Remittances to sub-Saharan Africa grew 14 per cent to $49 billion in 2021, the strongest gain since 2018, even as the continent remained the costliest developing region to send money.
According to the latest World Bank Migration and Development Brief dated May 2022, aggregate regional remittance costs averaged 7.8 per cent between October and December last year.
The average cost of remitting $200 from countries in the least expensive corridors amounted to 3.4 per cent while costs for the most expensive corridors registered 31.5 per cent during the same period, an increase of 12.3 per cent from the year earlier.
The report titled “A war in Pandemic: Implications of the Ukraine Crisis and Covid-19 on Global Governance of Migration and Remittance Flows,” notes that though intraregional migrants in Africa comprise more than 70 per cent of all international migration, remittance costs are high due to the small quantities of formal flows and use of black-market exchange rates.
The fee for sending $200 in remittances from Tanzania to neighbouring Uganda, for example, would cost 29.7 per cent of the transaction amount.
The report, however, shows the continent recorded strong growth in remittances in 2021, largely as a result of a firm pace of economic activity in Europe and the US, although facing rising headwinds from inflation tied to distortions in supply chains and surging commodity prices.
In 2020, remittances to the region fell by eight per cent due to the Covid-19 pandemic.
“As Covid-19 incidence eased in the industrial economies, job prospects improved, allowing African migrants to supplement remittances to home countries that continued to experience sobering consequences of the virus. A major factor in improving 2021 out-turns was a restoration of recorded inflows to Nigeria, which had plummeted by 27 per cent in 2020 due to increased use of informal channels.” says the report.
The surge inflows to Nigeria by 11.2 per cent to $19.2 billion in 2021 accounted for nearly one-third of the overall $6.3 billion increase in remittances to Africa.
Nigeria dominates the region in remittance receipts, having historically accounted for half of sub-Sahara Africa inflows followed by Ghana. South Sudan and the Democratic Republic of Congo also saw upturns inflows in the period.
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