By Zainab.joaque@awokonewspaper.sl
Freetown, SIERRA LEONE – Among developing country regions, the remittance cost was lowest in South Asia, at about 4.1 per cent, while Sub-Saharan Africa continued to have the highest average cost, about 7.8 per cent.
According to the World Bank’s Remittance Prices Worldwide Database, the global average cost of sending $200 to LMICs was 6 per cent in the second quarter of 2022, not very different from a year ago, and twice as high as the Sustainable Development Goal (SDG) target.
The burden of compliance with regulations governing anti-money laundering and combating the financing of terrorism (AML/CFT) continues to restrict access of new service providers to correspondent banks. These regulations also affect migrants’ access to digital remittance services.
Remittance flows to Sub-Saharan Africa surged 16.4 percent to $50 billion during 2021, the strongest increase since 2018. However, the region is exposed to the effects of the concurrent crises affecting the global economy in 2022.
In addition, remittance outturns will depend on the balancing of increasing needs for support from the African overseas labour force, and the availability of incomes in host countries to be remitted. Remittance gains are likely to be held to 5.2 per cent in the year, an 11 percentage point falloff in growth from 2021.
Latin America and the Caribbean experienced the largest increase in total average costs, up from 5.6 per cent to 6 per cent, followed by Europe and Central Asia and the Middle East and North Africa. Meanwhile, the average cost of sending remittances to Sub-Saharan Africa, South Asia, and East Asia and the Pacific fell.
But remittance costs across many African corridors and for small islands in the Pacific remain above 10 per cent. Banks continue to be the costliest channel for sending remittances, with an average cost of 11 percent during the second quarter of 2022; while post offices are recorded at 6.5 per cent, money transfer operators at 5.2 per cent, and mobile operators at 3.5 per cent.
Mobile operations remain the cheapest type of service provider, but they account for a small part of total transaction volumes (less than 1 percent). ZIJ/5/12/20