{UAH} Migrants Are The Biggest Contributors of Forex to Africa, World Bank Data Reveals

• Migrants Are The Biggest Contributors of Forex to Africa, World Bank Data Reveals

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  World Bank reveal that Africans abroad play a major role in its development

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  Lionel Tarumbwa

   Fri, Apr 12, 2019

• Little credit is being given to Africans abroad for the role they are playing in supporting the communities back home. World Bank data reveals that they are the top contributor of foreign inflows to the continent.

• A World Bank report has revealed that money sent by immigrants to their home countries in sub-Saharan Africa reached a record $46 billion in 2018. This represents a 15% jump in remittances from the previous year, the largest annual growth for any world region.

  The remittances surpass the $27 billion dollars that were received in foreign aid in the same year, a clear representation of the major role African migrants are playing in supporting local communities. Aid levels dropped last year by 2.7% from 2017, with the poorest countries worst hit, according to figures published by the Organisation for Economic Cooperation and Development (OECD). Bilateral aid – direct, country-to-country assistance – to the least developed countries fell by 3% in 2018, with support to the African continent down 4% and humanitarian assistance dropping by 8%.

  Excluding China, remittances to low- and middle-income countries ($462 billion) were significantly larger than foreign direct investment flows in 2018 ($344 billion).

  As Africa's remittances are growing they have caught up with sliding FDI. In 2017, the remittances amounted to $41 billion compared to $42 billion dollars in FDI.

  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.

  The total amount of money sent is likely much larger than current estimates because only funds sent through formal channels such as banks are included. This is especially true for regions like sub-Saharan Africa, where just 40% use formal financial services and two-thirds of non-agriculture workers are part of the informal economy. Other countries such as Zimbabwe have a vibrant informal financial services sector offering cross border money transfer services between those at home and the migrant community across the border in South Africa. Flows from such services are omitted yet they represent a significant flow of remittances.

  This role of migration in reducing poverty has been underestimated as most experts tend to focus on aid as the major player in the global goal of reducing extreme poverty. One-in-four (23%) migrants from sub-Saharan Africa live in Europe and the U.S, places where recent economic growth has helped sub-Saharan African immigrants send home more remittances. The funds remitted are often mainly for expenditure on items such as healthcare, food, education and in some cases private construction.

  Nigeria, Ghana, Senegal and Kenya received the most remittances among sub-Saharan nations in 2017. These four countries are also among the top origin countries for sub-Saharan migrants living in Europe and the U.S. Most of the migrants from these countries have helped relatives set up their own businesses back home and have supported local development programs.

  Nigeria received most remittances sent to sub-Saharan Africa in 2017, but its share has declined. Since 2009, Nigeria has received more than half of all remittances sent each year to sub-Saharan African countries, by far the largest share of any country in the region. However, its share of its share of all remittances has been declining as remittances to other destinations have been increasing. Ghana received less than $4 billion in remittances, a distant second in the region.

  Nigeria receives the largest share of remittances to the region despite an emigrant population of 1.3 million that is smaller than that of Somalia (2 million) and South Sudan (1.8 million), which have the largest sub-Saharan emigrant populations, among others. One reason for this is that many of Nigeria's emigrants live in countries with strong economies like the U.S. and the UK.

  Remittances to sub-Saharan Africa are projected to increase in coming years, according to the World Bank. The region's population growth is expected to continue, which has the potential to boost migration and remittances sent to the region. Pew Research Center surveys have also found that a substantial share of Nigerians and Kenyans plan to leave their countries to seek opportunities elsewhere.

  Header Image Credits: The Washington Infomer

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