Last week, an interesting report from the African Development Bank both exhilerated and challenged observers.It was revealed that Africans in the diaspora transfer up to US$17 billion to their people back home.
This is about the total annual expenditure of Kenya, Tanzania and Uganda, which stands at about $18.2 billion.
The African Development Bank (AfDB) survey also showed that the amount accounts for 750% of the Official Development Assistance (ODA) for some countries..
ADB president, Dr. Donald Kaberuka, who has spent the last couple of weeks in the region, said that the replenishment of the African the Bank would assist African countries to channel these transfers from the diaspora.
This is a lot of money which if channeled strategically could bring in great dividends to the continent.
Money sent home by people living in the diaspora constitutes the second largest financial inflow to many developing countries, exceeding international aid.
The World Bank estimates are that about $250 billion was remitted globally in 2006.
These figures are increasing by almost 30% every year as more people travel abroad for more opportunities.
Remittances contribute to economic growth and to the livelihoods of needy people at home.
The transfers also promote access to financial services for the sender and recipient, thereby increasing financial and social inclusion
A typical example given on the magnitude of the amounts is the one given of Mali.
The Malian diaspora in France sent home 120 billion CFA francs, equivalent to the aid it gets from its development partners.
In other countries, such as Morocco, Senegal or the Comoros Islands, diaspora remittances account for 750%, 218% and 346% of the official development assistance respectively, reveals the AfDB study.
Remittances, provide a safety net during sudden economic downturns, financial crises, and unexpected short-falls.
Remittances have helped many families educate children, health provision, infrastructural developemnt and many other benefits especially at family level.
However a lot has to be done in the area of the cost of sending this money. It is still very expensive to send money here (5%-15% of the amount). We can borrow a leaf from India. Service providers in the UK offer fee Indians free account-to-account money transfer services which has had a dramatic effect on the average fees for sending money to India, reducing the cost by about 30% in one year.
