Why is it expensive for the African diaspora to remit money back home?, By Chofor Che, 15 February 2013

Africa has a gross diaspora population most of whom are found in Europe and America. According to the World Bank’s Send Money Africa report, in 2012, the African diaspora remitted back home $60-billion. This represented an important addition to the gross domestic product of many African states like Nigeria and South Africa.

It is however sad that Sub-Saharan Africa was the most expensive region to send money to, with average remittance fees reaching 12.4%. This view is shared by a February editorial by African Executive. This is almost 12% more than the global average of 8.96% and nearly twice the cost of remitting money to South Asia, which had the world’s lowest prices at about 6.54%. Further, the remittance fees were even higher between African states.
Tariff and non-tariff barriers continue to hamper the progress and development of African states. Protectionism, tariffs and non-tariff barriers within Africa encourage African markets to be tilted towards former colonizers.

The World Bank, the International Monetary Fund (IMF), the African Union, the African Development Bank as well as African states have not done much to facilitate efficiency in cash flow, goods and services into and out of the continent. The inertia by international and regional bodies as well as states also contributes to food insecurity, poor healthcare, and conflicts. Why should a continent so blessed with human resources and viable financial institutions remain at the mercy of institutions like the World Bank and the IMF to determine charges for money to be remitted to Africa? Is this not another way of making Africa poor and underdeveloped?

Eradicating unnecessary tariff and non-tariff barriers will make African entrepreneurs important players in the global trade system. This will thus make the process of transferring money to the continent easier, cheaper and secure, as this will translate to more investment and business opportunities.If international institutions like the World Bank and the IMF care much about Africans, then there is need to work hand in glove with African institutions and states to curb this exorbitant charges.

There is also much talk about the BRICs Bank, an initiative which is spearheaded by Brazil, India, China and South Africa. Many financial analysts are hoping that the BRICs Bank will grossly alleviate the poverty of Africans and contribute to the continent’s development. All the same, this view is not shared by all financial analysts and economists. Pessimists argue that the BRICs Bank will instead make things worse. Some of them even fear that remittance fees for African diaspora sending money to the continent may even double.

In as much as concerns remain with respect to remitting money to Africa, Africans in the diaspora need to remain optimistic. There is need for Africans in the diaspora to continue to cry foul via the social media, the press and television networks. The World Bank and IMF have done more harm than good to the African continent. This process has been facilitated by weak central governments of African states that continue to bow to programmes and policies that have continued to impoverish the continent. The continent needs a renaissance which can partly be achieved if remittance fees for African diaspora sending money home are reduced.

2 thoughts on “Why is it expensive for the African diaspora to remit money back home?, By Chofor Che, 15 February 2013

  1. Very good reflection Chofor.

    I concur with your opinion that tarrif and non-tarrif barriers constitute the biggest hurdle to Africa’s development prospect. But the problem is not always the World Bank and the other multilateral financial institutions. Our governments and legislators have a collective responsibility to lessen the tax burden on its citizen. Central Africa region is suffering from the tariff epidemic and thus remain the least developed sub-region on the continent. The price of doing business -in Cameroon or Central Africa Republic, is twice that of its counterparts in southern and eastern Africa (despite OHADA’s regulatory framework). While you and I can now open a company in Kigali from our bedrooms (ICT and transparency in the tax system), it takes a minimum of 60 working days in Cameroon to obtain a business license (this laps is not attributed solely to the cumbersome regulation but to its agents). Reforming the tax system requires a reformation of tax collectors. I continue to say that ENAM is doing more harm to Cameroon than any other institution. Our creativity and sense of entrepreneurship is washed away by a predominant school of thought that now requires every young Cameroonian to go to ENAM or EMIA if they want to make an ostensible living (I had to digress there).

    Like they say, the World Bank will only help us if we start by helping ourselves. We went through some damaging imposed economic rebirth called Structural Adjustment- mostly because we were debtors and had no choice than to obey what some idealistic policy thinker in Washington and Tunis( ADB) thought was right for Africa at the time. These kinds of shuffled thinking will continue to rule Africa if Africa is not ready to pick itself up and start thinking like an adult. Luckily some countries like Ghana, Rwanda, Botswana, and even Ethiopia are gradually shifting the economic and development perception of the continent.

    I enjoyed your post. Keep up the good work

    Like

    1. My brother Njoya, thanks for appreciating the article. I am happy you acknowlegede the fact that the World Bank and other multilateral financial institutions have their share of blame, alongside central governments.

      The issue about ENAM is a sensistive issue and we shall open this can of worms sooner or later. Although an alumni of this elite institution, i admit that there are a lot of things that are not right about the institution and graduates from this institution. We shall dedicate an article on intitutions like ENAM which are found all over Francophone Africa and how such institutions have contributed positively or negatively to Africa’s development.

      Many thanks again for you comment.

      Like

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