Sub-Saharan Africa (SAA) remains the most expensive region to send diaspora remittance to, according to estimates from the latest World Bank’s Migration and Development Brief.
The brief states that the cost of sending money around the world “continued to be too high,” as it averaged 6.4 per cent for a $200 transfer.
The most expensive region was sub-Saharan Africa at 8 per cent while transferring money to South Asia cost 4.6 per cent.
“Data reveal that costs tend to be higher when remittances are sent through banks than through digital channels or through money transmitters offering cash-to-cash services,” the World says noting that it is more than double the Sustainable Development Goal target of 3 per cent by 2030.
For example, the cost of remitting from the United States to Kenya amounts to 6.7 per cent, and from France to Cameroon, it is 3.5 per cent.
Consequently, the fee for sending $200 in remittances from Tanzania to neighbouring Uganda would cost the Ugandan migrant 23 per cent (up 100 basis points in the year).
“To keep remittances flowing, especially through digital channels, providing access to bank accounts for migrants and remittance service providers remains a key requirement. Policy responses also must continue to be inclusive of migrants especially in the areas of access to vaccines and protection from underpayment,” said Dilip Ratha, lead author of The Migration and Development Brief 35 and head of KNOMAD.
The report reveals that remittances to low – and middle-income countries are projected to have grown a strong 7.3 per cent to reach $589 billion in 2021.
“This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7 per cent despite a severe global recession due to COVID-19.”
Nigeria dominates remittance inflows into Sub-Saharan Africa given its exceptional size of the Nigerian migrant base in the United States and the United Kingdom.
Despite the Covid-19 pandemic and worsening debt levels, the report says “The broader resilience of migrant-worker remittances in the face of deterioration in economic conditions has been clearly demonstrated in the region.”
For instance, in 2020, remittances recorded strong performances in Ghana (5.9 per cent gain to $4.3 billion), Kenya (9.2 per cent advance to $3.1 billion), and Zimbabwe (31.2 per cent hike to $1.2 billion).