The Continental Migration Report 2021, has projected that Diaspora Remittances to Nigeria and other African countries may drop by 5.4 per cent, that is from $44 billion in 2020 to a projected total of $41 billion in 2021.
The report titled, “African regional review of implementation of the Global Compact for Safe, Orderly and Regular Migration,” was produced by the Economic Commission for Africa (ECA) in partnership with the African Union Commission (AUC).
It builds from four sub-regional reports compiled by AUC and a summary from stakeholder consultations at the just concluded 2021 African regional review meeting on the Global Compact for migration.
The report attributed the projected decline in remittances to the effects of COVID-19 pandemic.
Remittances are estimated to constitute approximately 65 per cent of the income of some receiving countries and senders spend an estimated 15 percent of their income on remittances.
For 25 African countries, all of which have large diaspora populations, remittances are the primary source of national income.
The World Bank had reported that remittances by Nigerians in the diaspora fell by 27.7 per cent to $16.8 billion in 2020 from $23.24 billion.
The World Bank disclosed this in a report titled, ‘Migration and Development Brief’, which also revealed that remittance flows to low- and middle-income countries fell by 1.6 per cent to $540 billion in 2020 from $548 billion in 2019.
The report, which provided updates on global trends in migration and remittances, revealed that remittances to Sub-Saharan Africa fell by 12.5 per cent to $42 billion in 2020, with Nigeria accounting for 40 per cent of the remittances into the subcontinent. The report stated: “Remittances to Sub-Saharan Africa declined by an estimated 12.5 per cent in 2020 to $42 billion.
“The decline was almost entirely due to a 27.7 per cent decline in remittance flows to Nigeria, which alone accounted for over 40 per cent of remittance flows to the region.
Although the COVID-19 pandemic was expected to lead to a decrease in remittances to Africa in 2020, findings of the reports show that by October 2020 remittances to Africa had reached approximately $78.4 billion, constituting 11.7 per cent of global remittances. Remittances have therefore demonstrated greater resilience and reliability as a source of capital in Africa than foreign direct investment flows.
It recommends that governments across the world should take effective action to facilitate and boost remittances in view of supporting the fight against COVID-19 and ultimately building a more sustainable post-pandemic world.
According to the report, the costs associated with sending remittances to Africa are some of the highest in the world. Until very recently, average transaction costs were equivalent to 8.9 per cent of the amount being sent for a remittance payment of $200,
With respect to the cost of sending money, the report says Africa is still far from achieving the 3 percent target set out in Sustainable Development Goal 10.