Remittances to African Economies Dip at 6.1% to $33b

A money changer holds Turkish lira banknotes next to UA money changer holds Turkish lira banknotes next to U.S. dollar bills at a currency exchange office in central Istanbul April 15, 2015.
  • Remittances to African Economies Dip at 6.1% to $33b

World Bank Statistics have shown that remittance to African countries have declined by an estimated 6.1 per cent to $33 billion.

The figure, which was for last year, was triggered by slow economic growth in remittance-sending countries and a decline in commodity prices.

It said rising sources of income for Africans are being realised through remittances, which have been observed as important aspect that impacts lives as well as brings about economic growth and development on the continent.

The theme of remittances was discussed by researchers and economists at the 12th African Economic Conference in Addis Ababa, Ethiopia, titled: “Financing Arica’s Development–Remittances and Natural Resources”.

A researcher from the University of Lagos, Taiwo Ojapinwa, said although remittances to Africa have recently declined, they still constitute a major component of income to households and investments compared to other external revenue flows.

“There is now need to find ways on how remittances can directly contribute to economic growth, which for decades have not been the case. There is need to have strong institutions and rule of law because the amount of remittances a country receives can be influenced by the quality of governance,” Ojapinwa said.

He added:“Remittances’ contribution to the economy can also depend on the protection of property rights, strong judicial independence, well-organised labour markets, low levels of corruption and a sound macroeconomic environment.”

His fellow researcher, Raphael Babatunde from the University of Ilorin, added that remittances have become a major livelihood strategy among African households – and that this source of income helps to supplement agricultural incomes for many farmers.

“Remittances sent by migrants are important in fighting nutrition, poverty and food insecurity. They are believed to have a huge impact on the socio-economic conditions of families left behind in the countries of the migrants’origin,” he said.

He added:“Although agriculture remains the most important single source of income for many communities in Africa, farming households that receive remittances have a slightly larger share of income than those that do not receive remittances.”

A Professor of Economics at the University of Leeds, Malcolm Sawyer, in his submission on the research papers, said although remittances have been fundamental in changing lives, their impact in Africa is affected by high costs imposed on migrant remittances.

“The remittances to Africa are not being used as efficiently as possible, largely due to high charges. Basically, sending money to Africa is a bit expensive, probably the costs are among the highest in the world,” he said.

He continued:“Policy-makers in individual countries and region should be looking at how these costs can reduce and how these financial flows can be exploited to boost growth and the socio-economic development of their people.”

The Chief Renewal of Planning Section at the United Nations Economic Commission for Africa (ECA), Bartholomew Armah, added that African governments should continue to introduce measures to attract Diaspora investments at home by offering them incentives and reducing remittance charges.

About the Author

Samed Olukoya
Samed Olukoya is the CEO/Founder of investorsking.com, a digital business media, with over 10 years experience as a foreign exchange research analyst and trader.

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