Kigali — Africans in diaspora would be sending more money back home if it wasnt for the high cost of money transfers, the World Bank has said.
In a new World Bank finding released last week, African migrants pay more to send money home compared to other migrant groups.
The Bank notes that there's a need to bring down remittance prices to at least 5 percent from the current 12.4 percent average cost a development that would put US$4 billion more in the pockets of Africa's migrants and their families who rely on remittances for survival.
In November last year, the World Bank said that remittance flows to the developing world would exceed earlier estimates and total $406 bn in 2012, an increase of 6.5%over the previous year, 2011.
Contributions from Rwandans abroad have been on the rise since 2008 where US$63.31 m was realized growing to $88.21m in 2009, $98.21m in 2010, and over $100m in 2011.
The remittances were projected to rise to $111.37 m in 2012, to $120.28m in 2013 and $129.90m in 2014 but this could be hurt if remittance costs don't drop.
The WB reckons that Africa's overseas workers sent close to US$60 b in remittances back home in 2012 despite having to pay more to send money home than any other migrant group.
Sub-Saharan Africa is particularly the most expensive when it come to sending money with the World Bank's Send Money Africa database indicating that senders had to part with average remittance costs of up to 12.4% in 2012. While the global average cost of sending money is placed at 8.96 percent Africa's rates are higher with the average being 12% far higher than the cost to South Asia, which has the world's lowest prices of 6.54%.
Rwanda continues to work on new innovative methods of dealing with international money transactions with the aim of reducing the cost which would not only aid international traders but also Rwandans in Diaspora.
The G8 and the G20 established 5 %as the target average remittance price to reach by 2014 with Gaiv Tata, Director of the World Bank's Africa Region and Financial Inclusion and Infrastructure Global Practice observing that high transaction costs are cutting into remittances, which are a lifeline for millions of Africans.
"Remittances play a critical role in helping households address immediate needs and also invest in the future, so bringing down remittance prices will have a significant impact on poverty," remarked Tata.
Tanzania is marked as the most expensive place to send money with rates placed at 19.7% a factor attributed to limited competition in the market for cross-border payments.