Improving Availability of Official Remittance Channels in Pakistan

Family remittances are the financial support sent by individuals living and working abroad to their families or relatives in their home country. In Pakistan, these remittances hold significant importance. 

According to the State Bank of Pakistan (SBP), remittances from overseas Pakistanis reached a record high of approximately $2.53 billion in March 2023, positioning Pakistan as one of the leading countries in terms of remittance inflow. Remittances serve as a lifeline for many families, especially in rural areas with limited employment opportunities, aiding poverty reduction and contributing to improved living standards. 

In 2022, a significant portion of remittances were from the Gulf region, with a total inflow of $14.99 billion between January and November, as reported by the SBP. The major contributors were Saudi Arabia with $6.67 billion and the United Arab Emirates (UAE) with $5.10 billion.

However, recently, there has been a slowdown in remittance inflows due to the increased use of informal channels for remittances. Experts, such as Dr. Khaqan Najeeb, a former advisor to the finance ministry, suggested addressing this issue by narrowing the gap between formal and informal markets through the implementation of a market-based exchange rate. 

In this context, it becomes evident that families relying on remittances encounter various challenges associated with traditional channels and limited access to banking services. To overcome these hurdles, technological advancements and regulatory support are crucial. 

Innovative digital solutions, such as mobile banking and digital payment platforms, have the potential to revolutionize remittance transfers by offering greater transparency and more efficient transactions. Prominent examples include the Sohni Dharti Remittance Program and Freelance Payments offered by Mobilink Bank’s JazzCash in collaboration with Payoneer.