Africa benefits from net positive remittances flows
International remittances has become a major source of foreign currencies for most 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).
Impact of remittances vary 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), 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. 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.
High Cost of Remittance flow within Africa: 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 to and within Africa have been known as the most stable and reliable capital inflows to the continent over the past two decades. Besides, it 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. In line with this, 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): https://sendmoneyafrica-auair.org.
The African Institute for Remittances (AIR) to provide Technical Assistances to African Central Banks on Remittances
The African Institute for Remittances (AIR) on 12 August 2016 concluded in Harare, Zimbabwe, a three-day Consultative and Stock-Taking workshop with African Central Banks, partners and other stakeholders on Remittances in the African Union Member States. The workshop was organized by AIR, with the support of the Reserve Bank of Zimbabwe, aimed at: (1) raising awareness on the Mandate and Function of the Institute and (2) take stock of levels of advancement of AU Member States in their legal and regulatory frameworks and remittances data measurement, compilation and reporting methods so as to define/design necessary programmes for capacity building and technical assistances.
The workshop was attended by 19 National and regional Central banks, representing 25 AU Member States. In his welcoming remarks, the Interim Executive Director of AIR, Mr. Amadou Cisse, recalled the main objectives of the Institute, which are to (1) lower the cost of sending money to and within Africa, (2) improve the remittances data measurement, compiling and reporting systems in the AU Member States and (3) leveraging the social and economic impact of remittances in Africa. Ambassador Olawale Maiyegun, Director, Department of Social Affairs, in his opening remarks, highlighted that remittances, apart from its economic impact, should be seen from the point of view of its significant contributions on improving the livelihood of beneficiary families and as a gateway to financial inclusion agenda in Africa. He drew particular attention to the increasing number of Women as senders of remittances; and as recipients “Women make better use of remittances than Men”, the Director said. The workshop was also addressed by Dr. Mpulo, Director External Reserves Management, Reserve Bank of Zimbabwe.
The workshop was an opportunity for Central Banks and other stakeholders to share their experiences and challenges on remittances data measurement, compiling and reporting systems as well as on remittances markets legal and regulatory frameworks. The workshop also allowed AIR to identify gaps in these areas that would enable the Institute to start engaging a few of African countries towards addressing the main challenges to improve remittances data accuracy and make African remittances markets more competitive and efficient. Going forward, AIR in collaboration with African Central Banks and Partners, will design TA programmes for specific countries where gaps are identified.
African Institute for Remittances (AIR)