Chic African Culture Africa Factbook

Hidden Billion Dollar Fees In Global Economics | Remittances, Sending Money Home

Money transfers
Sending money to Africa is expensive. Remittances are the lifeline to millions of families in Africa.

African Money Transfer Operators (MTOs)

Money Transfers to Africa, the Hidden Billion Dollar Fees In Global Economics


Explore and Understand Africa Through Her Food and Culture

Transferring and receiving money is of huge importance to the African diaspora. What is a remittance? A remittance is the funds an expatriate sends to their country of origin via wire, mail, or online transfer.

Money Transfer Operators (MTOs)

Western Union started offering money transfer services to Africa in 1995 since money transfers by banks were rare as most European banks did not accept transfers to Africa and most prospective recipients in Africa did not have bank accounts. Therefore, rendering financial assistance to their families and friends at home was a major problem for Africans living and working abroad.

Leading global money transfer providers to Africa operating in the country include Dahabshiil, Western Union, MoneyGram, RIA, Banks and WorldRemit along with those offering remittance based on wireless and cashless transfers.


 Remittance Streams of Money and Fees

In 2015, worldwide remittance flows are estimated to have exceeded $601 billion. Of that amount, developing countries are estimated to receive about $441 billion, nearly three times the amount of official development assistance. 

 The true size of remittances, including unrecorded flows through formal and informal channels, is believed to be significantly larger. The bulk of the remittances were to North and West Africa, regions with the largest number of migrants abroad and which alone received some 80 percent of the total funds from the diaspora.

The resilience of owning these money transfer companies attracts the interest of the public authorities and the private sector in Africa. Remittances from migrants are an important source of funding for the economies of many African countries. In these countries, large segments of the population benefit from these remittance. Remittances are an important source of foreign exchange, surpassing earnings from major exports.

Top remittance sending country is the United States at 56.3 percent of the world market in 2015. The top three African countries money is sent to from the USA are

Nigeria 20.8 billion
Egypt 20.4 billion
Morocco 6.7 billion

Top five African countries that remittance is a major percentage of the Gross Domestic Product (GDP)

Liberia 24.6
Comoros 20.2
The Gambia 20
Senegal 10.3
Cabo Verde 10.2

Somalia money

Making money off African immigrants hard earned money; money transfer companies.

The two largest worldwide remittance-recipient countries are Mexico and Egypt with the Global Average cost for sending remittances at 7.45 percent. For example, if sending $100 home to Liberia, it would cost around $7.45; the person receiving the money would also be charged a service fee around $7.45. The original $100 has $14.90 deducted just for fees.

South Africa remains the costliest G20 country to send remittances from 17 - 20 percent. Africa, remittances of African migrants to their countries of origin exceeded US $60 billion in 2012, an amount exceeding the US $56 billion in official development assistance to the continent, and the US $50 billion in foreign direct investment. Reducing the costs of remittances, banning exclusive contracts between Money Transfer Operators (MTOs) and banks, that is the issue to reducing fees.



Did you know?
Nigerian expats send the largest amount of remittances home from the United States, nearly 5.7 billion dollars a year. The charges from money transfer companies to send this money is between 399 million to a little over one billion dollars in fees alone.

More Articles to Read from Chic African Culture

Show more

This Week’s Best Posts and Pages

Cuban Military Presence in Angola

Image
The Cuban military had a long-lasting presence in Angola, with thousands of troops stationed there during a political conflict. The Cuban intervention in Angola had significant international implications and was seen as part of the broader Cold War rivalry between the United States and the Soviet Union.  Angola, a former Portuguese colony in southern Africa, was in the midst of a struggle for independence from Portuguese colonial rule. This war for independence lasted from the early 1960s until 1974, when the Portuguese Carnation Revolution led to the decolonization of Portuguese Africa. When Portugal withdrew from Angola in 1975, it left a significant hole in the political landscape in the country. This withdrawal marked the end of decades of colonial rule and set the stage for the country's transition to independence. However, it also created a political void, as there was no clear, unified government to take control. In the absence of Portuguese colonial rule, many Angolan polit
Read the Article

Sand Traveling from the Shores of Ghana to New England

Image
The journey of a grain of sand from the shores of Ghana to New England, USA, is an important reminder of the interconnectedness of all existence.  It serves as a reminder that even the smallest and seemingly insignificant elements of our world are subject to the grand tapestry of natural processes and the relentless passage of time.  It also invites us to reflect on the intricate web of relationships that underlie our existence and the profound implications of our actions on the global scale. The journey of a grain of sand from the shores of Ghana to New England, USA, shows how interconnected our world is despite vast distances. Sand grains on the shores of Ghana, like those on coastlines worldwide, are constantly subject to natural processes such as erosion. Waves, tides, and weathering gradually break down rocks and minerals, producing sand. The Atlantic Ocean separates Ghana from the eastern United States. Ocean currents, including the North Atlantic Drift and the Gulf Stream, are c
Read the Article

Sofala: A Key Stop on Covilhã's African Odyssey

Image
Sofala, historically known as a significant trading town, holds a special place in the history of Eastern Africa. Located on the eastern coast of Africa, in what is modern-day Mozambique, Sofala was a bustling and strategic port during the late medieval period and the Age of Exploration. Navigating the waters around Sofala was no small feat. The Indian Ocean currents and shifting sandbars made the approach to the Sofala coast treacherous. Pêro de Covilhã's successful navigation of these waters demonstrated his seafaring prowess and furthered Portugal's ambitions to dominate maritime trade routes. To Portuguese explorers, Sofala was not merely a geographical destination but a vibrant crossroads of cultures and trade during the late 15th century. The Age of Exploration in the late 15th century was a transformative era in African human history. It was a time when intrepid European explorers set out on perilous journeys to chart unknown territories, establish trade routes, and unco
Read the Article

Top 20 Largest Countries in Africa

Image
African Country by Size List. Africa Which are the top twenty largest, smallest, and territorial country in Africa by land area? 1. The continent of Africa is the world’s second largest based on land area and population just after Asia. 2. Top five largest countries of Africa are Algeria, Congo Democratic Republic of the, Sudan, Libya and Chad. 3. Top five smallest African countries and territories are Mauritius, São Tomé and Príncipe, Seychelles, Saint Helena and Mayotte. African Country from largest to smallest Area sq mile Area sq km Algeria 919,595 2,381,740 Democratic Republic of the Congo (DRC) 905,568 2,345,410 Sudan 718,723 1,861,484 Libya 679,362 1,759,540 Chad 495,755 1,284,000 Niger 489,191 1,267,000 Angola 481,354 1,246,700 Mali 478,767 1,240,000 South Africa 471,011 1,219,912 Ethiopia 435,186 1,127,127 Mauritania 397,95
Read the Article