Overseas remittances to Sub-Saharan Africa declined to $42 billion in 2020 from $48 billion in 2019, a 12.5% drop in the face of the covid19 pandemic. According to a report by the World Bank and Knomad, the decline was mainly caused by movement restrictions introduced in most countries around the world and a rise in unemployment in the main host countries.
Nigeria, the largest recipient of foreign remittances in Sub-Saharan Africa, booked a 27.7% drop in remittance flows in 2020. As per the World Bank report, the nation suffered from the high premium on the naira/US$ exchange rate in the informal markets and unsuitable policies for money transfer agents. Transfers into Nigeria accounted for over 40% of the total remittance flows to Sub-Saharan Africa.
Excluding Nigeria, remittance flows to Sub-Saharan African increased by 2.3%, defying analysts predictions. Zambia, Mozambique, Kenya, and Ghana in 2020 recorded 37%, 16%, 9% and 5% growth in remittances respectively. Inflows into Kenya were boosted by transfers from the United States, which is home to more than a quarter of Kenyan migrants.
The cost of sending money into Sub-Saharan Africa remained high in 2020. The region had the highest average remittance cost at 8.2% in Q4 2020 compared to other regions like East Asia and Pacific at 6.9%, Latin America at 5.6%, and South Asia at 4.9%.