Remittance flows to sub-Saharan Africa have been projected to decline by 6.8% to $41 billion in 2021, from $44 billion achieved in 2020.
This was disclosed in the Foresight Africa 2021 report, a publication of African Growth Initiatives of the Brookings Institution, a nonprofit organization devoted to independent research and policy solutions.
According to the report:
- “The pandemic has significantly dampened new migration flows worldwide due to widespread travel restrictions, fear of the virus, and weak job prospects. In many host countries, employment levels for foreign workers have fallen, invariably more so than for native-born workers.
- “A significant number of unemployed migrant workers are returning to their countries of origin, which are now facing the challenge of accommodating hundreds of thousands (if not millions) of returnees, including through the provision of health care, housing, jobs, and financial support.
- “In the long run, migration flows from Africa are expected to increase significantly, driven by income gaps, the rapidly growing working-age population, and climate change.
- “Notably, the average income in high-income OECD countries is over 50 times the average income in low-income countries. At recent (pre-COVID-19) growth rates, it would take over a hundred years to close that gap; the pandemic is likely to worsen it.”
What you should know
- The cost of sending money appears to be quite high and might need to be reduced. For example, the fees paid to remittance service providers to send money to Africa average nearly 9% – the highest rate in the world and three times the Sustainable Development Goal target for remittance costs of 3%.
- Also, most of the popular digital platforms during the crisis have had their fees reviewed upward in recent months.
- No doubt, a decision to lower the burden of sending remittances would maximize remittance inflows which are important sources of financing for development in most countries in sub-Saharan Africa.
- It is important that the policymakers work assiduously to make sure remittance service providers do not face difficulties in partnering with correspondent banks via strategic collaborations with post offices, micro-finance banks and other financial institutions, Telcos, etc. to remove entry barriers and increase competition in the remittance markets
- It is suggested that the global community should consider creating a non-profit remittance platform to provide a one-stop solution to keep remittances flowing and leverage them for development financing for the benefit of millions of poor people in Africa and the rest of the world.