It is more expensive to send money to Africa

The important role played by remittances from Africans in the Diaspora towards socio-eco-political development of the continent is limited by the relatively high cost of sending money to the continent. According to information from the World Bank (www.sendmoneyafrica.worldbank.org) in early 2013, it is more expensive to send money to Africa than to any other region in the world. The high cost of sending money to Africa leaves USD 4 billion less in the pockets of remitters and their families.

The World Bank reported that Africa’s overseas workers sent close to USD 60 billion in remittances in 2012, but paid a premium over other migrant groups (from other regions of the world) in doing so. In early 2013, the global average fee (viewed as a percentage of the amount of money being sent) for transferring money has been 9 per cent while the average fee to send money to Africa has been 12 per cent with Nigeria, the country to where the most African migrants send money, recording a fee of 10 per cent. South Asia, the lowest cost region recorded 6.5 per cent. Banks were reported to be the most expensive remittance service providers (remittance costs were even higher between African countries). South Africa was reported to be the most expensive destination country in Africa, with prices averaging 20.7 per cent, followed closely by Tanzania and Ghana. The World Bank reported that the global community including G20 and G8 countries has set a target to reduce money transfer fees to 5 per cent globally. InterCurrency Services (www.inter-currency.com) is already playing its role towards this global target. InterCurrency not only minimises transfer fees (through low operating costs) but also possible losses that may result from foreign exchange rates applied to remittance transactions (through co-operation with key stakeholders and partners).

Apart from leaving less in the pockets of remitters and beneficiaries, high transfer fees could also discourage remittances or lead to the postponement of investment decisions (and thereby – in some scenarios, missed opportunities). Besides, since remittances help households to not only bridge consumption gaps but also address immediate needs such as medical bills, efficient remittance services can save families from sleeping on empty stomachs, save lives by availing treatment fees in time and reduce poverty over time (assuming best usage). In its own small way, InterCurrency is supporting and encouraging Africans in the Diaspora to invest in the continent of Africa, in its people, in its biodiversity, in its culture and in its future.