NAIROBI, — The African Union (AU) plans to partner with African states to enable them to reform their laws and regulations so as to lower the cost of remitting funds into and within the continent.
Amadou Cisse, AU’s African Institute For Remittances (AIR) Interim Executive Director, told Xinhua in Nairobi that the new regulations will improve the sector’s efficiency and transparency.
“We also want to disclose more information about remittance service costs so that consumers can benefit from lower cost of remittance,” Cisse said on the sidelines of the Diaspora Homecoming Reception.
According to a 2015 survey conducted by AIR, Africa has the highest cost of remittance in the world.
“On average, it costs 12 percent to send funds into Africa compared to less than five percent in other regions of the world,” Cisse said.
“This means that if you send 100 U.S. dollars from Europe to Africa,the remittance service provider will on average charge a fee of 12 dollars,” he added.
The Executive Director said there are also hidden costs associated with sending money to Africa.
“Some remittance firms use a higher exchange rate compared to the official exchange rate, so the recipient receives less money,” he said.
AIR has also developed a database that details the cost of sending money from the different remittance service providers. It is also working with Africa’s central banks to lower the cost of remitting funds into Africa.
Cisse said the Africa’s remittances have been increasing very year despite the financial crisis in the developed countries.
“It is becoming more and more difficult for Africa immigrants to live in the developed countries and so the African Diaspora are more conscious on the need to invest in their home countries,” he added.
According to the AU, remittances are now a bigger source of Africa’s capital inflows compared to Foreign Direct Investment or Overseas Development Assistance.
The leading recipient of diaspora funds in Africa are Nigeria, Egypt,Kenya and Senegal.