By; Word Bank
Africa's
overseas workers, who sent close to US$ 60 billion in remittances in 2012, pay
more to send money home than any other migrant group. According to the World
Bank's Send Money Africa database, Sub-Saharan Africa is the most expensive
region to send money to, with average remittance costs reaching 12.4 percent in
2012. 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).
The G8
and the G20 established 5 percent as the target average remittance price to
reach by 2014. “High transaction costs are cutting into
remittances, which are a lifeline for millions of Africans,” said Gaiv
Tata, Director of the World Bank's Africa Region and Financial Inclusion and
Infrastructure Global Practice.
“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.” 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.
“Governments
should implement policies to open the remittances market up to competition,” said Massimo Cirasino,
Manager of the Financial Infrastructure and Remittances Service Line at the
World Bank. “Increased competition, as well as better informed
consumers, can help bring down remittance prices”. Send Money Africa also
finds that banks, which are the most expensive remittance service providers,
are often the only channel available to African migrants.
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.
from nyasebwablog