1. Migrant Labour Remittances in Africa: Reducing Obstacles to Developmental Contributions Cerstin Sander Bannock Consulting Presentation at the International Conference on Migrant Remittances Maximising Developmental Benefits of Migrant Remittances: Country Experiences A Regional Perspective: Africa London, UK October 2003 Findings of a World Bank funded study.

2. Key Messages Remittances to Africa are significant financial flow linked with migrational patterns heavily underreported barriers to flows due to weak financial systems & restrictive regulation underestimation & limitation of developmental contributions

3. Structure Remittance Profile –Volumes –Sources & Destinations –Use of Remittances –Developmental Contributions Factors Affecting Flows & Uses –Financial Infrastructure - Money Transfer Services –Policies & Regulations Directions for Future Work & Research

4. Volumes of Migrant Remittances All Developing Countries total developing countries $80 billion (2002)

5. Volumes of Migrant Remittances All Africa Africa $12bn 15% total developing countries $80 billion (2002)

6. Volumes of Migrant Remittances All Sub-Saharan Africa total developing countries $80 billion (2002) Africa $12bn 15% Sub-Saharan Africa $4bn 5%

7. ..by region

8. …where received, where sent? Key receiving countries Africa: Egypt, Morocco Sub-Saharan Africa: Nigeria, Lesotho, Sudan, Senegal, Mauritius Key sending countries France, Italy, Saudi Arabia, United States South Africa, Ivory Coast, Angola, Egypt, Botswana

9. Migration Patterns North Africa differs from Sub-Saharan Africa (SSA) More Africans in Europe & Middle East than in North America High intraregional and domestic migration in SSA Overseas migrants from Africa typically more educated than other migrant groups Overseas migration is increasing

10. What do Remittances Mean to Receivers? Individual & household benefits important source of income invested in human and social capital and financial assets often monthly transactions each ca. USD 200 average  transfer from richer to poorer households  better off than peers National benefits balance of payments / forex reserves 1.3% of GDP for SSA 2.2% of GDP for North Africa/Middle East

11. What are we seeing & what are we missing? Flows much higher than official data suggests Why? –High underreporting & high unrecorded flows »weak reporting structures and capacities »only 60% of Africa and 1/3 of Sub-Saharan Africa report data »migration patterns combined with weak financial infrastructure accounts for high informal & domestic flows What is lacking? »reliable, effective, attractive financial services for transfers and investments »enabling environment for attracting remittances with appropriate products

12. Financial Infrastructure: Money Transfer Service Market Service Providers –Formal: Banks Post banks / post offices Money Transfer Operators (MTOs) – eg. Western Union, MoneyGram => What they leave to be desired? good access, low cost, outreach, reliability … –Semi-Formal: Bus / coach companies Courier companies Associations Internet services (financial and non-financial) –Informal: Businesspeople; hawala style networks Transport oneself or through relatives/friends Informal still very common & MTOs expanding...  Increase in semi-formal, strong use of informal and now MTO indicate unmet demand

13. Choices or Preferences? Formal transfer channels more commonly used where strong financial sector liberalised forex regimes Informal transfer channels more common where proximity allows for regular travel financial services lacking and/or expensive familiarity or trust – sometimes due to cultural bonds limited outreach of services limited range of financial products

14. Policy & Regulatory Hurdles in Financial Services restrictive & conservative authorisation for money transfer services

15. Intraregional & domestic migration (SSA) Officially recorded flows heavily underreported (both formal and informal) & not kept pace with global trend Trust in informal channels partially eroding Growing demand for domestic services Growing demand for services beyond money transfer Weak financial systems – limited access, outreach, financial products Restrictive regulation of financial services KEY MESSAGES: UNDERREPORTED & BARRIERS TO FLOWS AND THEIR DEVELOPMENTAL CONTRIBUTIONS Unique Aspects of Remittances in Africa

16. Directions for Future Work Research better understand actual flows as well motivations for or barriers to choices of remittance channels and remittance use Policy review & adjust existing policies to reduce hurdles to developmental contributions including hurdles to remittance transactions through formal channels

17. Migrant Labour Remittances in Africa