Article: Diaspora Remittances to Africa: The Donor’s Perspective

[Crosslinked with Future Challenges Organization]

Diaspora aid has surpassed international aid on the continent of Africa. I‘d like to propose that we view aid from international and supranational bodies like the World Bank, United Nations, etc as a supplemental source of monies. Africa does not need the paternalistic and self-serving aid of neo-liberal governing bodies. Between 1960 and 2003, the continent of Africa has received over $600 billion in aid. Estimates from the World Bank indicate that remittances by the Africa Diaspora have continued to grow over time, with roughly US$30 billion remitted in 2007. This amount is more than double the amount of international aid received. In 2010, Nigeria‘s diaspora remittances totaled $12 billion.  The overarching trend is that diaspora remittances are increasing, despite the global economic downturn and global food price inflation.

According to the World Bank, in 2006, remittances to Kenya were roughly  $525 million, or the equivalent of 2.2 percent of the Gross Domestic Product (GDP). Between 2006 and 2010, Kenya‘s annual remittances  increased nearly 300%. Kenyans living abroad sent home $1.9 billion in the past 12 months, more than triple the amount previously estimated by the World Bank.

Remittances to Uganda in 2006 were $845 million, or 9.3 percent of the GDP. Uganda‘s remittances increased from $845 million to about $2 billion between 2006 and 2010. The Reserve Bank of Zimbabwe (RBZ) has reported that remittances from Zimbabweans living abroad increased 32.9 percent in 2010 to about $263.3 million. Rwanda‘s remittances hit $172.4 million in 2010, rising 23.3 percent despite the global recession. On the other hand, Tanzania, a formerly closed nation, receives much lower levels of remittances, both in real terms ($16 million) and as a percentage of GDP (0.1 %). For nations like Uganda, Nigeria or Zimbabwe, remittances make up a significant percentage of the gross domestic product.  What‘s more important is the recipients‘ perspective. These remittances offer the advantages of allowing children to remain in school, providing the seed capital for small businesses and covering the costs of basic medical care.

Possible Hindrances to Diaspora Remittances

There are several factors that may be a hindrance to sustained growth in diaspora remittances. Among these are prohibitive bank account transfer fees. Also, Western Union‘s fee for wire transfers can be up to 20 percent of the remitted monies. However, it must be noted that reducing the transfer fees is detrimental to African money transfer business. A possible partnership between Western Union and MTN Group would lower money transfer costs on the continent of Africa. Also, Western Union can work cooperatively with African money transfer businesses.

Another factor is inflation in North America & Europe; increase in commodity prices affect how much money members of the African diaspora can send back. A possible but unlikely solution is for nations like France, UK and the US to make these remittances tax decuctible. However, on a macroeconomic scale, inflation is a global issue. The interdependence of currency markets alone highlights the extent to which our world is globalized.

The growth in diaspora remittances over the last decade bode very well for the recipient families and the communities in which they invest those funds. Similarly, the fact that children whose families receive remittances from relatives abroad are able to stay in school longer is heartening. While highlighting the positive, we also have to cast our gaze upon the possible challenges. Diaspora remittances are essential to the growth of Africa- especially on a microeconomic scale. Therefore, it is important to address any hindrances to the sustained growth of diaspora remittances to Africa.

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4 Comments

Filed under Africa, African Diaspora, Economics, Europe, Globalization, Kenya, Nigeria, North America, Tanzania, The Continent of Africa, Uganda

4 responses to “Article: Diaspora Remittances to Africa: The Donor’s Perspective

  1. Pingback: Tweets that mention Article: Diaspora Remittances to Africa: The Donor’s Perspective | Reclaiming The Narrative: Making History (& Writing It Too!) -- Topsy.com

  2. Very good indeed! Question is: Where is that international aid from Western donors going all these years? To buy heavy and sophisticated military equipment to hold African Dictators in power! To line their pockets and those of their families, relatives and friends at the expense of the unemployed, poor, hungry, sick and diseased people with no toilets, public and private, no medicine, large pot-holed roads, etc.!!!
    They are being exposed -Tunisia, Egypt, Libya, Uganda, Zimbabwe, Rwanda, Kenya, Algeria. These dictators have held on to power ruthlessly and with no care. They have killed with impunity, boasted about it, silenced all those who don’t think like them, imrisoned, given poison, written impressive projects that remain on paper and in libraries, mismanaged and misallocated the monies, created “artificial terrorists” to catch “security monies” in this age of “created global insecurity”. But the West has continued to give them those monies with a few questions asked because of vested interests. The people have continued to go down the drain, and even die. Some have left to take up jobs they would not d oin their own countries so as to make life bearable for those left behind in their own countries.

  3. Pingback: Are Diaspora Remittances A Solution to Africa’s Underdevelopment? « The Sojourner Project

  4. Pingback: Are Diaspora Remittances A Solution to Africa’s Underdevelopment? | Reclaiming The Narrative: Making History (& Writing It Too!)

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