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Ghana records $4.5 billion in remittances in 2021 – Report

79552158 Remittance inflows to sub-Saharan Africa soared 14.1 percent to $49 billion in 2021

Sat, 21 May 2022 Source: classfmonline.com

Ghana recorded US$4.5 billion (5 percent increase) in remittances in 2021, the second-highest in Sub-Saharan Africa, according to the World Bank Migration and Development Brief.

It was US$3.6 billion in 2020.

Remittances constituted 5.9% of the country’s Gross Domestic Product (GDP) – the 10th in the region.

Africa’s most populous country, Nigeria, led the pack with inflows of $19.2 billion in 2021 (an 11.2 percent increase).

Remittance inflows to sub-Saharan Africa soared 14.1 percent to $49 billion in 2021 following an 8.1 percent decline in the prior year.

Growth in remittances was supported by strong economic activity in Europe and the United States, the report noted.

It said the largest recipient country in the region, Nigeria, gained 11.2 percent, in part due to policies intended to channel inflows through the banking system.

Countries registering double-digit growth rates include Cabo Verde (23.3 percent), Gambia (31 percent), and Kenya (20.1 percent).

Countries, where the value of remittance inflows as a share of GDP is significant, include the Gambia (27 per cent), Lesotho (23 percent), Comoros (19 percent), and Cabo Verde (16 percent).

In 2022, remittance inflows are projected to grow by 7.1 percent driven by the continued shift to the use of official channels in Nigeria and higher food prices – migrants will likely send more money to home countries that are now suffering extraordinary increases in prices of staples.

The cost of sending $200 to the region averaged 7.8 percent in the fourth quarter of 2021, a small decline from 8.2 percent a year ago.

The World Bank said officially recorded remittance flows to low- and middle-income countries (LMICs) are expected to increase by 4.2 percent this year to reach $630 billion. This follows an almost record recovery of 8.6 per cent in 2021, according to the World Bank’s latest Migration and Development Brief released.

Remittances to Ukraine, which is the largest recipient in Europe and Central Asia, are expected to rise by over 20 percent in 2022. However, remittance flows to many Central Asian countries, for which the main source is Russia, will likely fall dramatically. These declines, combined with rising food, fertilizer, and oil prices, are likely to increase risks to food security and exacerbate poverty in many of these countries.

“The Russian invasion of Ukraine has triggered large-scale humanitarian, migration and refugee crises and risks for a global economy that is still dealing with the impact of the COVID pandemic,” said Michal Rutkowski, Global Director of the Social Protection and Jobs Global Practice at the World Bank.

“Boosting social protection programs to protect the most vulnerable, including Ukrainians and families in Central Asia, as well as those affected by the war’s economic impact, is a key priority to protect people from the threats of food insecurity and rising poverty.”

In 2021, remittance inflows saw strong gains in Latin America and the Caribbean (25.3 percent), Sub-Saharan Africa (14.1 percent), Europe and Central Asia (7.8 percent), the Middle East, and North Africa (7.6 percent), and South Asia (6.9 percent). Remittances to East Asia and the Pacific fell by 3.3 percent; although excluding China, remittances grew 2.5 percent. Excluding China, remittance flows have been the largest source of external finance for LMICs since 2015.

The top five recipient countries for remittances in 2021 were India, Mexico (replacing China), China, the Philippines, and Egypt. Among economies where remittance inflows stand at very high shares of GDP are Lebanon (54 percent), Tonga (44 percent), Tajikistan (34 percent), Kyrgyz Republic (33 percent), and Samoa (32 percent).

“On the one hand, the Ukraine crisis has shifted global policy attention away from other developing regions and from economic migration. On the other hand, it has strengthened the case for supporting destination communities that are experiencing a large influx of migrants,”said Dilip Ratha, lead author of the report on migration and remittances and head of KNOMAD.

“As the global community prepares to gather at the International Migration Review Forum, the creation of a Concessional Financing Facility for Migration to support destination communities should be seriously considered. This facility could also provide financial support to origin communities experiencing return migration during the COVID-19 crisis.”

Globally, the average cost of sending $200 was 6 percent in the fourth quarter of 2021, double the SDG target of 3 percent, according to the Bank’s Remittances Prices Worldwide Database. It is the cheapest to send money to South Asia (4.3 percent) and the most expensive to send to Sub-Saharan Africa (7.8 percent).

The costs of sending money to Ukraine are high (7.1 percent from the Czech Republic, 6.5 percent from Germany, 5.9 percent from Poland, and 5.2 percent from USA). The global goodwill towards refugees and migrants from Ukraine opens an opportunity to develop and pilot programs to facilitate their access to jobs and social services in host countries, and apply simplified anti-money laundering and counter-terrorist financing procedures for small remittance transactions to help reduce remittance costs and mobilize diaspora bond financing.

The war in Ukraine has also affected the international payment systems with implications for cross-border remittance flows. The exclusion of Russia from SWIFT has added a national security dimension to participation in international payments systems.

“Lowering remittance fees by 2 percentage points would potentially translate to $12 billion of annual savings for international migrants from LMICs, and $400 million for migrants and refugees from Ukraine,” added Rathi.

“The cross-border payment systems, however, are likely to become multipolar and less interoperable, slowing progress on reducing remittance fees.”

Source: classfmonline.com