Cost of remitting money to Africa highest globally

The cost of sending money back home to Africa is still higher than anywhere else, the World Bank says.

Its Migration and Remittances Factbook for 2016 shows the global average cost of sending $200 home was about 7.4 per cent in the fourth quarter of 2015, down slightly from the previous quarter and 0.6 percentage points below the end of 2014.

However, sub-Saharan Africa with an average cost of 9.5 per cent, remains the highest-cost region and over 25 per cent costlier than other developing countries.

The report says an additional concern is that major international banks continue to close correspondent banking accounts of money transfer operators (MTO) to limit exposure to money laundering and other financial crimes.

A World Bank survey confirms that account closures are widespread, with adverse impacts on remittance costs and flows in rural and remote regions across the African continent.

Kenya and Uganda have both recorded a substantial increase in remittance flows from the diaspora in 2015, bucking the trend for sub-Saharan Africa and developing countries as a whole.

Kenya saw an increase of over $120 million to $1.56 billion in 2015 making up 2.4 per cent of GDP. The figure for Uganda was $1.075 billion or 3.3 per cent of GDP while for Tanzania, it remained the same at $389 million which is 0.8 per cent of GDP.

Migration flows

Overall sub-Saharan Africa saw a modest growth of one per cent in remittances in 2015 compared to 0.2 per cent in 2014. Remittances to the region are expected to increase further this year.

The report revealed some interesting statistics on migration flows to and from sub Saharan Africa. It showed that migrants from Africa totalled 23.2 million, of whom 26 per cent were living in OECD countries and 65.6 per cent were living within the region.

The largest source countries of emigrants were Somalia, Burkina Faso, Sudan, Democratic Republic of Congo, Nigeria and Côte d’Ivoire. The region hosted 18 million migrants in 2015.