Egypt is the highest recipient of remittances in Africa in 2019 with a total of $26.8 billion, Oxford Business Group said in a report on Thursday. The remittances received by Egypt were mainly from Arab countries, the U.S., and the UK. Oxford said Nigeria ranked second, as it received $23.8 billion in 2019, driven by remittances from the UK and the U.S.. The report also showed that remittances from African migrants abroad rose by 3.5 percent in 2019 to reach $707 billion. On average, they make up 2.5 percent of the region's GDP; however, for some smaller countries like Senegal, remittances account for around 10 percent of GDP. Sub-Saharan Africa has the world's highest average transfer cost for remittances, which is at nine percent, the report added. The coronavirus outbreak caused a global recession that has affected both labour markets and financial flows across the world, while the remittances are also hurt as well, which have increasingly been among the top contributors to GDP in many emerging markets over recent decades, the report read. On 22 April, a World Bank report forecast that remittances that are headed to low and middle-income countries would see the roughest fall in recent history over 2020, set to drop by 19.7 percent to $445 billion, down from $554 billion in 2019. According to the World Bank report, such fallout will affect emerging economies, which are the greatest recipients of these inflows. David Malpass, president of the World Bank, said remittances are a pivotal source of income for developing countries, yet, the ongoing economic recession caused by coronavirus is taking a severe toll on the ability to send money home and makes it all the more vital that we shorten the time to recovery for advanced economies. "Costs tend to vary based on market competition. It is therefore unsurprising that remittance commissions charged by operators in the Gulf are among the lowest, given that immigrants represent high proportions of their populations.” the Oxford report continued. Saudi Arabia and the UAE are the largest exporters of remittances worldwide after the U.S., as 80 percent of UAE residents are foreign-born, as is over 80 percent of Saudi Arabia's private sector workforce, according to the report. "The UAE is already one of the cheapest countries in the world to send money from. The average commission charged on a transfer of Dh735 ($200) to India was 3.04 percent as of February, only slightly above the UN's SDG target for 2030," Unlike the UAE, sub-Saharan Africa has the world's highest average transfer cost for remittances, which stands at nine percent. However, these costs have fallen significantly since 2008, when the average commission charged for sub-Saharan Africa transfers was 15 percent. They have, however, been reasonably stagnant since 2014, when the rate was 10 percent, the report showed. According to the report, these high charges were due to the strict regulations that require money transfer operators to carry out checks to verify that the money is not destined for, or being used in, illicit practices. Thus, streamlining regulations to reduce these checks would be one way to lower costs for consumers, who send small but regular amounts of money. Oxford also predicted that increased competition in Africa would likely drive down prices.
