Remittances to Sub-Saharan Africa grew almost 10 percent to $46 billion in 2018, the World Bank reported on Monday.
Nigeria, the largest remittance-recipient country in Sub-Saharan Africa and the sixth largest among low- and middle-income countries (LMICs), received more than $24.3 billion in official remittances in 2018, an increase of more than $2 billion compared with the previous year.
Looking at remittances as a share of gross domestic product, Comoros has the largest share, followed by the Gambia, Lesotho, Senegal, Cape Verde, Liberia, Senegal, Zimbabwe, Togo, Ghana, and Nigeria, according to the World Bank's latest Migration and Development Brief.
Remittances to the Middle East and North Africa grew 9 percent to $62 billion in 2018. The growth was driven by Egypt's rapid remittance growth of around 17 percent.
Beyond 2018, the growth of remittances to the region is expected to continue, albeit at a slower pace of around 3 percent in 2019 due to moderating growth in the Euro Area.
Remittances to low- and middle-income countries reached a record high in 2018.
The bank estimates that officially recorded annual remittance flows to low- and middle-income countries reached $529 billion in 2018, an increase of 9.6 percent over the previous record high of $483 billion in 2017. Global remittances, which include flows to high-income countries, reached $689 billion in 2018, up from $633 billion in 2017.
Growth in remittance inflows ranged from almost 7 percent in East Asia and the Pacific to 12 percent in South Asia.
The overall increase was driven by a stronger economy and employment situation in the United States and a rebound in outward flows from some Gulf Cooperation Council (GCC) countries and the Russian Federation.
Excluding China, remittances to low- and middle-income countries ($462 billion) were significantly larger than foreign direct investment flows in 2018 ($344 billion).
Among countries, the top remittance recipients were India with $79 billion, followed by China ($67 billion), Mexico ($36 billion), the Philippines ($34 billion), and Egypt ($29 billion).
In 2019, remittance flows to low- and middle-income countries are expected to reach $550 billion, to become their largest source of external financing.
The global average cost of sending $200 remained high, at around 7 percent in the first quarter of 2019, according to the World Bank's Remittance Prices Worldwide database.
Reducing remittance costs to 3 percent by 2030 is a global target under Sustainable Development Goal (SDG) 10.7. Remittance costs across many African corridors and small islands in the Pacific remain above 10 percent.
Banks were the most expensive remittance channels, charging an average fee of 11 percent in the first quarter of 2019. Post offices were the next most expensive, at over 7 percent.
Remittance fees tend to include a premium where national post offices have an exclusive partnership with a money transfer operator. This premium was on average 1.5 percent worldwide and as high as 4 percent in some countries in the last quarter of 2018.
On ways to lower remittance costs, Dilip Ratha, lead author of the Brief and head of KNOMAD, said, "Remittances are on track to become the largest source of external financing in developing countries.
"The high costs of money transfers reduce the benefits of migration. Renegotiating exclusive partnerships and letting new players operate through national post offices, banks, and telecommunications companies will increase competition and lower remittance prices."
The Brief notes that banks' ongoing de-risking practices, which have involved the closure of the bank accounts of some remittance service providers, are driving up remittance costs.
The Brief also reports progress toward the SDG target of reducing the recruitment costs paid by migrant workers, which tend to be high, especially for lower-skilled migrants.
"Millions of low-skilled migrant workers are vulnerable to recruitment malpractices, including exorbitant recruitment costs. We need to boost efforts to create jobs in developing countries and to monitor and reduce recruitment costs paid by these workers," said Michal Rutkowski, Senior Director of the Social Protection and Jobs Global Practice at the World Bank.
The World Bank and the International Labour Organization are collaborating to develop indicators for worker-paid recruitment costs, to support the SDG of promoting safe, orderly, and regular migration. Source: Nordic Africa News