAE to the South Asian Region (SAR) have always shown an upward trend. As per the World Bank, India, Bangladesh, Philippines, Pakistan, Sri Lanka, Indonesia, Egypt, Jordan and a few other Arab countries are among the top remittance receiving nations. Out of these, India continues to be the largest receiver of remittances.

"An interesting trend that we have noticed across nationalities is the increase in remittances during the festive time in their home countries. Irrespective of where they come from, sending more money for festive celebrations is one aspect that is commonly seen across different nationalities," noted Giriyan.

"Based on a recent survey that we conducted among Arab expats across multiple nationalities, 71 per cent of them send money back home, with 38 per cent sending money home at least once a month, and another 32 per cent sending money at least every two to three months."

On an average, he said, Arabs are also likely to send more money home, with figures showing expat Arab remitters based in select GCC countries regularly transferring amounts in the $700-$1,000 range.

"If we categorise our customers based on their job profiles, the blue collar workers remit about 70 to 80 per cent of their salaries every month, which is approximately in the $200 to $300 range. White collar professionals on the other hand, do not remit money very month but wait for certain occasions and remit larger amounts of money, either during the festival season or when their home currency is weak and they get more money for the dirhams that they send," he explained.

Favourable exchange rates
"While many other countries experienced a slowing down in money transfers due to the oil price slump and volatility in global currencies, remittance flow from the UAE remained robust," said Manghat. "This was due to a stable economy backed with strong governance. Expatriates took advantage of the favourable exchange rates due to weaker South Asian currencies against the strengthening US dollar, spiking remittances."

In 2015, UAE Exchange handled $13.40 billion as remittances from the UAE, which was 6.55 per cent above 2014.
Meanwhile, large projects across the UAE are attracting migrants from developing nations, leading to further increase in remittances. With the economy steadily gaining strength and rising growth pattern, Manghat said the UAE Exchange is cautious yet optimistic about 2016.

Manghat also noted that there is increasingly growing awareness about the importance of financial inclusion. Governments in countries such as India, Pakistan and Egypt are coming up with initiatives to encourage expatriates to use formal channels for remittances, thus contributing to the respective nation's exchequer.

Regulators and service providers are working closely with a strong agenda to reduce the cost of remittances, encourage formal remittances and strengthen the financial system as a whole.

These aspects, he revealed, have helped in encouraging expatriates to shift to formal channels such as authorised exchange houses or banks to transfer money home.

"Technological advancements like transferring money through online or mobile further add to their convenience; so lately, the trend shows more people switching to formal remittances through cash to card, cash to bank, online or mobile channels to send money home."

- rohma@khaleejtimes.com

Rohma Sadaqat

rohma@khaleejtimes.com