Transcript Maximising Developmental Benefits of Migrant Remittances

Migrant Labour Remittances in Africa:
Reducing Obstacles to Developmental Contributions
Cerstin Sander
Bannock Consulting
Presentation at the
International Conference on Migrant Remittances
Maximising Developmental Benefits of Migrant Remittances: Country Experiences
A Regional Perspective: Africa
London, UK
October 2003
Findings of a World Bank funded study.
Key Messages
Remittances to Africa are
• significant financial flow
• linked with migrational patterns
• heavily underreported
• barriers to flows due to
weak financial systems & restrictive regulation
• underestimation & limitation of developmental contributions
Structure
• Remittance Profile
–
–
–
–
Volumes
Sources & Destinations
Use of Remittances
Developmental Contributions
• Factors Affecting Flows & Uses
– Financial Infrastructure - Money Transfer Services
– Policies & Regulations
• Directions for Future Work & Research
Volumes of Migrant Remittances
All Developing Countries
total developing countries
$80 billion (2002)
Volumes of Migrant Remittances
All Africa
total developing countries
$80 billion (2002)
Africa $12bn 15%
Volumes of Migrant Remittances
All Sub-Saharan Africa
total developing countries
$80 billion (2002)
Africa $12bn 15%
Sub-Saharan Africa
$4bn 5%
..by region
Remittances Africa Regional Distribution
2001
Southern Africa
7%
West Africa Central Africa
5%
0%
Northern Africa
75%
East Africa
13%
…where received, where sent?
• Key receiving countries
• Africa: Egypt, Morocco
• Sub-Saharan Africa:
Nigeria, Lesotho, Sudan, Senegal, Mauritius
• Key sending countries
• France, Italy, Saudi Arabia, United States
• South Africa, Ivory Coast, Angola, Egypt, Botswana
Migration Patterns
• North Africa differs from Sub-Saharan Africa (SSA)
• More Africans in Europe & Middle East than in North
America
• High intraregional and domestic migration in SSA
• Overseas migrants from Africa typically more
educated than other migrant groups
• Overseas migration is increasing
What do Remittances Mean to
Receivers?
• Individual & household benefits
•
•
•
important source of income
invested in human and social capital and financial assets
often monthly transactions each ca. USD 200 average
 transfer from richer to poorer households
 better off than peers
• National benefits
•
•
balance of payments / forex reserves
1.3% of GDP for SSA
2.2% of GDP for North Africa/Middle East
What are we seeing & what are we
missing?
• Flows much higher than official data suggests
•
Why?
– High underreporting & high unrecorded flows
» weak reporting structures and capacities
» only 60% of Africa and 1/3 of Sub-Saharan Africa report data
» migration patterns combined with weak financial infrastructure
accounts for high informal & domestic flows
•
What is lacking?
» reliable, effective, attractive financial services for transfers and
investments
» enabling environment for attracting remittances with
appropriate products
Financial Infrastructure:
Money Transfer Service Market
•
Service Providers
–
Formal:
•
Banks
•
Post banks / post offices
•
Money Transfer Operators (MTOs) – eg. Western Union, MoneyGram
=> What they leave to be desired?
good access, low cost, outreach, reliability …
–
Semi-Formal:
•
Bus / coach companies
•
Courier companies
•
Associations
•
Internet services (financial and non-financial)
–
Informal:
•
Businesspeople; hawala style networks
•
Transport oneself or through relatives/friends
Informal still very common & MTOs expanding...
 Increase in semi-formal, strong use of informal and now MTO
indicate unmet demand
Choices or Preferences?
• Formal transfer channels more commonly used where
• strong financial sector
• liberalised forex regimes
• Informal transfer channels more common where
• proximity allows for regular travel
• financial services lacking and/or expensive
• familiarity or trust – sometimes due to cultural bonds
• limited outreach of services
• limited range of financial products
Policy & Regulatory Hurdles in
Financial Services
• restrictive & conservative authorisation
for money transfer services
Unique Aspects of Remittances
in Africa
• Intraregional & domestic migration (SSA)
• Officially recorded flows heavily underreported (both formal and
informal) & not kept pace with global trend
• Trust in informal channels partially eroding
• Growing demand for domestic services
• Growing demand for services beyond money transfer
• Weak financial systems – limited access, outreach, financial
products
• Restrictive regulation of financial services
• KEY MESSAGES: UNDERREPORTED & BARRIERS TO
FLOWS AND THEIR DEVELOPMENTAL CONTRIBUTIONS
Directions for Future Work
• Research
• better understand actual flows as well motivations for
or barriers to choices of remittance channels and
remittance use
• Policy
• review & adjust existing policies to reduce hurdles to
developmental contributions including hurdles to
remittance transactions through formal channels
Migrant Labour Remittances in Africa