Researchers have identified the rising sources of income for Africans being realized through remittances as an important aspect that has the potential of impacting lives positively as well as bringing about the much desired economic growth and development on the continent.
This was one of the findings after some experts discussed the theme of remittances 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”.
In his presentation, a researcher from the University of Lagos, Nigeria, Taiwo Ojapinwa, noted that although remittances to Africa had recently declined, they still constituted a major component of income to households and investments compared to other external revenue inflows.
He explained: “There is now a 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.
“Remittances’ contribution to the economy can also depend on the protection of property rights, strong judicial independence, well-organized labour markets, low levels of corruption and a sound macroeconomic environment”, Ojapinwa added.
Another fellow researcher from the University of Ilorin, Nigeria, Raphael Babatunde, pointed out that remittances had become a major livelihood strategy among African households and that this source of income helps to supplement agricultural incomes for many farmers.
According to him, “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 the countries of the migrants’ origin.
“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”, he added.
In his discussion on the research papers, a Professor of Economics at the University of Leeds, Malcolm Sawyer, explained that although remittances had been fundamental in changing lives, their impact in Africa was being undermined by high costs imposed on migrant remittances.
He said: “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.
“Policy-makers in individual countries and region should be looking at how these costs can reduce and how these financial flows can be exploited to boost growth and the socio-economic development of their people”, Sawyer added.
Commenting on the theme, the Chief Renewal of Planning Section at the United Nations Economic Commission for Africa (ECA), Bartholomew Armah, advised African governments to continue to introduce measures to attract diaspora investments at home by offering them incentives and reducing remittance charges.
Data provided by the World Bank indicate that remittances have declined by an estimated 6.1% to US $33 billion in 2016 due to slow economic growth in remittance-sending countries and a decline in commodity prices.