Increasing sources of income for Africans are being realised through remittances, which have been observed as an important factor that impacts lives as well as brings about economic growth and development on the continent.
The theme of remittances was discussed by researchers and economists at the 12th African Economic Conference in Addis Ababa, Ethiopia, on Wednesday, December 6 during a session titled ‘Financing Arica’s Development – Remittances and Natural Resources’.
Taiwo Ojapinwa, a researcher from the University of Lagos, Nigeria, said that although remittances to Africa have recently declined, they still constitute a major component of income to households and investments compared to other external revenue flows.
“There is now need to find ways how remittances can directly contribute to economic growth, which for decades has not been the case. There is need to have strong institutions and rule of law, because the amount of remittances a country receives can be influenced by the quality of governance,” Ojapinwa said.
“Remittances’ contribution to the economy can also depend on the protection of property rights, strong judicial independence, well-organised labour markets, low levels of corruption and a sound macroeconomic environment.”
His fellow researcher, Raphael Babatunde from the University of Ilorin, Nigeria, added that remittances have become a major livelihood strategy among African households – and that this source of income helps to supplement agricultural incomes for many farmers.
“Remittances sent by migrants are important in fighting nutrition, poverty and food insecurity. They are believed to have a huge impact on the socioeconomic conditions of families left behind in countries of the migrants’ origin,” he said.
“Although agriculture remains the most important single source of income for many communities in Africa, farming households that receive remittances have a slightly larger share of income than those that do not receive remittances.”
In his discussion on the research paper, Malcolm Sawyer – a Professor of Economics at the University of Leeds – said that although remittances have been fundamental in changing lives, their impact in Africa is affected by high costs imposed on migrant remittances.
“The remittances to Africa are not being used as efficiently as possible, largely due to high charges. Basically, sending money to Africa is a bit expensive; probably the costs are among the highest in the world,” he said.
“Policymakers in individual countries and regions should be looking at how these costs can be reduced, and how these financial flows can be exploited to boost the growth and socio-economic development of their people.”
Bartholomew Armah, Chief of the Renewal Planning Section at the United Nations Economic Commission for Africa (ECA), added that African governments should continue introducing measures to attract diaspora investments at home by offering them incentives and reducing remittance charges.
World Bank Statistics indicate that remittances have indeed declined by an estimated 6.1% to US$33billion in 2016 due to slow economic growth in remittance-sending countries and a decline in commodity prices.