By Our Correspondent
Lagos (INVESTADVOCATE)-If the average cost of sending remittance is reduced to five percent (5%) from the current 12.4% Africa’s migrants and their families who rely on remittances for survival will save about $4 billion.
This is contained in the March 2013 issue of Finance & Development a Quarterly publication of the International Monetary Fund (IMF) made available to www.investadvocateng.com.
The publication says Africa’s overseas workers, who sent nearly $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 destination for remittances.
“The average cost of sending money to Africa is higher than the global average of 8.96% and almost double the cost of sending money to south Asia, which has the world’s lowest price tag for moving money (6.54%)†the F & D Quarterly Publication said.
The Publication further affirmed that receiving remittances is often a person’s first exposure to financial services and makes the recipient more likely to use other financial services, such as bank accounts.
“Lowering the cost of remittances can thus advance financial inclusion on the continent. 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%, 19.7%, and 19.0% respectively, partly because of limited competition†the Publication Reported.
Prior to this time, the G8 and the G20 had established 5% as the target average remittance price to reach by 2014.
According to Gaiv Tata, Director of the World Bank’s Africa Region and Financial Inclusion and Infrastructure Global Practice, high transaction costs are cutting into remittances, which are a lifeline for millions of Africans.
“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†Tata said.
