Business News of Thursday, 26 April 2018
Ghana bagged US$2.2 billion from remittances in 2017 from a total of US38.4 billion that Sub Saharan Africa recorded, according to the World Bank’s Migration and Development Brief.
Ghana was joint second with Senegal which also earned US$2.2 billion from remittances last year.
The largest remittance recipient was Nigeria with remittances of $21.9 billion. Remittances to Sub-Saharan Africa accelerated 11.4 percent to $38 billion in 2017.
Kenya (US$2.0 billion), Uganda (US$1.4 billion), Mali (US$1.0 billion) and South Africa (US$900 million) placed 3rd, 4th, 5th and 6th respectively.
The region is host to several countries where remittances are a significant share of gross domestic product, including Liberia (27 percent), The Gambia (21 percent), and Comoros (21 percent). In 2018, remittances to the region are expected to grow 7 percent to $41 billion.
Remittances to low and middle-income countries rebounded to a record level in 2017 after two consecutive years of decline.
The World Bank estimates that officially recorded remittances to low and middle-income countries reached $466 billion in 2017, an increase of 8.5 percent over $429 billion in 2016. Global remittances, which include flows to high-income countries, grew 7 percent to $613 billion in 2017, from $573 billion in 2016.
The stronger than expected recovery in remittances is driven by growth in Europe, the Russian Federation, and the United States. The rebound in remittances, when valued in U.S. dollars, was helped by higher oil prices and a strengthening of the euro and ruble.
Remittance inflows improved in all regions and the top remittance recipients were India with $69 billion, followed by China ($64 billion), the Philippines ($33 billion), Mexico ($31 billion), Nigeria ($22 billion), and Egypt ($20 billion).
Meanwhile, Sub-Saharan Africa remains the most expensive place to send money to, where the average cost is 9.4 percent. South Africa however is the costliest G20 country to send remittances from.
Major barriers to reducing remittance costs are de-risking by banks and exclusive partnerships between national post office systems and money transfer operators. These factors constrain the introduction of more efficient technologies—such as internet and smartphone apps and the use of cryptocurrency and block chain—in remittance services.
The global average cost of sending $200 was 7.1 percent in the first quarter of 2018, more than twice as high as the Sustainable Development Goal target of 3 percent.
“While remittances are growing, countries, institutions, and development agencies must continue to chip away at high costs of remitting so that families receive more of the money. Eliminating exclusivity contracts to improve market competition and introducing more efficient technology are high-priority issues,” said DilipRatha, lead author of the Brief and head of KNOMAD.