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Harnessing Remittances for Africa’s Development

Mthuli Ncube - May 2013

Speed Read
  • African remittance inflows have quadrupled since 1990 reaching US$40 billion in 2010.
  • Remittance flows relieve poverty, but they also improve the balance of payments and bolster foreign exchange reserves.
  • African countries need to create enabling investment and regulatory environments in order that these flows can be channelled into productive investments.

More than 30 million Africans (about three per cent of Africa’s total population) are living outside their home countries. This figure includes those living within other African countries. These African migrants send money to their families in Africa. Remittances by African migrants play an important role as a source of financing and foreign exchange for African households and countries. A recent report published by the United Nations Conference on Trade and Development (UNCTAD) shows that remittances sent to the world’s poorest countries including 33 African countries have increased to US $27 billion in 2011 from US $3.5 billion in 1990. For Africa as a whole, remittance inflows have more than quadrupled since 1990, reaching US $40 billion in 2010. This represents about three per cent of Africa’s total GDP. Globally, the amount of remittances reached US $300 billion in 2010, surpassing foreign direct investments (FDI) and official development assistance (ODA) combined. The estimate for the Africa figure is widely believed to be conservative...

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