SUB-SAHARAN Africa remains the most expensive region to send money to, where sending $200 costs an average of 8.2 per cent in the fourth quarter of 2020, the World Bank has said. Within the region, which experiences high intra-regional migration, it is expensive to send money from South Africa to Botswana (19.6 per cent), Zimbabwe (14 per cent to), and to Malawi (16 per cent).
The World Bank, therefore, disclosed that it is working with the group of developed economies known as G20 countries and the global community to reduce remittance costs and improve financial inclusion for the poor.
The multi-lateral institution which made this known in a report titled: ‘Defying Predictions, Remittance Flows Remain Strong During COVID-19 Crisis’, added that it is assisting member states in monitoring the flow of remittances through various channels, the costs and convenience of sending money, and regulations to protect financial integrity that affects remittance flows.
The average cost of sending $200 to the region stood at 4.9 per cent in the fourth quarter of 2020, the lowest among all the regions.
Some of the lowest-cost corridors, originating in the Gulf Corporation Council (GCC) countries and Singapore, had costs below the SDG target of three per cent owing to high volumes, competitive markets, and deployment of technology.
But costs are well over 10 per cent in the highest-cost corridors. The World Bank report further stated that remittances to Sub-Saharan Africa declined by an estimated 12.5 per cent in 2020 to $42 billion.
The decline was almost entirely due to a 27.7 per cent decline in remittance flows to Nigeria, which alone accounted for over 40 per cent of remittance flows to the region. Excluding Nigeria, remittance flows to Sub-Saharan African increased by 2.3 percent.
Remittance growth was reported in Zambia (37 per cent), Mozambique (16 per cent), Kenya (9 per cent) and Ghana (5 per cent). In 2021, remittance flows to the region are projected to rise by 2.6 per cent, supported by improving prospects for growth in high-income countries.
Data on remittance flows to Sub-Saharan Africa are sparse and of uneven quality, with some countries still using the outdated fourth IMF Balance of Payments Manual rather than the sixth, while several other countries do not report data at all.
High-frequency phone surveys in some countries reported decreases in remittances for a large percentage of households even while recorded remittances reported by official sources report increases inflows.
The shift from informal to formal channels due to the closure of borders explains in part the increase in the volume of remittances recorded by central banks.
According to the World Bank, with global growth expected to rebound further in 2021 and 2022, remittance flows to low and middle-income countries are expected to increase by 2.6 per cent to $553 billion in 2021 and by 2.2 per cent to $565 billion in 2022.
Despite COVID-19, remittance flows remained resilient in 2020, registering a smaller decline than previously projected. Officially recorded remittance flows to low and middle-income countries reached $540 billion in 2020, just 1.6 per cent below the 2019 total of $548 billion, according to the latest Migration and Development Brief.
“As COVID-19 still devastates families around the world, remittances continue to provide a critical lifeline for the poor and vulnerable,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.
“Supportive policy responses, together with national social protection systems, should continue to be inclusive of all communities, including migrants.”
(Nigerian Tribune)
