Sub-Saharan Africa to see remittances rise to USD 33 bn in 2014: World Bank
The World Bank notes that remittances to the region are expected to rise 3.2% to around USD 33 billion in 2014 from USD 32 billion in 2013—a significant acceleration from the modest growth of the preceding two years. (Image: Bloomberg)
Sub-Saharan Africa is expected to receive USD 33 billion in remittances in 2014, notes the World Bank’s latest issue of Migration and Development Brief, released October 06, 2014.
Remittances to the region are expected to rise 3.2% to around USD 33 billion in 2014 from USD 32 billion in 2013—a significant acceleration from the modest growth of the preceding two years.
Meanwhile, Nigeria is yet again the largest recipient in SSA, with a share of USD 22.3 billion of remittances received in 2014, up 1.9% from 2013.
While Nigeria continues to command the greatest share of remittances received across Africa, the importance of remittances varies greatly across the region.
Among countries for which 2013 data is available, remittances as shares of GDP were most significant for Lesotho (24%), the Gambia (20%), Liberia (19%), Senegal (11%), and Cabo Verde (9%).
Also, as shares of foreign reserves, remittance flows to Sudan are very high (220%), and significant for Senegal (72%), Togo (66%), Mali (60%), and Cabo Verde (37%). Consequently, remittances are of great importance to these countries for maintaining external-sector balances and macroeconomic stability.
However, the brief notes that while the global average cost of sending remittances continued its downward trend in the third quarter of 2014 – falling to 7.9% of the value sent, compared to 8.9% a year earlier – the cost of sending money to Africa remains stubbornly high, exceeding 11%.
To be precise, the price of remitting to Sub-Saharan Africa remains above global levels, a double-digit 11.3% for sending the equivalent of USD 200, versus the global average of 7.9 percent. Nine out of the 10 most expensive corridors in the world are to countries in the region, with prices ranging from 18 percent to 22 percent.
The high prices in these corridors are due to a lack of competition among service providers, exclusive partnerships between national post offices and money transfer operators, as well as between money transfer operators and banks, and the application of Anti-Money Laundering (AML) and Counter Terrorism Financing (CTF) regulations.
However, mobile money transfer services have transformed the landscape for domestic remittances in several African countries. Also, the number of electronic payment service providers that offer over-the-counter-payments, mobile money payment and payment cards have increased rapidly.
For instance, several African economies such as, Cameroon, the Democratic Republic of Congo, Gabon, Kenya, Madagascar, Tanzania, Uganda, Zambia and Zimbabwe, now boast more mobile money accounts than bank accounts.
M-Pesa mobile money service, for example, was the first to operate in Sub-Saharan Africa, and since then there has been an explosion in the use of mobile money services. The greater availability of mobile money transfer agents has enabled recipients to send smaller amounts of money more often in Kenya.
Looking at the Middle East and North Africa (MENA) region, after the sharp fall in flows to Egypt in 2013, remittances are expected to stabilize in 2014, helped by attractive investment opportunities in the planned expansion of the Suez Canal.
The ongoing economic crisis and high unemployment rates in Europe will continue to dampen remittances to Morocco, Tunisia and Algeria. Flows to the MENA region are expected to strengthen in the coming years, growing by 4 percent in 2015 to reach USD 53 billion.
Globally, remittances by international migrants from developing countries are on course for strong growth this year, while at the same time forced migration due to violence and conflict has reached unprecedented levels, the report went on to note .
Bringing in large amounts of foreign currency that help sustain the balance of payments remittances remain an especially important and stable source of private inflows to developing countries.
In 2013, remittances were significantly higher than foreign direct investment (FDI) to developing countries excluding China and were three times larger than official development assistance.
Overall, officially recorded remittances to developing countries are expected to reach USD 435 billion this year, an increase of 5 percent over 2013.
The growth rate this year is substantially faster than the 3.4 percent growth recorded in 2013, driven largely by remittances to Asia and Latin America.
Furthermore, remittances to the South Asia region are increasing more robustly this year, accelerating from slower growth in 2013.
“Remittances to developing countries grew this year by 5 percent. Remittance inflows provided stable cover for substantial parts of the import bill for such countries as Egypt, Pakistan, Haiti, Honduras, and Nepal,” said Senior Vice President and Chief Economist of the World Bank Group, Kaushik Basu.
“India and China lead the chart with projected remittance inflows of, respectively, USD 71 and USD 64 billion in 2014,” he said.
Finally, remittance flows are expected to grow robustly to almost all regions of the developing world reaching an estimated USD 454 billion in 2015 except Europe and Central Asia, where the conflict in Ukraine and associated sanctions are contributing to an economic slowdown in Russia, home to a large number of migrants from the region.