4.1.2
Remittance Flows
Outlook for Remittance Flows 2012-14 notes an increasing trend in remittances over the years within Sub-Saharan Africa due to strong south-south flows and weaker currencies in some countries that attracted larger remittances. Despite the crises in North Africa, the civil conflict and unrest related to the “Arab Spring� and the difficult economic situation in Europe, remittance flows to Sub-Saharan Africa are estimated to have increased by 7.4 percent in 2011. Remittances from Kenyan migrants grew to $644 million in the first nine months of 2011. Inflows surged by 45 percent on a year-on-year basis in part because the weak Kenyan shilling made it more attractive to invest in local currency assets. Remittance flows to Ethiopia are reported to have increased to more than $1.5 billion in the 2010-11 fiscal year (Ratha and others 2011). Supporting Remittances in Southern Africa (Truen and others 2005) highlights how remittance flows between developing countries, or the South-South corridor, are quite significant. A good example of South-South remittances is discussed in this work, which assesses remittance patterns, flows, regulatory framework and latest technological advances in the remittance market in the South Africa corridor. Characterized by high levels of migration, both short term and long term, the study on remittances flows between SADC members found that the volume of remittances is quite large but with only about 41.9 percent carried by formal financial service providers. The volume of unregulated remittances may be the result of extremely severe foreign exchange restrictions in South Africa, which is highly regulated and allows only banks to handle foreign transactions. This increases the incentive of sending transfers through unregulated remittances. Remittance Markets in Africa is a companion volume to Leveraging Migration for Africa: Remittances, Skills, and Investments (AfDB and World Bank 2011) and presents findings of surveys of remittance service providers conducted in eight Sub-Saharan African countries and in three key destination countries. It looks at issues relating to costs, competition, innovation and regulation, and discusses policy options for leveraging remittances for development in Africa (Mohapatra and Ratha 2011). Outlook for Remittance Flows 2011-13. Migration and Development Briefs are prepared by the Migration and Remittances Unit, Development Economics Group (DEC) and Poverty Reduction and Economic Management (PREM) network of the World Bank. These briefs are intended to be informal briefing notes on migration, remittances, and development. A study by the Development Prospects Group, Migrant Remittance Flows (Irvine and others 2010) based on a survey of 33 central banks in Africa, sets out to find how data on remittances is collected. The study shows a need for better coordination between both sending and receiving countries. It also suggests that countries must consider new channels and technologies (including mobile networks) for collecting data. The study also noted that African countries have made progress in removing some regulatory obstacles, including rendering exclusivity agreements illegal, which will help spur competition in the remittance transfer market and decrease costs. Migrant Remittances and Development in the Global Economy. This work analyzes the way that migrant remittances operate worldwide and the implications of these inflows for developing countries. It focuses on the main trends and characteristics of remittance senders and recipients, the context in which migrants send money, and the relationship of these transfers to development—in particular to asset building, trans-nationalism, and migrant philanthropy (Orozco 2013).
4.1.3
Costs
Remittance flows through regulated channels are defined by many factors, including costs, cultural familiarity, convenience, and speed. The cost of sending remittances is one of the key influencing factors, and the use of regulated channels is likely to increase when costs go down. South-South Migration and Remittances (Ratha and Shaw 2007), in estimating the cost of remittances, finds it is more costly to send US$200 between the South-South 35