Remittances flows to Sub-Saharan Africa are expected to decline by 0.5 per cent in 2016, says the World Bank’s latest paper on migration and development.
“For 2017, remittances are expected to grow at 2.5 per cent, underpinned by flat remittances in Nigeria which account for two-thirds of remittance flows into the region,” the Bank said.
The paper titled, “Migration and Development: A Role for the World Bank Group”, said remittances to developing countries were expected to increase only slightly in 2016.
“Remittances to low and middle income countries are expected to increase 0.8 per cent to $442 billion,” the paper, made available to the Times, said.
According to the Bank, the modest recovery this year is largely anchored on increases in remittances sent to Latin America and the Caribbean and this follows a decline in the level of remittances recorded in 2015.
It said low oil prices continue to be a factor in reduced remittance flows from Russia and the Gulf Cooperation Council (GCC) countries, adding that structural factors have also played a role in dampening remittances growth.
The paper said anti-money laundering efforts have prompted banks to close down accounts of money transfer operators, diverting activity to informal channels.
The World Bank said policies favouring employment of nationals over migrant workers have discouraged demand for migrant workers in the GCC countries and exchange controls in countries from Nigeria to Venezuela have disrupted the flow of remittances.
It said global growth of remittances to developing countries is projected to remain modest at about 3.5 per cent over the next two years and developing regions other than Latin America and the Caribbean are projected to have growth of two per cent or lower.
“The global average cost of sending $200 remained at 7.6 per cent in the second quarter of 2016. Average costs have dropped from 9.8 per cent in 2008,” the paper said.
The Bank said the highest-cost region to send money to continues to be Sub-Saharan Africa at 9.6 per cent while it is the least costly to send remittances to the South Asia region.
“Remittances continue to be an important component of the global economy, surpassing international aid. However this ‘new normal’ of weak growth in remittances could present challenges for millions of families that rely heavily on these flows,” Augusto Lopez-Claros, Director of the World Bank’s Global Indicators Group, said.
He said “this, in turn, can seriously impact the economies of many countries around the world bringing on a new set of challenges to economic growth.”
The World Bank paper provides an overview of the fundamental drivers of migration and the associated economic benefits and challenges.
It outlines a role for the World Bank Group and International Financial Institutions (IFIs) to take on in this area, thus complementing the New York Declaration on Refugees and Migrants agreed on at the United Nations (UN) Summit on Refugees and Migrants held on September 19, 2016.
There are about 250 million international migrants and almost three times as many internal migrants. Out of these, there are 21.3 million refugees (including 5.2 million Palestinian refugees).