Sending money to Africa is expensive. How can the costs of migrant remittances be reduced in order to heighten their impact in receiving countries? This question and others are among the pressing issues that will be addressed during this two-day pan-African seminar, which aims to arrive at innovative solutions.
On March 27 and 28, 2014, the African Development Bank is hosting an important event on African migrant remittances in Tunis. This seminar is the culmination of over six years of work, characterized by tangible achievements: field studies, publications, workshops, lessons learned, stakeholder involvement, the creation of dedicated funds, etc.
A high level seminar with a pan-African dimension
Organized over two days, the event, which has been organized by the AfDB, in partnership with the French Development Agency (AFD) and the French Government, will be opened in the presence of AfDB President Donald Kaberuka and Tunisian Finance Minister Hakim Benhammouda. Attendees are expected from across the continent, including Ministers of Finance and other decision-makers, Governors of Central Banks, financial operators both within and outside the banking sector, along with representatives of the African diaspora and African researchers.
The goal of the event is ambitious: to provide the opportunity to share knowledge and experience on the theme of migrant remittances to deal more effectively with the specific needs and expectations of the those populations. This includes those abroad who send funds to their home countries and those who receive them. The ultimate aim is to reduce the costs of remittances, which remain high, and to optimize their impact on the development of migrants’ countries of origin. This objective has become all the more urgent in the context of the global economic crisis and the reduction in official development assistance.
Remittances: an untapped resource
The figures are striking: in 2012, no less than US $406 billion was transferred by migrants around the world. The actual sum was certainly higher if we take into account informal transfers, which are still very significant in a large number of African countries. The threshold of US $500 billion in global migrant transfers is expected to be surpassed by 2015. In the specific case of Africa, remittances of African migrants to their countries of origin exceeded US $60 billion in 2012, an amount exceeding the US $56 billion in official development assistance to the continent, and the US $50 billion in foreign direct investment. Reducing the costs of remittances, and a better response to the expectations and needs of both senders and recipients, that is the issue.
Reducing the costs to the benefit of development
The costs of sending remittances to Africa are among the highest in the world. On average they represent more than 11% of the amount sent, which is four percentage points higher than the world average. By way of comparison, these charges are around 6.5% in South Asia. Which raises the question: How can the costs of remittances from African migrants to their respective countries of origin be reduced? In addition, how can these financial flows be used to boost growth in the recipient countries and to improve the socio-economic situation of the beneficiary populations?
The AfDB spearheading an action strategy
The AfDB is so concerned that, since 2007, it has been determined to create an integrated and proactive strategy in this area. This pan-African seminar is also the result of activities underway since 2007, in cooperation with the Government of France and the French Development Agency. These included the publication, in 2011, of a study entitled Reducing the Costs of Migrants' Remittances and Optimising their Impact on Development: Financial Products and Tools for North Africa and the Franc Zone. This field study was conducted in five African countries: Morocco, Tunisia, the Comoros, Senegal and Cameroon. After identifying the characteristics of the market in each country, the study presents recommendations. It also suggests avenues to explore which could help to reduce the costs of remittances and optimize the impact of the financial flows that they create.
Following publication of the report, briefing workshops were held in each of the countries in the study. The final one, concerning Tunisia, was held at the country’s Central Bank in June 2013.
This pan-African seminar marks a new stage in creating solutions that meet the expectations of the African diaspora and their communities of origin. In addition, it should promote cooperation that will benefit the countries of Africa and their development partners. These also represent the ambitions and resolutions of the international community, especially within the G20 framework.