Egypt’s remittance inflows defied expectations to grow more than 10% in 2020 despite the shock of the pandemic, a trend that may have been fuelled by the return of expats and high-interest savings products offered by banks, analysts tell us. Central bank data (pdf) released today reveals that remittance inflows rose to USD 29.6 bn last year, up 10.5% from the USD 26.8 bn that entered the country in 2019, showing that inflows held up remarkably well despite most of the world plunging into a recession and GCC economies being rocked by the collapse in oil prices. Remittances grew 7% y-o-y to USD 7.5 bn during the fourth quarter of 2020.

Making sense of the numbers: Official numbers show that worker transfers were more or less unscathed by the pandemic. The only time they fell was at the height of the initial wave of the virus in 2Q2020 when much of the world entered some form of lockdown. The drop at the time (by 10% y-o-y to USD 6.21 bn) was swiftly offset by an 11% increase the following month, and then by solid performance in subsequent quarters (here and here), despite the ominous predictions offered by economists at the outset of the crisis.

Expats could’ve been returning home with their savings: Remittances are highly correlated with global GDP growth, and the fact they grew despite a worldwide recession can be explained by other factors, possibly that many white- and blue-collar workers either lost their jobs and returned home with their savings or were able to come back and work remotely, Pharos’ head of research Radwa El Swaify tells us. The fact that the EGP remained stable through the worst of the crisis and that the government didn’t introduce a full lockdown made people more confident to reallocate their money back home, she added.

NBE and Banque Misr’s high-interest CDs also played a role: The incentive to save is another factor that helped to stimulate inflows, says Arqaam Capital’s Arqaam Capital’s Noaman Khalid. He suggests the uptick in remittances is a repeat of what we saw in 2016, when inflows surged after the central bank hiked interest rates following the EGP float and banks launched high-interest, three-year CDs. Last year, the National Bank of Egypt and Banque Misr introduced 15% fixed-rate savings certificates to help bolster the financial system, attracting EGP 383 bn in inflows.