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Remittance Markets in Africa
branches and automatic teller machines (ATMs) per square kilometer is lower in Sub-Saharan Africa than in any other developing region. High remittance costs represent an unnecessary burden on African migrants. In a recent survey, almost 70 percent of central banks in SubSaharan Africa cited high costs as the most important factor inhibiting the use of formal remittance channels (Irving, Mohapatra, and Ratha 2010), as figure 1.12 shows. Evidence based on surveys and field experiments suggests that remittance flows respond to reductions in costs (Gibson, McKenzie, and Rohorua 2006; Martinez, Aycinena, and Yang 2010). Reducing remittance costs can lead to increases in the remittances sent by migrants, in turn increasing the resources available to recipient African households.
Issues in Remittance Source Countries Surveys and interviews of RSPs in key migrant destination countries (France, the United Kingdom, and the United States) reveal that African
Figure 1.12
Factors Inhibiting Use of Formal Remittance Channels high cost
no bank branch near beneficiary sender’s/recipient’s lack of access to bank accounts sender’s/recipient’s lack of valid ID mistrust/lack of information on electronic transfers mistrust of formal financial institutions exchange controls 0
10
20 30 40 50 60 % of central banks citing factor
70
Sub-Saharan African countries all developing, remittance-receiving countries Source: Irving, Mohapatra, and Ratha 2010.
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