Africa receives $40bn in remittances in 2010

African immigrants sent home over $40 billion (N6 trillion) in remittances last year, according to a new joint report by the World Bank and African Development Bank. This figure is down from $41 billion in 2008 and just over US$38 million in 2009, according to a similar report last year.

The report which cover remittances from OECD (Organisation for Economic Co-operation and Development comprising Eastern and Western Europe, advanced Asian and South American economies) countries and transfers from other African countries such as South Africa, also shows the pattern of disbursement of these transfer of funds.
“Data from household surveys reveal that households receiving international remittances from OECD countries have been making productive investments in land, housing, businesses, farm improvements, agricultural equipment, and so on.” It added that many migrants transfer funds to households in origin countries for the purpose of investment. Thirty six percent in Burkina Faso, 55 percent in Kenya, 57 percent in Nigeria, 15 percent in Senegal, and 20 percent in Uganda.

Investing significantly
According to the report, “households receiving transfers from other African countries are also investing a significant share in business activities, housing, and other investments in Kenya (47 percent), Nigeria (40 percent), Uganda (19.3 percent), and Burkina Faso (19.0 percent).” Education was the second-highest use of remittances from outside Africa into Nigeria and Uganda, the third highest into Burkina Faso and the fourth highest into Kenya.
The report titled, ‘Leveraging Migration for Africa:
Remittances, Skills, and Investments’ added that the annual estimated saving, usually held in foreign countries, by Africans exceeds $50 billion. “African governments need to strengthen ties between Diaspora and home countries, protect migrants, and expand competition in remittance markets,” said Dilip Ratha, main author of the report and lead economist at the World Bank.
“Otherwise, the potential of migration for Africa remains largely untapped.”The World Bank said African countries should begin to consider issuing Diaspora bonds, which are sold by governments or private companies to nationals living abroad, a concept that has been utilised in tapping into assets of Israeli and Indian citizens living abroad.
The report estimates that Nigerian emigrants save about $3.5 billion annually, as at 2009, a figure which represents about 2 per cent of the country’s gross domestic product. “Most of these savings are invested in the host countries of the Diaspora. It is plausible that a fraction of these savings could be attracted as investment in Africa if African countries designed proper instruments and incentives,” the report added.

Diaspora bonds

According to Ratha¸ Sub-Saharan African countries can potentially raise $5-$10 billion a year in Diaspora bonds. Countries with large diasporas in high-income countries that can potentially issue its bonds include Ethiopia, Ghana, Kenya, Liberia, Nigeria, Senegal, Uganda, and Zambia in Sub-Saharan Africa and Egypt, Morocco, and Tunisia in North Africa.

“Diaspora bonds can be sold globally through national and international banks and money transfer companies. They can be marketed through churches, community groups, ethnic newspapers, stores, and hometown associations in countries and cities where large numbers of migrants reside.”

Ronan McCaughey of the Laferty Group, a United Kingdom-based financial research and advisory services firm, said remittances are important determinants of growth in West African countries. ‘‘Especially in construction and real estate, and are a major source of household income and financing,” he said in an email response.

Source : 234next