Spurring intra-Africa remittances – Business Daily
When we talk about diaspora remittance in Africa, often the first line of thought is persons residing outside the continent, especially in North America and Europe, sending money back to their homeland.
But the most overlooked factor is the intra-continent immigrants; that is, persons who are economically active not in their country of birth, but in another country within the continent.
Data from the United Nations shows that in 2019, over 21 million Africans were living in another African country, a significant increase from 2015, when around 18.5 million Africans were estimated to be living within the region.
South Africa remains the most significant destination country in Africa, with around 4 million international migrants residing in the country in 2019 (about seven percent of its total population). It was followed by Côte d’Ivoire with 2.5 million international immigrants. Lying in third was Uganda with 1.7 million international immigrants.
Kenya, on the other hand, had slightly over one million international immigrants (or just 2 percent of its total population). Other countries with high immigrant populations as a proportion of their total populations included Gabon (19percent), Equatorial Guinea (18percent), Seychelles (13percent) and Libya (12percent).
Furthermore, significant migration corridors within and from Africa exist, many of which are related to geographic proximity and historical ties, as well as displacement factors.
Migration corridors represent an accumulation of migratory movements over time and provide a snapshot of how migration patterns have evolved into significant foreign-born populations in specific destination countries.
Some of the largest migration corridors involving African countries are between North African countries such as Algeria, Morocco and Tunisia to France, Spain and Italy, in part reflecting post-colonial connections and proximity.
Notable labour migration corridors to Gulf States also exist, as in the case of Egypt to Saudi Arabia and the United Arab Emirates (UAE). Overall, the United Nations identified 20 major migration corridors involving African countries. The top one being Algeria-France corridor.
However, within Africa, there were nine identified migration corridors, (i) Burkina Faso-Côte d’Ivoire (reflecting migrant workers in the Ivorian cocoa plantations); (ii) South Sudan-Uganda; (iii) South Sudan-Sudan (reflecting historical ties); (iv) Mozambique-South Africa; (v) Mali-Côte d’Ivoire (also reflecting migrant workers in the Ivorian cocoa plantations); (vi) Somalia-Ethiopia; (vii) South Sudan-Ethiopia; (viii) Somalia-Kenya (reflecting Kenya playing a host to Somali refugees); and (ix) Zimbabwe-South Africa (reflecting economic migrants seeking better opportunities).
Displacements within and from Africa due to political instabilities is a major feature of the region. In 2018, South Sudan produced the highest number of refugees in Africa at 2.3 million, with most hosted in neighboring countries such as Uganda.
Somalia produced the second highest number of refugees in the region with the majority hosted in Kenya and Ethiopia. However, African migration in the 2000s and 2010s has been much less driven by instability compared to the 1990s, which suggests a growing ability for SSA migrants to earn and remit money from within Africa, and beyond.
The World Bank estimates that intra-African remittances could be around $14 billion a year. Within Sub-Saharan Africa, South Africa, Côte d’Ivoire, Sudan and Uganda were the top remittance senders in the region, sending out a total $2.5 billion in 2019.
This makes migration corridors involving Côte d’Ivoire, Uganda, South Africa and Sudan as the remittance hotspots.
In terms of remittance channels, the dominant mode of transfers across the region are commercial banks and money transfer organisations (MTOs). The use of pure digital platforms is picking up as remittance channel providers partner up to offer seamless transfer of funds directly from a sender to a recipient at the comfort of their devices.
Essentially, remittance flows within the region is not yet fully digital. The current remittance flow has three phases: (i) customer phase where the sender places instructions; (ii) infrastructure phase which provides the transfer interface; and (iii) settlement where the recipient receives the cash.
As technology improves, different players have tried to improve or re-imagine any of the three phases. For instance, M-Pesa has moved in to integrate with Western Union’s network interface to provide a global offering which allows its users to send money to bank accounts in Germany, China and UAE as well as Western Union agents globally.
However, there is yet to be an end-to-end integration of mobile wallets between the West, Central and East Africa. For instance, it is still not possible for an M-pesa user to send money directly to Orange Money wallet in Senegal (or even MTN wallet in Ghana).
The market is still waiting for a player to integrate the mobile money infrastructure between the three African regions. The players that will crack this will be multi-billion dollar companies.
