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Monday, July 15, 2024

Diaspora Remittances: Average cost of sending $200 to SSA increases to 7.9% in 2023 – World Bank

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Sending $200 to Sub-Saharan Africa cost more in 2023. It went up from 7.4% in 2022 to 7.9% in 2023, says the World Bank.

The World Bank said this in their report about migration and development in Lower- and Middle-Income Countries (LIMC) for 2024. They mentioned that money sent to Sub-Saharan Africa dropped by 0.3% in 2023. But they think it will go up by 1.5% this year.

Sending money to Africa is the most expensive in the world. In some African countries, it could cost as high as 33% to send $200 in 2023. Globally, the average cost to send $200 was 6.4% in low and middle-income countries. The cheapest was South Asia at 5.4%.

The World Bank said, “Sub-Saharan Africa is the most expensive region to send money to. In the last part of 2023, it cost an average of 7.9% to send $200. In the last part of 2022, it was 7.4%.”

“The costs are very different across the region. It can be as low as 2.1–4.0 percent in the cheapest places and as high as 18–36 percent in the most expensive ones. For example, sending $200 from Tanzania to Kenya, Uganda, or Rwanda cost more than 33% in late 2023.”

The United Nations wants to lower the cost of sending $200 to about 3% by 2030. This will help families get more money.

Sending money helps low and middle-income countries. It makes people spend more and can help reduce poverty. But the high costs of sending money, especially to Sub-Saharan Africa, make it harder for migrants.

Since 2019, money sent home has been more than Foreign Direct Investment (FDIs) in these countries. In 2023, money sent home was 1.5 times more than FDI in Sub-Saharan Africa.

Problems affecting money sent to Africa in 2024

The World Bank said some things could make it hard to send money to Sub-Saharan Africa in 2024. These include slow growth in rich countries, the conflict between Israel and Hamas, security issues in places like Chad, Mozambique, Mali, and Nigeria, and climate problems like drought in Southern Africa.

In 2023, Nigeria got about $19.5 billion in remittances, the highest in the region. This was about 35% of the total money sent to Sub-Saharan Africa. Ghana and Kenya also got a lot, with $4.6 billion and $4.2 billion, respectively.

Countries like Sudan and South Africa received $1 billion each, which is on the lower end. In places like Gambia, Lesotho, Comoros, Liberia, and Cabo Verde, remittances make up one-fifth of their GDP. They rely a lot on this money for economic growth.

What you should know

The risks mentioned by the World Bank are real and happening this year. The Israel-Hamas conflict has continued into the second half of the year. Houthi rebels in the Red Sea are causing problems with supply chains and shipping times.

But there is some good news. The Eurozone’s economy grew by 0.3% in the first quarter of 2024 and by 0.5% year-on-year. This is the best growth since the energy crisis started in 2022.

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