UAE remittance industry flourishes despite oil slump

Published December 6th, 2015 - 08:30 GMT

Leading players in the $15 billion (Dh55 billion) remittance industry are still gung ho about the growth prospects despite a more than 50 per cent slump in the price of crude oil since 2014, from which most of the Gulf countries derive their revenues.

Over the past 10 years, the population of the UAE has more than doubled from 4 to 9.5 million, which has triggered a strong growth in expats sending money home. With tumbling oil prices, market participants have dismissed concerns of a follow through impact on the remittance industry.

“Despite the drop in oil prices, it has been life as usual for us. Numbers have not dropped for us. We are very gung ho of ending the year on a high note,” Sudhesh Giriyan, chief operating officer at Xpress Money told Gulf News over the phone.

“The UAE would continue to be on the growth path as far as remittances are concerned this year. We [Xpress Money] are growing by double digits year on year. We have not been impacted so far. Our numbers have been pretty decent even now,” said Giriyan, projecting a growth of 15 per cent in 2015.

The UAE is the third largest remittance market in the world behind US and Saudi Arabia.

Xpress Money is present in the Gulf, Middle East, along with the US and the UK among others, and has opened new channels of money transfer.

For Xpress Money, new growth would come in from new channels, new products, and that would ensure higher growth for the firm.

Limited impact

A senior official from Al Ansari Exchange also agreed.

“Despite indications of softening in certain sectors especially those affected by lower oil prices and slow execution of large scale projects, we predict that the impact will be somewhat limited on the remittance industry,” Rashed Ali Al Ansari, General Manager at Al Ansari Exchange said in an emailed reply to questions.

“The majority of remitters residing in the UAE have dependents back home who rely on regular money being sent. Furthermore, our economy here in the UAE has evolved to be more robust and better diversified away from oil compared to the past decades,” Al Ansari said.

Cutting costs

Xpress money has announced a reduction in transfer fees for 8 Sub-Saharan nations, from the UAE, a move that could bring respite and spur growth in the world’s most overcharged market in terms of remittance cost.

Globally the cost of remittance stands at 7.6 per cent, with the peak of 20 per cent in some markets in Africa. Globally the average cost for sending remittances stands at 2.09 per cent for Xpress Money.

“Xpress Money has always been committed to the cause of making remittances affordable for customers, because we are aware of the importance that every dirham holds for our customers. This becomes especially important, when we consider that a lot of these African expats are employed in mid to low income jobs in the UAE,” Giriyan added.

Remittance cost was also the point of discussion at the recent G20 summit.

“The G8 and G20 countries are seriously looking in bringing the costs down,” said Giriyan, adding that India wants to be at a 3 per cent level by 2030, quoting the Indian Prime Minister Narendra Modi.

By Siddesh Suresh Mayenkar

© Al Nisr Publishing LLC 2021. All rights reserved.

You may also like