Remittances to Africa set to decline in 2021
Remittances to African countries are expected to decline 5.4%, from US $ 44 billion in 2020 to US $ 41 billion forecast in 2021 due to the effects of the COVID-19 pandemic, according to Continental Migration Postponement 2021.
The report, titled “African Regional Review of the Implementation of the Global Compact for Safe, Orderly and Regular Migration,” was produced by the Economic Commission for Africa (ECA) in partnership with the African Union Commission (AUC).
It builds on four sub-regional reports compiled by the AUC and a summary of stakeholder consultations at the recently concluded 2021 African regional review meeting on the Global Compact for Migration.
Although the COVID-19 pandemic was expected to result in a decrease in remittances to Africa in 2020, the report’s findings show that by October 2020, remittances to Africa had reached an estimated 78.4 billion. dollars, or 11.7% of global remittances.
Remittances have therefore shown greater resilience and reliability as a source of capital in Africa than foreign direct investment flows.
The report recommends that governments around the world take effective action to facilitate and increase remittances to support the fight against COVID-19 and ultimately build a more sustainable post-pandemic world.
The report also found that the costs associated with sending remittances to Africa are among the highest in the world.
Until very recently, average transaction costs were equivalent to 8.9% of the amount sent for a payment of $ 200.
Regarding the cost of sending money, the report indicates that Africa is still far from reaching the 3% target set in Sustainable Development Goal 10.
The Addis Ababa Action Agenda of the Third International Conference on Financing for Development and indicator 10 (c) of the Sustainable Development Goals predicts that countries should, by 2030, reduce to less than 3 % migrant remittance transaction costs and eliminate remittance corridors with higher costs. more than 5 percent.
It is estimated that remittances constitute about 65% of the income of some receiving countries, and senders spend about 15% of their income on remittances.
For 25 African countries, all of which have large diaspora populations, remittances are the main source of national income.
In response, a number of African countries have taken steps to reduce the costs of remittances.
Some countries are also offering diaspora bonds to investors and have relaxed currency controls to allow electronic and mobile money transfers at reduced costs.
“It should be noted, in this regard, that the use of digital money transfer platforms reduces transfer fees in Africa by 7% on average,” the report states, adding: “Private financial institutions also offer incentives to encourage members of diaspora communities. to use their services, including low transaction fees for remittances, and to facilitate projects initiated by the diaspora, especially in the real estate sector. These measures all promote the financial inclusion of migrants and their families.