Amna Puri-Mirza
Research Expert covering the Middle East
Remittances from the GCC - statistics & facts
After the United States, the Gulf Cooperation Council (GCC) countries are among the leading senders of migrant remittances. The discovery of oil and gas reserves on the Arabian Peninsula, followed by the independence of Qatar, Kuwait, Bahrain, Oman, and the United Arab Emirates (UAE) during the middle of the 20th century, led to a strong influx of foreign workers. The majority of those foreign workers hailed from the South Asian subcontinent, followed by other Asian and African countries. Sending back remittances was a leading reason for those foreign workers to pick up work assignments in the GCC region. Today, the workforce of the GCC region consists of over 70 percent of migrant workers.
Sending money back home
The leading concern of foreign workers worldwide has always been how to safely transfer their remittances to their family and dependents in their country, through cross-border payments. For a long time, the practice of the “hawala system” was quite common for workers from South Asia and other Muslim countries to transfer money back home. For a transfer, they would hand cash to a “hawala broker” in the country they were currently residing. That “hawala broker” would then contact a second “hawala broker” in the foreign worker’s home country and task him to hand over an agreed-upon amount in the local currency to the foreign worker’s family. However, this custom had no regulation or legal construction in any of the countries and involved many risks. Therefore, this transfer system was also outlawed in many Western countries.The impact of fintech on the future of remittances
Money transfer services, such as Western Union, have been regarded as a safe and fast alternative for hawala and bank wires for quite some time but also come with a high transfer cost. Fintech products have revolutionized the transfer of remittances in quite a short period. Digital remittance payments meant a fast transfer of money with a lower transfer cost.Global outlook on remittances
Remittances are an important financial matter, not only in the Gulf Cooperation Council region but globally. Through globalization and the international movement of labor, cross-border money transfers have increased exponentially. You can find out more details on this topic in our current report on global remittances.Amna Puri-Mirza
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Sep 30, 2024
Amna Puri-Mirza
Research Expert covering the Middle East
