... But sub-Saharan Africa still lags behind

ALL OVER the world, migration and remittances have grown rapidly in recent years and now constitute the second largest financial flow to developing countries after foreign direct investment (FDI).

They are now more than double the size of the net official finance but Sub-Saharan Africa continues to be the last on the league of remittances table.

Like FDI but quite unlike portfolio finance, remittances are stable over time.

Furthermore, they also tend to rise in times of economic difficulty in the recipient country. This, Miss Sonia Plaza, the chief economist of the Africa region disclosed to The Business Chronicle.

As migration continues to increase, the corresponding growth of home remittance has come to constitute a critical flow of foreign currency into many developing countries.

In recent times, official policies in developing countries have begun to assign an important role to private unrequited transfers as a key ingredient in the growth prospects of their economies, because of the large number of people involved and the increasing level of remittances.

Policy makers in developing countries have started to streamline financial systems, remove controls and create incentives, all with the aim of attracting remittances, especially through official channels.

Referring to the macroeconomic impact on the economy through various channels such as savings, investment, growth, consumption, and income distribution, she said recently, remittances have gained prominence as veritable sources of investment funds.

One of the impacts of remittances is its effect on the current account of the Balance Of Payments (BOP).

According to her, remittances help in raising income by providing foreign exchange and raising national savings and investment, as well as by providing hard currency to finance essential imports, thereby curtailing BOP crisis.

The president and Chief Executive Officer (CEO) of the Pelican Group, Mr. Kojo Benjamin Taylor, told the paper that the objectives of the Ghana Project is to provide capital and business expertise to start ups or early stages of small and medium size businesses in Ghana.

Mr.Taylor stated that, as well, it is to recruit a group of Ghanaians in the Diaspora who have extensive experience in business building capacity, marketing, finance and information technology.

Also, it is to build a profitable venture capital firm capable of becoming a credible African venture capital firm in five years.

Touching on the Ghanaian environment, he said the government is committed to private sector development and multi-party democratic governance as well as respect for the rule of law.

"Stable micro economic environments over the past four years had revealed that inflation has reduced from 40% in 2001 to 11.8% in 2004."

Interest rates, he said, have reduced from between 45%-50% in 2001 to between 20%-25% in 2004. National currency has remained stable as compared to other major global currencies.

Challenges faced by Ghana's economy, according to him, remain dominated by the agricultural sector.

Recent growth of mining, construction and services do not substantially alter this economic profile of a national economy with the primary sector as the biggest contributor to GDP (36%). Compared to Cote d'Ivoire, Ghana's share of industries (25.3%) is about half the size while the primary sector is twice as large as that of its closest neighbour.

Sub-Saharan Africa recorded the least amount of remittances last year with only US$6 billion out of the total US$126 billion. Latin America and the Caribbean recorded the highest with US$37 billion followed by South Asia with US$33 billion. East Asia and the Pacific had US$20 billion whilst Europe and Central Asia had US$13.