Africa benefits from net positive remittances flows
International remittances has become a major source of foreign currencies for most of African countries and have been found to be more stable and dependable than other forms of foreign currency inflows such as Foreign Direct Investment (FDI) and Overseas Development Aid (ODA). In 2015, African economies received – both from overseas and Intra-African corridors – officially recorded remittances amounting to US$66 billion.
The five top sending countries to Africa are United States (US$ 8,87 billion), Saudi Arabia (US$ 8,36 billion), France (US$ 6,72 billion), United Kingdom (US$ 5,51 billion) and Italy (US$ 3,36 billion).
Intra-Africa Remittances represent 20 percent (US$ 12,8 billion). Cameroon (US$ 2,15 billion), Cote d’Ivoire (US$ 1,66 billion), South Africa (US$ 1,06 billion), Ghana (US$ 1 billion) and Nigeria (US$ 0.9 billion) are also the five top African sending countries to other countries within Africa.
The top ten African remittances receiving countries are Nigeria (US$ 20,66 billion), Egypt (US$ 19,71 billion), Tunisia (US$ 2,35 billion), Algeria (US$ 2,0 billion), Ghana (US$ 2,0 billion), Senegal (US$ 1,61 billion), Kenya (US$ 1,56 billion), Uganda (US$ 1,07 billion), Mali (US$ 0,89 billion) and South Africa (US$ 0,87 billion).
The impact of remittances varies across the continent and compared to GDP, remittances have become very significant in many countries such as Liberia (24.6%), The Gambia (21.2%), Comoros (20.2%), Lesotho (17.4%) and Cabo Verde (10.5%). Though recorded remittances flows to and within Africa are stable and growing, they are still significantly understated as large volume of remittances are being sent through informal/unregulated channels.
The African Institute for Remittances (AIR) to work with key market players to lower the cost of sending money to and within Africa
Remittances transfers is one of the most important sources of external resources in many African countries that has real impacts on lives of millions of recipient families across Africa. However, remittance senders to and within Africa continue to suffer from the high costs of sending money home.
Though significant reductions has been achieved since 2010 where the average cost was above 12%, the cost of sending remittances to and within Africa – according to the data collected during the second quarter of 2016 – are still the highest. Further, the top ten most expensive corridors in the world are all intra-Africa originating from South Africa and Tanzania, both sending mainly to their neighboring countries.
The average cost of sending money to and within Africa, in the second quarter of 2016, was 9%, which was 1.4 percentage points more expensive than the global average transfer costs for the same period and 6% above the target set by the Sustainable Development Goals (SDG) to reduce transfer costs to the level of 3% by 2030.
A key priority of the African Institute for Remittances (AIR) is to lower the costs of sending money to and within Africa, and will engage key market players including regulators, Remittance Service Providers (RSPs), technology providers, and remittance senders and receivers. In this regard, the Institute works towards the improvement of transparency and enhancing competition and efficiency within the remittances market in Africa.
The AIR, in the framework of its Technical Assistance/Capacity building programmes, is working with AU Member States and Partners towards improvement of remittances data measurement, compiling and reporting systems in Africa. The Institute has started consultations with several Central Banks in AU Member States in this regard. A Consultative forum was held in Naivasha, Kenya, in December 2015 followed by a Consultative and Stock-taking workshop in Harare, Zimbabwe, from 10-12 August 2016 and nine Central Banks have already been identified to benefit from the technical Assistance in the 2016/2017 period. In the coming months, AIR will firm up country-specific TA programmes.
The AIR is conducting quarterly surveys on remittances price structures. Collected data are published in the Institute’s remittances price database Send Money Africa (SMA).