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Pakistani Rupee wrapped with care

Overseas Pakistanis are remitting more than $1.5 billion a month, making a significant contribution to the lives of their families and bringing about a socio-economic change

Had I not come to the UAE, my children wouldn't have received the same level of education and care they did," an elderly taxi driver Mustafa told me on my way to work one morning.
The soft spoken, silver-haired Pakistani has remitted money to his hometown Sialkot every month for the last three decades. "Dubai has helped me raise two sons and a beautiful daughter Saba. Everyone is settled; now I can return," he said with a smile, content with himself on fulfilling his responsibility as a son, husband and a father.
Mustafa is among the large Pakistani diaspora who had left the warmth and comfort of homeland to find better economic opportunities elsewhere. He, like many others, has worked diligently to provide better living standards at home.
The numbers
The World Bank estimates more than 247 million people, or 3.4 per cent of the world population, live outside their countries of birth. The Migration and Remittance Factbook 2016 produced by the World Bank notes as of 2015 international migrants are expected to have sent $601 billion to their families in their home countries, of which developing countries like Pakistan received $441 billion.
"At more than three times the size of development aid, international migrants' remittances provide a lifeline for millions of households in developing countries. In addition, migrants hold more than $500 billion in annual savings. Together, remittances and migrant savings offer a substantial source of financing for development projects that can improve lives and livelihoods in developing countries," says Dilip Ratha, co-author of the report.

In case of Pakistan, more than six million Pakistanis live and work abroad. Between July 2015 and January 2016, they have sent an estimated $11.2 billion - a marked increase of about 6 per cent compared with July 2014 to January 2015. The State Bank of Pakistan expects remittances to cross $20 billion this financial year, the highest ever. The expectations are in line with the World Bank's calculations that place Pakistan on the eight rung among the top 10 recipients of remittances this year at $20.1 billion.
"The inflows from remittances (at current levels) now fully cover the country's petroleum imports. Currently, international remittances are moving 6 per cent of the total GDP of Pakistan," says Rizwan Wyne, a Pakistan-based expert on international remittances from Middle East to South Asia.
UAE-Pakistan: A top remittance corridor
The UAE is among the favoured destinations for Pakistanis looking at better economic opportunities, and is credited with being one of the top destinations for remittances to the country.
The World Bank estimates more than 1.5 million Pakistanis live in the emirates, which is almost the one-fifth of the total Pakistanis living outside their home country. This UAE based diaspora is estimated to have sent $5 billion to Pakistan - almost a fourth of the total remittances received by the south Asian nation.
Remittances from the UAE increased 9.24 per cent to $2.48 billion on a year-on-year basis. Inflows from the UAE had registered the largest increase of 26.1 per cent from any major remittance-sending country in 2014-15, data from the State Bank of Pakistan shows.
In the first seven months of the current fiscal year, remittances from Dubai surged 39.71 per cent year-on-year. But the figure for overall inflows from the UAE so far has remained subdued because of a 25.6 per cent annual decline in remittances from Abu Dhabi over the same period.
 Pakistan Remittance Initiative
Pakistan Remittance Initiative (PRI), a joint initiative by the State Bank of Pakistan, Ministry of Finance and Ministry of Overseas Pakistanis, deserves approbation for channelising remittances to the country. "The PRI initiative was taken in 2009, and since then we have seen remarkable increase in remittances to the country. At that time, remittances accounted for as low as $6 billion due to the aggressive use of illegal means such as Hundi and Hawala. However, this government initiative reduced bad practices and made remittances cheaper too," says Wyne.
Pakistan government has encouraged the use of formal channels by incentivising companies and exchange houses and making transactions above $200 fee of charge. "Company such as XM, IME, and PMT, or exchange houses like Al Fardan Exchange Qatar, Al Fardan Exchange UAE, Federal Exchange, UAE Exchange, Al Ansari Exchange, etc. that are registered with the State Bank of Pakistan (SBP) as PRI-operated companies are given a rebate of 20 Saudi Riyals (Dh19.5) by the central bank. So they do not charge for remittances above $200. For transactions lower than $200 (Dh735), the standard charge is Dh15 for remittances from the UAE," adds Wayne.
The average ticket size of remittance from the Middle East to Pakistan is about PKR 40,000 to PKR 50,000 (Dh1,400 to Dh1,750) and average ticket size from the EU to Pakistan is PKR 60,000 (around Dh2,000).
Pakistanis based in foreign countries sent home $18.4 billion in 2014-15, which is a marked increase of 16.5 per cent annually.
Saudi Arabia is by far the largest source of remittances in the world for the country. During the July to January period, Pakistan received $3.4 billion from the largest Middle East economy, up 8.2 per cent from the corresponding period of previous year.
Socio-economic change
 "Migrants' remittances to their country of origin represent a major vehicle for reducing the scale and severity of poverty in the developing world. Besides pure monetary gains, remittances are associated with greater human development outcomes across a number of areas such as health, education and gender equality. The money acts as a lifeline for the poor, increasing income for individuals and families. Research on the impact of remittances in particular settings shows effects as lower school dropout rates and increased average birth weights for children born to remittance-receiving families," wrote Ratha in The Impact of Remittances on Economic Growth and Poverty Reduction.
A study from rural Pakistan suggests that temporary migration is associated with high school enrolment among sending households, especially girls. Another research paper on the Socio Economic Impact of Foreign Remittances on the Household in Rural Areas of Pakistan suggests that families receiving regular money had better standards of living, bought better food for family, and overall exhibited more confidence in their living style.
Statistically, Pakistan has made substantial progress in reducing poverty. The headcount poverty, according to World Bank staff calculations, fell nationally from 35 per cent in 2002 to an estimated 13.6 per cent in 2011. Reductions in poverty have been strong in both urban and rural areas, and striking. Pakistan now has the second lowest headcount poverty rate in the South Asia, after Sri Lanka at 4 per cent. A large mass of the population moved from just below to just above the official poverty line, which is why small improvements in households' real consumption have translated into substantial reductions in poverty.
The rupees wrapped in care sent by the family members, like Mustafa who work and toil abroad, are making lives better today, and investing in a stronger and more skilled and knowledge population for a better tomorrow. 
suneeti@khaleejtimes.com