Several reports and studies have lauded the importance of remittances to economic growth in Africa1. In short, an increase in remittances to Africa improves the chances of a growing African economy. So what does 2019 hold for African remittance? Here are few things to watch.
Forecast for 2019
The World Bank forecasts that Sub-Saharan Africa will receive roughly $47 billion in remittance inflow in 20192. Remittance data for North Africa is grouped with the Middle East region, but if North Africa receives anything close to the average of 62 percent of the inflow to Middle East and North Africa as in 2018, 2017 and 2016, then its forecast for 2019 would be roughly $38 billion. In total, the forecasted remittance to Africa for 2019 is $85 billion.
Digital Push to Improve Remittance Services
There has been a trend of partnerships between IMTOs, mobile money operators, banks and fintech players to improve remittance service delivery.
Diaspora Financing Initiatives
The African Development Bank, or AfDB, has been working with African governments to develop the appropriate policies and regulations so they can attract more remittance inflow4. The logic is that if there were efficient systems in place, remittance inflow to Africa would be higher than current levels.
In addition to the challenge of a financial system that doesn’t make it easy to move money in Africa, there’s also a transparency challenge threatening the growth of remittances in Africa.
A few African countries are making a move to improve their financial systems as well as improve the transparency of remittance-driven investments in Africa. The Nigerian government is currently working to grow remittance inflow to the country to $35 billion by providing transparent ways for Nigerians in diaspora to invest back home5.
The private sector is also getting involved. In December 2018, RemitFund announced an investment fund that will provide investments for Africa-based entrepreneurs. The Belgium-based non-profit, which empowers Africans in diaspora to use remittances to tackle unemployment and underemployment challenges in Africa will build the new investment fund with donations of a percentage of African remittances6.
Remittances in Africa have played a pivotal role in providing access to better education, facilitating healthcare and sustaining households. However, a rising trend observed across the continent is the diaspora’s efforts to channelize streamlined investments in businesses, which may give an impetus to the economy of Africa.