Remittances to sub-Saharan Africa grew 14% to $49 billion in 2021, the fastest increase since 2018, although the continent remained the most expensive developing region for remittances.
According to the latest World Bank Migration and Development Brief of May 2022, the aggregate regional cost of transfers averaged 7.8% between October and December last year.
The average cost of sending $200 from countries in the cheapest corridors was 3 .4%, while the cost of the most expensive corridors recorded 31.5 percent over the same period, up 12.3 percent year-on-year.
The report, titled “A was in Pandemic: Implications of the Ukraine Crisis and Covid-19 on Global Governance of Migration and Remittance Flows” notes that although intra-regional migrants in Africa account for more than 70 percent of all international migration, the remittance Transaction costs are high due to the small amount of formal flows and the use of black market exchange rates.
For example, the fee for sending $200 worth of money transfers from Tanzania to neighboring Uganda would cost 29.7 percent of the transaction amount.< /p>
However, the report shows that the continent will see strong growth in remittances in 2021, mainly due to resilient economic activity in Europe and the US, although they face increasing headwinds from inflation, which is associated with distortions in linked to supply chains and rising commodity prices.
In 2020, remittances to the region fell by eight percent due to the Covid-19 pandemic.
“As the Covid-19 incidence in developed countries, job prospects improved, allowing African migrants to supplement the remittances to their home countries that continued to arrive after the sobering consequences of the Experiencing virus,” the report said.
“A key factor behind the improvement in 2021 outcomes was the recovery of recorded inflows into Nigeria, which had collapsed 27 percent in 2020 due to increased consumption of informal channels.”
The increase in flows to Nigeria by 11.2 percent to US$19.2 billion in 2021 accounted for almost a third of the total US$6.3 billion increase in remittances to Africa dollars.
Nigeria dominates the region in remittance receipts, having historically accounted for half of sub-Saharan Africa’s inflows, followed by Ghana. South Sudan and the Democratic Republic of the Congo also saw an increase in flows during this period.
According to the report, a strong motivation of migrants to support families at home in countries under pandemic conditions underpinned these exceptional gains.
Kenya benefited from 20% growth in remittance receipts, with momentum sustained by almost 25% in the first quarter of 2022.
Tanzania’s receipts grew by 60%, and The Gambia saw remittances grow 30% thanks to a new government and currency.
Mozambique’s migrant workers eventually responded with some force (a two-thirds increase in inflows to $570 million). Support hard-hit residents of Cabo Delgado amid an uprising against mega LNG projects in the region.
The report finds remittances to Africa for 2022-23 are uncertain and the outlook carries risks ahead against the backdrop of the globe exceptionally high All conditions affected by the Russian invasion of Ukraine.
An important staple for the region – wheat – is up 24% over the course of 2021 and since the invasion by a further 22% in February.
Higher oil prices are expected to dominate the external accounts of the region’s 36 net oil-importing countries, and expectations of larger current account deficits and deteriorating debt positions are widespread.
Africa is the developing region most exposed to the consequences of the invasion of Ukraine, as the indirect effects are increasing over time amplifying over time.
Most countries are currently facing a sharp contraction in trade, which continues to increase, with deficits and debt fueling inflation and hurting real income and growth.
The continent is heavily exposed to increases in wheat, corn, cooking oil and fertilizer prices; The latter could impact farmers in the new farming season.
Sub-Saharan Africa imports 85% of its wheat supply, with almost a third (28%) coming from Ukraine and Russia.