afrol News, 19 October – A new survey reveals that over 14 percent of Kenyans receive substantial money transfers from abroad each year. For Africa as a whole, remittances currently reach up to US$ 30 billion annually.
The Central Bank of Kenya today in Nairobi presented the results from a remittances survey it had conducted together with the World Bank. The survey revealed that remittances from abroad had a much greater impact on Kenyan welfare, development and economy than earlier assumed.
The Bank’s survey estimates that 14 percent of adult Kenyans regularly receive money transfers from abroad. One in seven Kenyans therefore see their personal economy strongly affected by money sent from abroad. The number is far higher if the family members of the recipients also are counted.
The funds received are substantial. The Kenyan recipients regularly get an average of US$ 735 in remittances from abroad a year. This amount is typically remitted in seven transactions amounting to US$ 105 each, according to the survey.
“Remittance flows represent a significant share of Gross Domestic Product (GDP) for Kenya and many African countries,” the World Bank noted at the Nairobi conference, where the new survey was launched.
On an African level, the size of remittances is disputed. The World Bank in its conservative estimate says that at least US$ 21 billion are sent in remittances to sub-Saharan Africa each year. Even during the current weak global economy, the Bank forecasts this amount “to grow by almost 2 percent in 2010.”
Regionally, however, experts expect the amount to be even greater. The national banks of Kenya, Uganda and Ethiopia currently are running a project termed the “Future of African Remittances (FAR) Programme”, to coordinate policies on foreign remittances. The FAR Programme holds that “international remittances flows to sub-Saharan Africa currently exceed US$ 30 billion annually, affect as many as 25 million recipient households.”
The Nairobi conference was part of the launching of the regional FAR Programme, with similar conferences upcoming in Kampala and Addis Ababa later this month. Surveys in Uganda and Ethiopia have also been conducted and will soon be presented.
Among the primary goals of the programme is to ease cash movement across borders and therefore help the international money transfer flows to sub-Saharan Africa to keep on growing.
According to the banks, “the remittances market in Sub-Saharan Africa is not competitive, leading to significantly higher transfer costs relative to other regions. The remittance service landscape is dominated by two international money transfer operators that control in excess of 60 percent of the remittance access points across Africa.”
Remittance flows are thought of as being very sensitive to transfer costs. Some studies have estimated that countries in sub-Saharan Africa could potentially raise an additional US $1-3 billion of remittance flows by reducing the cost of transfer by 50 percent, according to the FAR Programme.