Report: Remittances to Africa increase by 6.2 %, Nigeria leads
Remittances to Sub-Saharan Africa region are projected to have grown by an estimated 6.2 % to 6.2 percent to $45 billion in 2021, a World Bank report has shown.
This return to growth is more robust than earlier estimates and follows the resilience of flows in 2020 when remittances declined by only 1.7 percent despite a severe global recession due to COVID-19, according to estimates from the World Bank’s Migration and Development Brief released today.
According to the report released on Wednesday, remittances to low- and middle-income countries are projected to have grown a strong 7.3 percent to reach $589 billion in 2021.
Remittances registered strong growth in most regions. Flows increased by 21.6 percent in Latin America and the Caribbean, 9.7 percent in West Asia (Middle East) and North Africa, 8 percent in South Asia, 6.2 percent in Sub-Saharan Africa, and 5.3 percent in Europe and Central Asia.
Nigeria, the Sub-Saharan Africa's largest recipient, is experiencing a moderate rebound in remittance flows, in part due to the increasing influence of policies intended to channel inflows through the banking system. Countries where the value of remittance inflows as a share of GDP is significant include the Gambia (33.8 percent), Lesotho (23.5 percent), Cabo Verde (15.6 percent) and Comoros (12.3 percent).
In 2022, remittance inflows are projected to grow by 5.5 percent due to continued economic recovery in Europe and the United States.
Remittance costs averaged 8 percent in the first quarter of 2021, down from 8.9 percent a year ago. Although intra-regional migration makes up more than 70 percent of cross-border migration, costs are high due to small quantities of formal flows and utilization of black-market exchange rates.
However, the cost of sending $200 across international borders continued to be too high, averaging 6.4 percent of the amount transferred in the first quarter of 2021, according to the World Bank’s Remittance Prices Worldwide Database.
This is more than double the Sustainable Development Goal target of 3 percent by 2030. It is most expensive to send money to Sub-Saharan Africa (8 percent) and lowest in South Asia (4.6 percent). Data reveal that costs tend to be higher when remittances are sent through banks than through digital channels or through money transmitters offering cash-to-cash services.