Diaspora inflows to Africa down in 2023 on costly transmission fee
By Alfred Onyango |
According to the global lender, the increased cost took a hit on the inflows coming into the African continent as a whole compared to other developing nations
The cost of sending money home from abroad remained high in the one year period ending December 2023, hitting the continent's remittance inflows in the period under review.
World Bank's latest Migration and Development report says the global average cost of sending $200 stood at 6.4 per cent of the amount being sent, as of the fourth quarter of 2023. This is up from 6.2 per cent a year earlier, or a three per cent increase, and well above the SDG target of three per cent.
Keep reading
In Sub-Saharan Africa, the report says sending the same amount to the region cost an average of 7.9 per cent, almost unchanged from a year before.
In Kenya for instance, this means for every Sh25,800 sent into the country, close to Sh2,000 went to servicing the transmission.
According to the global lender, the increased cost took a hit on the inflows coming into the African continent as a whole compared to other developing nations in other regions.
"Sub-Saharan Africa saw a decline of 0.3 per cent to $54billion in 2023," the report reads.
Comparatively, remittance flows increased most to Latin America and the Caribbean (7.7%), followed by South Asia (5.2%), and East Asia and Pacific (4.8%, excluding China).
"Notably, the countries that are heavily dependent on remittances in SSA include the Gambia, Lesotho, Comoros, Liberia, and Cabo Verde."
The report however paints a positive picture for the continent's inflows prospect this year.
"Flows to the SSA are projected to grow by 1.5 per cent this year."
Nevertheless, it highlights the potential downside risks to the projection, including weaker than expected economic growth in high-income migrant-hosting countries and volatility in oil prices and currency exchange rates.
The lender notes that remittances remain a crucial source of external finance for developing countries, bolstering the current accounts of several countries that often channel them to support their current accounts that help in dealing with food insecurity, drought, supply chain disruptions, floods, and debt-servicing difficulties.
"In 2023, remittances surpassed foreign direct investment (FDI) and official development assistance (ODA)," it says.
Reader comments
Follow Us and Stay Connected!
We'd love for you to join our community and stay updated with our latest stories and updates. Follow us on our social media channels and be part of the conversation!
Let's stay connected and keep the dialogue going!
Latest News For You
