Tunisians living abroad: When money knows no borders

Mohsen is a Tunisian who once lived in France. There he had an accident that left him disabled and unable to work. Then he returned to Tunisia. That was 30 years ago. Today, Mohsen lives between Tunis and Hammamet, receives no support from the Tunisian state and has no source of livelihood except what his brothers and sisters who live in France and Canada send him, which is a monthly amount that barely exceeds 790 dinars. . – It’s sad that I live thanks to the money they send me, but I have no other way – says the man and adds that if it weren’t for them, he wouldn’t be able to survive.

Not everyone who receives financial support from abroad lives in a dire situation like Mohsen’s. Abeer, for example, is forty years old and works as a scientific researcher in Romania, and from time to time sends some money to his mother, who lives in Tunisia, for her birthday or New Year’s Eve or in case of urgent expenses. . “There are 6 of us brothers and sisters, and I am the only one among them who has finished her studies and is working. When I have enough money, I send it to her to make her happy and help her in trouble, because that is my responsibility after all the years of sacrifice she has been through passed,” says Abeer proudly.

For Mohsen and many like him, remittances from abroad are a lifesaver in hard times or unemployment. About 2 percent of Tunisian households rely heavily on this money, while 14 percent of Tunisian households rely on it to some extent, according to Afrobarometer figures.

However, sending money to Tunisia is not free, as it necessarily goes through an intermediary. Abeer, for example, pays a transfer fee of 10 percent of the total amount she sends to her mother: “Last time I paid 80 Romanian lei (about 55 dinars), which is not an insignificant amount.” A transfer sent to Tunisia costs an average of 8.7 percent of the total amount, according to World Bank estimates, which is why many choose to send money through informal channels in the form of goods or cash. Thus, official data do not reflect the total amount of remittances arriving in Tunisia, but at the same time they show the extreme importance of these funds for the country’s economy.

Official data only count transfers that go through official channels. Informal remittances, according to the World Bank, can account for 50% or more of a country’s total remittances. As for Tunisia, the majority of transfers go to the families of residents abroad, either in cash or in the form of goods, while it is estimated that only about 5% of them go through banks.

A stable source of foreign exchange

Remittances to Tunisia have continued to grow unabated in recent years, reaching 7.15 billion dinars by the end of October 2022, which is an increase of 13.5% compared to the same period last year, and more than twice the tourism revenues achieved in the first ten months Current year. Over the past decade, remittances have surpassed both tourism and foreign direct investment, making them one of Tunisia’s main sources of foreign exchange.

In 2021, remittances from expatriates were 28 percent more than in 2020 and alone represented 4.7 percent of Tunisia’s GDP. It is expected that this pattern will continue in the foreseeable future, in parallel with the increase in the number of immigrants and immigrants.

Foreign currency earnings are used to pay off foreign debts and imported goods, and Rafik Al-Salmi, lecturer in Financial and Data Sciences, explains that “all countries in the world, including Tunisia, depend on other countries for imports. This is why every country needs foreign currencies like the dollar.” Either the yen or the euro to save its imports.”

Remittances from abroad are not only larger, but also more stable than other sources of currency, such as income from tourism and foreign direct investment. An unexpected event like the terrorist attacks that the country was exposed to in 2015 or the Covid-19 pandemic enough to hit the tourism sector, killing and damaging its foreign exchange imports.

As for foreign direct investment, it has also declined over the past decade and “is unlikely to return to its previous state in the absence of political stability and economic reform, both unlikely in the short term,” according to the Economist analysis. Intelligence Group. Therefore, transfers are less related to changes in priorities and fluctuations in the financial position of official donors.

Less poverty, better health and education

Studies around the world show that the effects of remittances on the country and on the families that receive them reduce poverty and boost spending on health and education. Remittances for beneficiary families also represent a form of insurance against financial shocks, as they diversify their sources of income.

While the emigration of high-calibres, such as doctors and engineers, can result in what is called a “brain drain”, the remittances issued by these people inversely contribute to supporting a “brain gain”, as skilled expatriates earn more in host countries and thus they send more amounts to their families, who in turn invest more resources in the education of their members. In this way, the immigration of qualified people can contribute to improving the educational level of their family members in the country of origin.

At the national level, remittances from emigrants, men and women, have an indirect positive effect on the labor market. Hajar Habib, a research assistant at the University of Tunis El Manar, writes in one of his articles that “increased consumption and investment resulting from remittances from abroad stimulate domestic production, which can lead to an increase in the employment rate among households that do not benefit from these remittances. “

The rest of the investigation is on the “Inkifada” page.