Screen Shot 2017-06-29 at 11.28.45 AMAbstract – International Remittance or Cross border remittance the way its called in todays time has proven from decades the manifesto of  how money transfer can fuel an economic engine. Remittance from migrant workers to developing countries helps not only their own house hold but also the country economy itself. The World Bank estimates for year 2016 remittances was over USD 440 billion. More than twice that of foreign aid across the globe. Migration and Remittances represents numbers and facts behind the stories of international migration and remittances. Remittance has impact across the globe but growth in Africa has lagged other regions though. The Importance of the Remittances by the African Diaspora and its problems are very different compare to the rest of the world. African per capita income is now increasing in tandem with other developing countries as African immigrants are highly skilled workers.

Introduction – Drawing on authoritative, publicly available data. Some interesting downloadfacts: More than 247 million people, or 3.4 percent of the world population, live outside their countries of birth (2013 December Data as per study from internet) . Although the number of international migrants rose from 175 million in 2000 to more than 247 million in 2013 and surpassed 251 million in 2015, the share of migrants has remained just above three percent (of world population) for the last fifteen years.  The top migrant destination country is the United States, followed by Saudi Arabia, Germany, the Russian Federation, the United Arab Emirates, the United Kingdom, France, Canada, Spain, and Australia. The top six immigration countries, relative to population, are outside the high-income OECD countries: Qatar (91 percent), United Arab Emirates (88 percent), Kuwait (72 percent), Jordan (56 percent), and Bahrain (54 percent).  According to data collected by the World Bank as recently as 2015, the global average of sending remittances was >7%. From South Africa, it was >=17%.

Main Story –  Back to our main agenda question number one; Why remittances to Africa are not growing in accordance to international standards. However, many developing countries struggle to leverage these remittances. Though we are able to see through many reports and studies on internet that early shifts in global migration patterns and changes in global currencies. The impact of remittances is extraordinary. According to available official data, the Mexico–United States corridor is the largest migration corridor in the world, accounting for 13 million migrants in 2013. Russia–Ukraine is the second largest corridor, followed by Bangladesh-India, and Ukraine–Russia. For the former Soviet Union corridors, many natives became migrants without moving when new international boundaries were drawn. One of the major impediments is the cost and ease of sending remittances.

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Remittances are part of an individual’s access to financial services. A good remittance product improves value to the user in the short term and access to other financial products in the long term it also increases competition and could move transactions to the formal sector. Remittances play a critical role in supporting the welfare for many individuals and households in developing countries. Now the answer for the question Why remittances to Africa are not growing accordance to international standards and Evaluating the impact of remittance on the households?. These two questions are our agenda for this post. Moreover, remittances can contribute to economic growth, with research indicating that it can have a greater impact than ODA and FDI. This might suggest that remittances serve as a social safety net for those individuals who are not the poorest but who would be in need of targeted social assistance without remittances.

Glob.pngIn 2015, the top recipient countries of recorded remittances were India, China, the Philippines, Mexico, and France. As a share of GDP, however, smaller countries such as Tajikistan (42 percent), Kyrgyz Republic (30 percent), Nepal (29 percent), Tonga (28 percent); Tonga’s economy is weak – based to a large extent on remittances from expatriates, and on foreign aid., and Moldova (26 percent) were the largest recipients. Why there is no African country in this his list. Are we really sure African remittance outlook is in Plug and play mode and not plug and pay and then pray! Main issues in Africa is around government policies, lack of financial literacy for migrants, cost of remittances (Most of hard earned money is bean eaten by money transfer agency/banks/agents/brokers etc).

Also needs to rest on other criteria than the financial savings from cheaper remittances, such as the improvements in their capabilities from being more informed customers, and the potential savings from other aspects of financial management, such as choice of debt levels and instruments.  Regression analysis indicates, too, that remittances are negatively correlated with receiving any type of government benefits. Remittance corridors between South Africa and the rest of the Southern African Development Community (SADC), which are amongst the most expensive in the world.

When we will stop reinventing the wheel as remittance os not new and all Eco system16215226-flying-money-american-dollars-background-stock-photo around it i.e channels (Digital or Traditional), Systems, methods, technical infra, regulations, policies, forex, on sending side and almost similar issues around receiving side are done deal in many parts of the globe i.e Asia Pacific, too much to learn and adopt to give this need a flying speed. No big changes in ultimate outcomes – migrants avoid switching to more expensive or less transparent remittance channels, but do not change the amount or frequency of remitting. Need is to change and designing policies to reduce the transaction costs, strengthen the formal financial infrastructure, leverage remittances to improve access to financial services. Experimenting further with adding additional content on budgeting, saving, and debt management seem fruitful areas for policy refinement in this area.

make-money-internetAs a remittance service provider one needs to take care of exchange rate and their need & greed for margins, transfer fee & charges, reputation & image in market, speed of processing, methods & options to transfer and after & in service customer support. Our second question here is “What impact remittance have on people lives/household? then can be answer simply by evaluating the impact of remittance on the households / people lives through some interviews and real data on ground. The impact for receiving house hold are very much visible here in this video. A small heart touching video on The Power of Remittance. Please click to watch it full. Its very clear from the the video that recipient households spend more on education and healthcare and urban recipients also report higher subjective health status and educational enrollment. The effect on inequality and poverty is not straightforward because households in the middle income range benefit disproportionately from remittances.

images (2)However in those months when remittances increase, the monthly inflation rates, typically, decrease. Still, the regions with the higher rates of recipient households do experience lower levels of poverty, while individuals from recipient households have higher subjective and objective perceptions of welfare. Remittances arguably create moral hazard, at the public level, as the elderly and the poorest are less likely to be remittance recipients. Most transfers take place via formal money transfer systems, but informal channels, such as a courier or a family member travelling to or from source market (Across the globe trend) accounted for nearly one third of transactions. Informal remittances appear to be higher in rural areas, probably because of the undeveloped financial infrastructure in rural areas. Remittances arguably play an important role in the political economy of social welfare. Regulation which allowed for non-bank formal providers to offer cross-border remittances independently of a bank. This was intended to spur innovation that would bring down the cost and improve the ease of sending remittances and indeed it did the job.

Neoliberal economic and social policies, founded on the idea that the private sector should drive the country‘s advancement, intended to reduce public involvement in private lives by reducing regulations and the size of the civil service in the country. Remittances were most likely viewed as one of the components of that private sector. The elderly and the poorest are less likely to be remittance recipients than the younger and the better-off. At the same time needs to implement more inclusive migration policies by effectively allowing dual citizenship and granting a number of political and economic rights to expatriates. Further, due to identification requirements and distribution challenges, many adults rely on informal channels. The barriers faced by many migrants when accessing formal transfer services, including affordability and access to documentation.

Sign-tConclusion – As research has shown to be the case with cross-border remittances, even total amounts remitted are sensitive to priceA giant step forward for governments, policy makers, regulation controllers together with the remittance services providers and sender & receiver should be extra ordinary education on financial literacy. This will enable literally hundreds of millions of people to have and use the power of remittance, a bank account, get financially included, start and grow businesses and prevent fraud. Transactions will then be safe, quick and easy. As research has shown to be the case with cross-border remittances, even total amounts remitted are sensitive to price. An efficient domestic payment system infrastructure is key to reduce costs of remittance services, especially in receiving countries.

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Posted by V Sharma

Technology specialist in Financial Technology(FinTech), Photography, Artificial Intelligence. Mobile Financial Services (Cross Border Remittances, Mobile Money, Mobile Banking, Mobile Payments), Data Science, IT Service Management, Machine Learning, Neural Networks and Deep Learning techniques. Mobile Data and Billing & Prepaid Charging Services (IN, OCS & CVBS) with over 15 years experience. Led start ups & new business units successfully at local and international levels with Hands-on Engineering & Business Strategy.


  1. Reblogged this on sheetal05 and commented:
    Are we really sure African remittance outlook is in Plug and play mode and not plug and pay and then pray! …..



  2. Remittance save life , build business and career…. its very important factor in todays time where people live out of home but still needs to take care of home



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