UAE Remittances to Shift from South Asia to Africa

The construction business in the UAE is booming – some locals claim that around 26% of the world’s cranes are currently in the region, particularly Dubai and Abu Dhabi. With oil prices remaining high, the boom looks set to sustain over the next few years and with it, the number of migrant workers is expected to soar. Currently, the population of migrants stands at 70% of the 6 million residents of the UAE and the nation is the 3rd largest sender of remittances in the world.

Traditionally, the migrant workforce has come in large numbers from South Asia into the UAE. Despite in growth in migration to the region, this number may experience slowing growth, and simultaneously, growth in the migration corridor between the UAE and Africa may start to climb. This trend has been already been observed by industry insiders – at the Money Transfers Dubai Conference 2008, Mr Sudhir Shetty, COO of UAE Exchange commented that a larger number of African nationals have been sending money home.

The reasons are manifold – rising inflation, due the UAE Dirhams’ pegging to the weakening dollar, is making life in Dubai and Abu Dhabi expensive, leaving less money for workers to remit. Further, development in South Asia, particularly the Philippines and India, is generating more opportunities at home, where cost of living is also comparatively lower. Additionally, some insiders claim that in a bid to increase cooperation in the region, the government is encouraging companies to obtain visas for certain nationalities.
For companies looking at tapping into the lucrative UAE workers’ remittance market, it may be time to look beyond the South Asia corridor towards the African corridor which is fast strengthening.