Remittances to African countries are expected to decrease by 5.4 percent from $44 billion in 2020 to a projected total of $41 billion in 2021, due to effects of Covid-19 pandemic, according to findings of Continental Migration Report 2021.
The report titled, ‘African regional review of implementation of the Global Compact for Safe, Orderly and Regular Migration’, was produced by the Economic Commission for Africa (ECA) headed by executive secretary Vera Songwe, in partnership with the African Union Commission.
It builds from four sub-regional reports compiled by African Union (AU) and a summary from stakeholder consultations at the just concluded 2021 African regional review meeting on the Global Compact for Migration on September 1 in Morocco.
Although the Covid-19 pandemic was expected to lead to a decrease in remittances to Africa in 2020, findings of the reports show that by October 2020 remittances to Africa had reached approximately $78.4 billion—constituting 11.7 percent of global remittances.
Remittances have, therefore, demonstrated greater resilience and reliability as a source of capital in Africa than foreign direct investment flows.
The report recommends that governments across the world should take affirmative action to facilitate and boost remittances in view of supporting the fight against the pandemic and ultimately building a more sustainable post-pandemic world.
According to the report, costs associated with sending remittances to Africa are some of the highest in the world.
Until very recently, average transaction costs were equivalent to 8.9 percent of the amount being sent for a remittance payment of $200.
With respect to the cost of sending money, the report says Africa is still far from achieving the 3 percent target set out in Sustainable Development Goal 10.
Remittances are estimated to constitute approximately 65 percent of the income of some receiving countries and senders spend an estimated 15 percent of their income on remittances.
For 25 African countries, all of which have large diaspora populations, remittances are the primary source of national income.
ECA projects that remittance inflows to Africa could decline by 21 percent in 2020, implying $18 billion less will go to the people who rely on that money.