Think international remittances are all from developing countries, sending money to less developed African and Asian countries? Think again.
One in seven people in the world either send money home or receive it.
The World Bank has previously estimated that migrant workers within Africa send remittances in excess of $14 billion dollars each year. In 2018, intra-African remittances represented a whopping 20% of global remittance flows, according to Ecobank Group.
That’s right: a fifth of global remittances in 2018 took place between African countries. And this doesn’t account for unrecorded flows through formal and informal channels, so the true size is significantly higher.
Yet the myth persists that remittances are a one-way flow from high-income to low-and middle-income countries.
The reality is very different. Between 2015 and 2017, for example, the number of African international migrants living within the region jumped from 16 million to around 19 million, according to the World Economic Forum (WEF). Within the same period, there was only a moderate increase in the number of Africans moving outside the continent, from around 16 million to 17 million.
As the WEF put it: “Contrary to much media coverage, the majority of Africans do not leave the continent. They largely move to neighbouring countries.”
It makes sense if one considers the flow of people in search of employment. According to the Migration Data Portal, South Africa, the DRC and Angola have the highest number of international migrants in the region, sourced from 2020 mid-year estimates by the UN DESA.
Industrial developments, the mining sectors in South Africa, Botswana and Zambia, and Angola’s oil wealth have been magnets for both skilled and unskilled labour migrants from within the region and elsewhere.
Remittances are incredibly resilient — more so than experts often expect. In April 2020, the World Bank voiced its concern that global remittances would “decline sharply” as a result of the COVID-19 outbreak, estimating the loss at about 20% in 2020. Its subsequent estimations were revised to just 1.6%, as it noted the resilience of remittances.
And those remittances are a lifeline — surpassing other forms of financial support to low- and middle- income countries.
As the World Bank put it: “The decline in recorded remittance flows in 2020… was far lower than the fall in foreign direct investment (FDI) flows to low- and middle-income countries, which, excluding flows to China, fell by over 30 percent in 2020. As a result, remittance flows to low- and middle-income countries surpassed the sum of FDI ($259 billion) and overseas development assistance ($179 billion) in 2020.”
Sub-Saharan Africa saw some of the strongest growth in that period.
But sending money home can be expensive. Conversions and fees of sending money to Africa can cost over 8%. At MFS Africa we recognise the financial contribution of migrant workers to their families and communities back home and believe they shouldn’t have their hard-eaten cash eaten away by exorbitant fees.
Our mission is to create interoperability: allowing different mobile money systems to work together, regardless of borders. #SDG 10(c) aims to reduce remittance costs to less than 3% by 2030: MFS Africa is doing everything we can to make this a reality on the continent at the forefront of remittances.
