Sub-Saharan Africa most expensive globally to send and receive money

Sub-Saharan Africa (wardheernews.com)

 

By BOB KARASHANI

The cost of remittances in sub-Saharan Africa was the highest, averaging 8.17 percent in the fourth quarter of 2020 compared with 4.9 percent in South Asia, the lowest average cost.

The cost of diaspora remittances from Tanzania to Kenya and Uganda was among the highest in Africa in the past year, averaging between 17 percent and 21 percent per $200. These were some of the findings of a brief prepared by the Global Knowledge Partnership on Migration and Development for the World Bank.

The report also said remittance flows to the sub-Saharan Africa region declined by 12.5 percent in 2020 — the biggest drop in over a decade — partly as a result of the global Covid-19 pandemic, but mainly attributed to a huge decline in remittances to Nigeria.

The cost of sending money varied widely across corridors in the region with Tanzania-Kenya and Tanzania-Uganda rated among the five most expensive corridors alongside Angola-Namibia, South Africa-Angola and South Africa-Botswana. Remittance costs from Tanzania to Kenya went up to 17 percent in the fourth quarter of 2020 compared with 14.5 percent in the fourth quarter of 2019, while the rise for Tanzania-Uganda was even steeper from 15.2 percent in the last quarter of 2019 to just over 21 percent in the fourth quarter of 2020. The lowest-cost corridors in the region averaged three percent for transfers primarily to the Philippines, while the highest-cost corridors, including Tanzania-Kenya and Tanzania-Uganda, averaged 13 percent.

The decline in remittance flows across sub-Saharan Africa was "almost entirely due to a 27.7 percent decline in remittance flows to Nigeria, which alone accounted for over 40 percent of remittance flows to the region," said the report. It notes that excluding Nigeria, remittance flows to sub-Saharan Africa increased by 2.3 percent, demonstrating resilience at a time of crisis and defying earlier projections. "Strong remittance growth was reported in Zambia (37 percent), Mozambique (16 percent), Kenya (nine percent) and Ghana (5 per cent)." Remittance flows to the region were affected by "restricted mobility measures and the employment situation in the main host countries" resulting from the Covid-19 pandemic.

Kenya was ranked third in top remittance recipients in sub-Saharan Africa in 2020, receiving $3.1 billion to trail only Nigeria ($17.2 billion) and Ghana ($3.6 billion). In East Africa, South Sudan and Uganda were ranked 7th and 9th respectively, receiving $1.2 billion and $1.1 billion apiece and separated by Zimbabwe in 8th position ($1.2 billion).

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The report recommends that remittance support infrastructure to maintain healthy global flows should include efforts to lower remittance fees which continued to average above 6.5 percent in quarter four of 2020.

In current dollar terms, the top five remittance recipient countries in 2020 were India, China, Mexico, the Philippines, and Egypt, with India being the largest recipient of remittances since 2008. The United States was the largest source country for remittances in 2020, followed by the United Arab Emirates, Saudi Arabia, and Russia.