SME News

World Bank predicts flat growth in diaspora cash

Growth in diaspora remittances to sub-Saharan Africa will remain flat and will not show any appreciable growth this year as the African continent will be affected by the European economic crisis, according to a new World Bank report.The Bank’s Migration and Development Brief, November edition states that remittances to sub-Saharan Africa will be stagnant and remain at the same level as last year. Last year, remittances reflected a growth of 6.8 per cent and there has been an upward trend since 2009.

The region is slated to receive Sh2.63 trillion ($31 billion) in remittances, with Nigeria receiving the most remittances.

Liberia and Lesotho also lead in remittances as a share of gross domestic product (GDP).

Data from the bank shows that the slow-down is not unique to sub-Saharan Africa alone.

It is expected that growth in remittances to developing nations will slow down to 6.5 per cent, as against 11.7 per cent last year. At the same time, remittances will reflect a growth of 3.9 per cent globally as against 11 per cent last year.

Those countries whose diaspora populations reside in Western Europe have been most affected.

Developing European nations and countries of central Asia will see negative rates in remittance inflows while countries that rely on member states of the Gulf Co-operation Council and Russia for diaspora remittances will see a positive outlook.

In a statement the World Bank said that regions having a large numbers of migrants in oil exporting countries will continue to see a healthy growth in inward remittances, as compared to those countries whose migrant workers were largely found in advanced countries such as Western Europe.

The report reflects the trends seen in Kenya that although diaspora remittances had exhibited a rise since 2010, remittances in September 2012 were 2.4 per cent lower than in August – and this figure represented an eight-month low.

The World Bank said that in spite of the slow down, remittances have shown an element of strength in the face of the European crisis as compared to with private capital flows and foreign direct investments. The present remittances to the developing world are more than three times the official development assistance.

The World Bank predicts that growth is likely to pick up next year to 7.9 per cent for all developing countries and 6.2 per cent for sub-Saharan Africa. But this growth could slow down as a result of hostile policies to migrants in many countries, especially in Europe.

The cost of remittance across borders was quite high, with Africa being the most expensive destination — at about 12.4 per cent of the amount sent.

Mobile money, which could make sending remittances more convenient, has not yet been popularised.

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