Wednesday, August 12, 2020

Expat Exodus In The Middle East

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Vanshita Banuana

Article Title

Expat Exodus In The Middle East

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Global Views 360

Publication Date

August 12, 2020

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A photograph of Dubai

A photograph of Dubai | Source: Fredrik Öhlander via Unsplash

The COVID-19 pandemic has hit people and economies worldwide, sparking a global recession and financially destabilising millions of people. In the Middle East, dipping oil prices have only worsened the threat to the economy. Businesses are shutting down, and many are trying to survive by cutting the salaries or laying off of workers. Large segments of the workers in these countries are expatriates, and many have struggled to make ends meet as unemployment soared.

The development of the Gulf countries has always been intertwined with their large expat populations. These workers are often vital to the economy, not just as part of the workforce but also as consumers by enabling successful malls, restaurants and other forms of recreation and tourism. Countries like Saudi Arabia gain valuable non-oil revenue in the form of increased Value Added Taxes (VAT) and by imposing a monthly fee on migrants who want to sponsor family members.

Many of these workers are from developing Southeast Asian countries such as India and Pakistan, and contribute greatly to their home country’s economy in the form of remittances, i.e sending money back home. Those who are facing unemployment or salary cuts are eager to be repatriated, especially since in many Gulf countries visas, rent, and even phone lines are linked to jobs, and expats have little to no social safety nets to fall back on.

Panicked” Indians applying to go back home crashed the Dubai aviation ministry’s website for applications in the process. The consulate says it has received around 200,000 applications for repatriation of expats from as many as 12 countries.

For some, closing businesses are forcing them to go home. For others, the cost of education is the major concern. The Emirates group, Uber’s Middle Eastern counterpart Careem, and hotels are some of the few major employers considering laying off large portions of their staff or reducing salaries.

Dubai has been one of the hardest hit, as expats form an estimated 92% of the population. Dubai based movers estimate that they’re getting up to seven calls a day to ship belongings abroad. It is extremely hard to gain permanent resident status in countries such as the UAE, and the costs of living and education are quite high and often provided by employers, which has made leaving the only option left for many laid-off workers across all fields.

The UAE has tried to offset the damage by granting automatic extensions to expiring work permits, waiving of work permit fees and fines, and providing interest-free loans and repayment breaks.

Meanwhile, governments in Kuwait and Oman are trying to mould the exodus into an opportunity to boost local employment. On the other hand, the Saudi Arabian government has been criticised for not taking enough measures to protect the local workforce.

While the Gulf countries have been trying to decrease their dependence on oil wealth and foreign workforce, it is not something that can be accomplished soon, especially given the great dependence of the Gulf economies on both those factors.

There is still too unavoidable a gap between the current skill of local workers and the training needed to compete with foreign professionals, making it hard to simply employ domestic workers in place of foreign ones. The pandemic, however, might not leave much of a choice.

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February 4, 2021 4:48 PM

Kenyans turning to mobile loans in times of COVID-19

The economic impact of COVID-19 is felt on the personal finance of people across the world who are looking for ways to tide over the situation. In Kenya, people are lapping the short-term credit in the form of digital loans by mobile money operators. The number of people taking digital loans has doubled during the COVId-19 induced lockdown period.

Boston Consulting Group's Consumer Sentiments Survey conducted in April and May 2020 reported that "In May, 29 percent responded that they had taken out a short-term loan, compared to 16 percent in April. Mobile money operators were the most common sources of this credit”

Kenya is a pioneer in using mobile money transfer services as the key tool for providing financial inclusion to its citizens. A simple money transfer service, M-PESA launched in 2007 has transformed the financial service industry in Kenya. Today mobile money operators are providing multiple services like digital loans, marketplace for small businesses and farmers.

Digital loans are easy to process and disbursed but there are concerns of shaming the defaulters and compromising the data security of clients. The Digital Lenders Association of Kenya (DLAK) which is a body representing the digital lenders of Kenya has distanced from two of their members, Okash and Opesa over unethical practices. These mobile apps have shared the details of defaulting customers with the moneylenders and asking them to recover the money.

DLAK also stated that Opesa and Okash are known for attacking a client's data privacy which is against the Kenyan data protection laws and has additionally spoiled the reputation of digital leaders in Kenya.

In April 2020, Central Bank of Kenya barred unregulated digital mobile lenders from forwarding the names of loan defaulters to credit reference bureaus. A huge number of Kenyans have been recorded on Credit Reference Bureaus by digital money lenders for loans as little as $5.

Central Bank of Kenya governor Patrick Njoroge told during a press conference in May 2020 that the central bank in consultation with the mobile money operators and digital lenders is presently working to develop a model where the borrowers are protected from mistreatment of online moneylenders.

The borrowers are looking up to the regulatory authorities and the industry bodies to come up with a mechanism which will protect their interest in times of such a health and economic emergency.

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