Remittances to Sub-Saharan Africa will drop to $37b - World Bank
A teller counts dollars in a bank. File photo
What you need to know:
- The other challenge has been the high cost of sending remittances.
- According to the World Bank’s Remittance Prices Worldwide database, the global average cost of sending $200 (Shs760,000) stood at around 7 per cent in the first quarter of 2019.
Remittances flows to Sub Saharan African countries will drop by 23.1 per cent in 2020 in the awake of the Covid-19 crisis, World Bank has said.
According to a World Bank statement issued on June 3, remittances in this year will drop to $37b (Shs140.6 trillion), down from $48b (Shs182 trillion) recorded in 2019.
Comesa director of trade and customs Dr Christopher Onyango observes: “Diaspora remittances are a key source of investments and enabler of economic growth and sustainable development. They have multiplier effects in the economy through savings, investments, fiscal and debt sustainability.”
In his report on the impact of Covid-19 on diaspora remittances, he notes that affluent countries such as the USA, France, United Kingdom, Italy and China, which account for up to a quarter of all funds remitted to African countries, are among the worst hit by the pandemic.
“Migrants in the diaspora have lost jobs and taken pay-cuts amidst the corona virus outbreak and subsequent lockdowns leading to the drastic fall in remittances. Thus, many countries have suffered a double blow more so those whose remittances constitute a significant share of the GDP,” he says.
Further, the Covid-19 pandemic has constrained mobility and travelling across countries. This may reverse the gains already made in promoting greater openness and flexibility in migration. This is because a range of professionals and semi-skilled workers are needed to provide various services.
Dr Onyango adds: “About 13 per cent of essential workers, including ICT technicians, teachers, health professionals, sports men and women, cleaners, drivers and other general workers in Europe are immigrants. Stringent immigration policies are likely to close out immigrant workers and reduce diaspora remittances.”
The other challenge has been the high cost of sending remittances.
According to the World Bank’s Remittance Prices Worldwide database, the global average cost of sending $200 (Shs760,000) stood at around 7 per cent in the first quarter of 2019.
“No wonder the reduction of remittance costs to 3 per cent by 2030 is a global target under the SDGs,” Onyango noted.
