By Jeph Ajobaju, Chief Copy Editor
Diaspora remittances to Africa reached $48 billion in 2019, says the latest data published by the World Bank, but the amount accounts for only formal transfers and would be much higher if informal transactions are added.
From 2013 to 2018, Nigerians in the Diaspora remitted an estimated $96.5 billion to the country, according to figures released last October by the National Bureau of Statistics (NBS).
Remittances rose 126 per cent in the six years, from $3.24 billion in 2013 to approximately $25.08 billion in 2018.
Between January and November 2019, Nigeria received $17.57 billion in direct Diaspora remittances, the Central Bank of Nigeria (CBN) said in January 2020.
Remittance by Nigerians more than 80% of national budget
Earlier this year, President Muhammadu Buhari confirmed that “$25 billion annual remittance by Nigerians in the Diaspora was more than 80 per cent of the country’s annual budget and formed about 6 per cent of the Gross Domestic Product (GDP).”
PricewaterhouseCoopers (PwC) estimates that migrant remittances to Nigeria could grow to $25.5 billion in 2019, $29.8 billion (2021), and $34.8 billion (2023).
Over a 15-year period, PwC expects total remittance flows to Nigeria to grow by almost double, from $18.37 billion in 2009 to $34.89 billion in 2023.
The total $48 billion remitted to Africa in 2019 came despite predictions from the World Bank of a historic 20 per cent drop to $445 billion in remittances to poorer countries this year because of global economic slump induced by coronavirus.
Nairametrics reports that remittance companies got an additional boost early on in the pandemic when African central banks reduced fees and loosened limits on digital transactions to encourage the public to use digital services to facilitate social distancing.
“I would probably agree with the World Bank that the total amount (of remittances) will go down, but anyone who’s in digital would actually gain market share and see their volume go up,” said Dare Okoudjou, Founder of MFS Africa.
Blessing in pandemic
The pandemic gave remittance companies an advantage over their main competition in Africa – the sprawling informal networks of traders, bus drivers, and travellers used by many migrants to send money home, according a summary by Nairametrics.
The summary also shows that
· Experts said the official $48 billion remittances to Africa las year only tells a part of the story because much of the monies Africans ship home via informal networks is absent from official data.
· Among industry executives, the shift is likely to last as digital remittance services are typically cheaper, faster, and safer than informal networks, which are difficult for governments to regulate.
· Online remittance company, WorldRemit, reported last week that transfers to Zimbabwe via its service had doubled over the past six months.
· Azimo, remittance company based in the UK – whose major African markets include Nigeria, Ghana, and Kenya – saw nearly 200 per cent increase over the expected number of new customers in April, May, and June.
· Kenyan Central Bank data shows remittances to Kenya were up 6.5 per cent through August compared with the same period last year. Remittance inflows to Zimbabwe rose 33 per cent through July.
· Remittance companies got an additional boost early on in the pandemic when African central banks reduced fees and loosened limits on digital transactions, to encourage the public to use digital services to facilitate social distancing.
· MFS Africa, which runs networks across 36 African countries to channel remittances between mobile money accounts, has seen year-on-year transaction growth of over 90 per cent in 2020.
· Mukuru, based in South Africa – which focuses mainly on African remittances and allows customers to send both cash and groceries – has seen a roughly 75 per cent acceleration in growth compared to last year.
Having to go without bread
Having fled an economic implosion in his native Zimbabwe, Brighton Takawira was able to support his mother back home with modest earnings from a small perfume business he set up in South Africa.
Brighton Takawira uses the Mukuru remittance app which enables him to send money and groceries home to family in Zimbabwe from his home in Pinetown, South Africa. Then the pandemic struck and borders closed.
The buses he had used to send his cash stopped running. “I had to send something, even a few dollars, though it meant sometimes going without bread,” he said.
Patrick Roussel, Head of mobile financial services Africa at French telecom company, Orange, confirmed that “we saw an increase of transfers as the Diaspora wanted to help their families.”
Andy Jury, Chief Executive of Mukuru, South Africa, added: “We’ve seen an influx of new customers, and we see them mainly coming to us from the informal market.”