Remittances to African countries are expected to decrease by 5.4 percent from $44 billion in 2020 to a projected total of $41 billion in 2021, due to the effects of Covid 19 pandemic, according to findings of Continental Migration Report 2021.
The report titled, “African regional review of implementation of the Global Compact for Safe, Orderly and Regular Migration,” was produced by the Economic Commission for Africa (ECA) in partnership with the African Union Commission (AUC). It builds from four sub-regional reports compiled by AUC and a summary from stakeholder consultations at the just concluded 2021 African regional review meeting on the Global Compact for migration (August 26 to September 1, Morocco ).
Although the COVID-19 pandemic was expected to lead to a decrease in remittances to Africa in 2020, findings of the reports show that by October 2020 remittances to Africa had reached approximately $78.4 billion, constituting 11.7 per cent of global remittances. Remittances have therefore demonstrated greater resilience and reliability as a source of capital in Africa than foreign direct investment flows.
It recommends that governments across the world should take effective action to facilitate and boost remittances in view of supporting the fight against COVID-19 and ultimately building a more sustainable post-pandemic world
According to the report, the costs associated with sending remittances to Africa are some of the highest in the world. Until very recently, average transaction costs were equivalent to 8.9 per cent of the amount being sent for a remittance payment of $200,
With respect to the cost of sending money, the report says Africa is still far from achieving the 3 percent target set out in Sustainable Development Goal 10.
The Addis Ababa Action Agenda of the Third International Conference on Financing for Development and Sustainable Development Goal indicator 10(c) provides that countries should, by 2030, reduce to less than 3 percent the transaction costs of migrant remittances and eliminate remittance corridors with costs higher than 5 percent.
Remittances are estimated to constitute approximately 65 per cent of the income of some receiving countries and senders spend an estimated 15 percent of their income on remittances.
For 25 African countries, all of which have large diaspora populations, remittances are the primary source of national income.
In response, a number of African countries have taken action to lower the costs of remittance transfers. Some countries also offer diaspora bonds to investors and have relaxed foreign exchange controls to allow for electronic and mobile money transfers at reduced costs.
“It should be noted, in that regard, that the use of digital money transfer platforms reduces transfer fees in Africa by an average of 7 per cent,” says the report.
“Private financial institutions also offer incentives to encourage members of diaspora communities to use their services, including low transaction fees for remittances, and facilitate diaspora-initiated projects, especially in the real estate sector. These measures all promote the financial inclusion of migrants and their families.”
The report recommends that member States should support migrants and their families through the adoption of laws and regulations to facilitate the sending and receiving of remittances, including by fostering competition among banks and other remittance handling agencies with a view to establishing low-cost transfer mechanisms.
African countries should also make every effort to reduce the transfer costs associated with remittance payments, inter alia, by making more extensive use of digital transfer solutions, such as MPESA, and by streamlining the regulatory constraints associated with international money transfers. African States should also engage with destination countries to identify ways to enhance the provision of basic services to migrants in those countries.
To achieve Global Compact objectives 1, 3, 7, 17 and 23, member States should implement steps proposed in the context of regional economic community-led dialogues on migration; and consider the increasingly important role played by diaspora communities in fostering development, including through remittance payments, skills development initiatives and the adoption of emerging technologies.
ECA projects that remittance inflows to Africa could decline by 21 percent in 2020, implying $18 billion less will go to the people who rely on that money. It is therefore critical to preserve this essential lifeline. As the world enters an economic downturn, remittance flows will be more important than ever for the poorest and most vulnerable people, espcially those without access to economic and social safety nets.
Naira Opens the Week at N413.30 Against U.S Dollar
The Nigerian Naira opened better than expected against the United States Dollar at the Investors and Exporters forex window on Monday following a record decline on Friday.
The local currency opened at N413.30 against the U.S Dollar on Monday, representing N1.6 or 0.39 percent improvement when compared to Friday’s closing rate of N414.90.
On Friday, investors turnover at the Investors and Exporters forex window stood at $193.59 million. While Naira spot rate dropped to as low as N415 against the United States Dollar and forward rate of the local current hits N432.05 to a greenback.
However, at the unregulated parallel market, the Naira remained at over N550 to a United States Dollar on Monday, according to operators.
Despite the Central Bank of Nigeria stopping the sale of forex to bureau de change operators and forcing media companies from publishing black market rates, the naira remained under pressure and trading at record lows across key foreign exchange markets.
Efforts to curb further decline and boost the local currency’s value are yet to crystalise as chronic scarcity due to years of weak foreign revenue and over-reliance on importation continues to weigh on Naira outlook.
Naira Gained Slightly at I&E Forex Window to N412.81/$US
Despite the Nigerian Naira trading at a record-low across the nation’s unregulated black market, the embattled currency opened slightly higher at N412.81 to a United States Dollar on Monday at the Investors and Exporters Forex Window, representing an increase of 0.08 percent when compared to the N412.88 it closed on Friday.
The improvement in Naira value was after the Central Bank of Nigeria (CBN) directed all depoisit money banks operating in the country to freeze bank accounts linked to Oniwinde Olusegun Adedotun, the founder of www.abokfx.com, a forex rate publishing platform.
Godwin Emefiele, the Governor, CBN had blamed black market and bureau de change operators for the constant plunge in Naira value against its global counterparts and insisted that forex rates remained the apex bank stipulated rates and not the unregulated rates imposed by speculators and hoarders and published to the public by Abokifx and other business platforms.
“There was a particular time I asked our colleagues to call the so-called owner of abokiFX, that we want to understand his model and how he came about advertising those rate, we find him as someone, a Nigerian who lives in England and conducts this nefarious activity on our economy.
“It is economic sabotage and we will pursue him, wherever he is, we will report him to international security agencies, we will track him, Mr Oniwinde, we will find you, because we cannot allow you to continue to conduct an illegal activity that kills our economy.” Emefiele said.
The governor further stated that the website was set up primarily manipulate and speculate forex rates. He said “they get naira loans, use to purchase dollars, take a position, change the rate over a given period, sell the dollars they purchased and make a profit, this is completely illegal, unacceptable and we will pursue them.”
On Friday, the last time Abokifx published unregulated forex rates, Naira was qouted at N570 to a United States Dollar while the British Pound and the Euro were quoted at N770 and N655, respectively.
U.S Dollar Jumps to Three Weeks High on Better Than Expected Retail Sales
The United States Dollar rose to a three-week high after data from the Commerce Department showed that the U.S retail sales rebounded in the month of August despite falling consumer confidence.
The US Dollar Index rose to 93.40 on Monday to extend Friday breakout above the 93.00 key resistance level.
U.S retail sales jumped to its highest in five months in the month of August to beat 0.8 percent decline predicted by experts. Retail sales grew by 0.7 percent in August to increase the odds of the US Federal Reserve announcing tapering during next week’s Federal Open Market Committee (FOMC) meeting.
“U.S. consumption is not slowing as quickly as it appeared a month ago despite the fading stimulus, and the Delta variant did not much affect the industries feeding into retail sales,” said Chris Low, chief economist at FHN Financial in New York. “The economy continued to hum in August.”
Against the Japanese Yen, the U.S dollar strengthened to 109.48 from 109.91 attained on Friday on broad-based selloff during London trading session, while heavy selloff plunged British pound against the U.S dollar 1.36610 before reboundling slightly to 1.36946.
The Euro dropped from 1.17883 recorded on Friday to 1.16995 on Monday during London trading session.
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