African migrants spend more to send money home than other migrant groups, according to a new World Bank survey.
The average cost of sending money to Africa is almost 12 %, which is higher than the global average of 8.96 %, and almost double the cost of sending money to South Asia which has the world’s lowest prices at 6.54 %.
Data from the Send Money Africa database reveals that Sub-Saharan Africa is the most expensive region to send money to, with average remittance costs reaching 12.4% in 2012. Send Money Africa is funded by the African Institute for Remittances (AIR) Project, which aims to help the African Union and its member states reduce poverty by instituting sound remittances systems.
- In 2012 alone, 30m African migrants sent close to $60 bn in remittances to 120m recipients
- Bringing remittance prices down to 5% from the current average cost of 12.4% would put US$ 4bn back in the pockets of Africa’s migrants and their families. (The G8 and the G20 established 5 % as the target average remittance price to reach by 2014)
- South Africa, Tanzania, and Ghana are the most expensive sending countries in Africa, with prices averaging 20.7%, 19.7%, and 19% respectively.
“Governments should implement policies to open the remittances market up to competition,” said Massimo Cirasino, World Bank manager of the Financial Infrastructure and Remittances Service Line.
Send Money Africa also finds that banks, which are the most expensive remittance service providers, are often the only channel available to African migrants. A regulatory environment that encourages competition among remittance service providers can help bring down remittance prices. Migrant workers can also benefit from more transparent information on remittance services.
All of the top 10 most expensive remittance corridors are intra-African ones; primarily originating in South Africa (an expensive, bank-dominated market) and Tanzania. Corridors originating in South Africa are the most expensive, taking up the top five places in the rankings.