Remittance narratives

The central bank’s recently launched survey of overseas Pakistanis to assess recent trends and prospects for remittances couldn’t have come at a better timing. The unexpected rise in worker remittances, despite Covid-19 or because of it depending on which narrative one ascribes to, has gotten the attention of all and sundry from the business and economics community. But as far as narratives go, this year’s remittance narrative is perhaps the most imaginary of all economic narratives in Pakistan’s economic history. Or perhaps mythical since myth is defined as something unsubstantiated by facts.

Those bent on selling the positive narrative, including the government and its cheerleaders, point to greater incentives to remit money as real estate activities have reportedly picked up following the PM’s construction package. Then there are those who assert that because of travel ban in earlier part of CY20 and low frequency of travel since then, hawala/hundi industry doesn’t have cash carriers, which is why smugglers have to eventually resort to official channels.

Some even say that the government has taken drastic measures to curb smuggling, which is leading to higher remittances, which quite obviously seems non-sensical since reduced smuggling should lead to increase in import rather than remittance. Of course, the Pakistan Remittance Initiative would like to take some credit as well but no evidence of it is ever provided.

Those who are not as cheerful about remittance outlook argue that the increase in remittance is temporary, largely because of the savings being sent by workers who are forced to return to Pakistan after having been rendered jobless abroad. If that is indeed the case, then Pakistan’s total remittance potential is shrinking. The increase in remittance is also being attributed to greater need to send money back to families since the pandemic has impaired lives and livelihoods here at home.

Both sides of the rhetoric, however, appear to have camouflaged that what we don’t know about labour migration and remittance is far more than what we know. Frankly, the only thing one knows about remittance is gross labour migration data (since the board of emigration doesn’t record data of returnee workers) and total remittance flows. The central bank, according to sources, does have enough dataset to have some sense of average transaction size but those numbers aren’t revealed, because obviously it is some kind of national secret revealing which might put national security under threat.

Which narrative one ascribes to, it would be well to reflect on the assertion worth repeating: we don’t know about labour migration and remittance is far more than what we know – implying that none of these narrative have enough evidence to be substantiated, which is unfortunate considering that labour, not textile, is Pakistan’s biggest exports. (See BR Research’s Pakistan’s economic stepchild, Jan 13 2020)

Instead of harping and regurgitating unsubstantiated narratives, stakeholders would do well to muse over the governance and administration of labour exports. For instance, consider that overseas migration is a federal government subject with its various agencies and organisations to regulate and monitor labour migration, whereas education and development of vocational skills is a provincial subject. Or consider the view that the PRI be made an autonomous institution or a part of a government division responsible for remittances, rather than just being an initiative, which would access and maintain complete data related to remittance transactions. If these arguments resonate with you; you will hopefully discuss it with other stakeholders and demand more evidence before believing or selling narratives.