World Bank says remittances to Africa higher than rest of world
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E-mail Xinhua, January 29, 2013
The World Bank remittances to Africa were the world's most expensive in 2012, especially in sub- Saharan Africa.
According to the World Bank's Send Money Africa database released in Nairobi on Tuesday, the average cost of sending money to Africa is almost 12 percent higher than global average of 8.96 percent, and almost double the cost of sending money to South Asia, which has the world's lowest prices (6.54 percent).
Massimo Cirasino, Manager of the Financial Infrastructure and Remittances Service Line at the World Bank said governments should implement policies to open the remittances market up to competition.
"Increased competition, as well as better informed consumers, can help bring down remittance prices," Cirasino said.
The Bank's November 2012 study says remittances to sub-Saharan Africa will grow by zero percent in 2012, when remittances grew by 6.8 percent. The upward trend has been reported since 2009.
The region will receive 31 billion U.S. dollars in remittances with Nigeria receiving the most amount of money in absolute terms while Liberia and Lesotho lead in remittances as a share of the GDP.
The Bank's data indicates that the slow-down is not unique to sub-Saharan Africa. Growth in remittances to developing nations will slow down to 6.5 percent against 11.7 percent last year.
In its latest report released on Tuesday, the Bank said bringing remittance prices down to 5 percent from the current 12.4 percent average cost would put 4 billion dollars more in the pockets of Africa's migrants and their families who rely on remittances for survival.
Send Money Africa also finds that banks, which are the most expensive remittance service providers, are often the only channel available to African migrants.
The continent's overseas workers, who sent close to 60 billion dollars in remittances in 2012, pay more to send money home than any other migrant group. The G8 and the G20 established 5 percent as the target average remittance price to reach by 2014.
Gaiv Tata, director of the World Bank's Africa Region and Financial Inclusion and Infrastructure Global Practice, said remittances play a critical role in helping households address immediate needs and also invest in the future, so bringing down remittance prices will have a significant impact on poverty.
"High transaction costs are cutting into remittances, which are a lifeline for millions of Africans," Tata said.
Lower cost remittances also advance financial inclusion, since they are often the first financial service used by recipients, who are then more likely to use other financial services including bank accounts.
Remittance prices are even higher between African nations. South Africa, Tanzania, and Ghana are the most expensive sending countries in Africa, with prices averaging 20.7 percent, 19.7 percent, and 19.0 percent respectively, due to several factors including limited competition in the market for cross-border payments.
A regulatory environment that encourages competition among remittance service providers can help bring down remittance prices. Migrant workers can also benefit from more transparent information on remittance services. Endi
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