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Barriers to remittances in sub-Saharan Africa

Barriers to remittances in sub-Saharan Africa

June 20, 2018    

The barriers to remittances in sub-Saharan Africa (SSA) series is a set of seven notes exploring the supply-side barriers to remittances in this region. The series is part of our work under the Remittances theme of our Risk, Remittances and Integrity programme with FSD Africa, which aims to improve welfare and boost investment growth in SSA.

Currently, the average cost of remittances to SSA is 9.4% of the value of the transaction, compared to the global average of 7.1% (World Bank, 2018a). Informal flows are prevalent especially in SSA, and the trend is increasing in many corridors. The relatively low number of formal flows (compared to informal flows), coupled with the high cost of remittances, is indicative of a formal market that is not functioning optimally to serve people’s needs. To reduce the cost to between 3% and 5% of the transaction value (as agreed by the G20 and Sustainable Development Goals) without compromising the access of consumers in hard-to-reach areas, one needs to understand the current market impediments, which are preventing formal costs from decreasing. This includes an understanding of both informal and formal flows and the various barriers that constrain the formal market.

To conclude on what is required to enable the formal market to fulfil its true potential, this series of notes seeks to provide an overview of the remittances market in SSA, as well as the gaps and barriers in this market.

The series is structured as follows:

  • Volume 1 provides an overview of key remittance corridors in SSA, from the perspective of both the receiving and sending countries. It analyses the correlation between migration and remittances and introduces a categorisation of countries.
  • Volume 2 outlines and ranks the market barriers to the efficient flow of remittances in SSA, drawn from existing literature and in-depth stakeholder interviews.
  • Volumes 3 to 6 explore how the barriers manifest in SSA by presenting four country case studies from the region, namely Uganda, Ethiopia, Nigeria and Côte d’Ivoire.
  • Volume 7 draws conclusions and recommendations for SSA on how to overcome the barriers to reduce informality and costs without compromising access in the region.

To learn more about the study, contact Barry Cooper or Antonia Esser.