|Banks gouge chunk out of African migrant remittances
African migrants around the world pay more than other groups to send money back home, costing them and their families US$4 billion a year, the World Bank said.
The development lender said Africa's overseas workers sent close to US$60 billion in remittances in 2012, but paid a premium over other migrant groups to do so.
“High transaction costs are cutting into remittances, which are a lifeline for millions of Africans,’’ Gaiv Tata, director of financial inclusion in the World Bank's Africa Region. “Remittances play a critical role in helping households address immediate needs and also invest in the future, so bringing down remittance prices will have a significant impact on poverty.’’
Sub-Saharan Africa was the most expensive region in 2012. The average remittance cost there was 12.4 percent, compared with 8.9 percent worldwide and 6.5 percent in South Asia, the lowest cost region, the bank said.
The bank noted that leading developed countries had set a target of 5 percent for the average remittance price by 2014.
“Governments should implement policies to open the remittances market up to competition,’’ to help bring down money transfer prices, said Massimo Cirasino, manager of the Financial Infrastructure and Remittances Service Line at the World Bank.
Banks – the most expensive remittance service providers – are often the only channel available to African migrants, the World Bank said, and remittance costs were even higher between African countries.
South Africa was the most expensive destination country in Africa, with prices averaging 20.7 percent, followed closely by Tanzania and Ghana, “due to several factors including limited competition in the market for cross-border payments.''