Project News

Reducing Remittance Costs: Consolidating Trends and Harnessing Gains

03 December 2021

Within the framework of the AU-EU Continent-to-Continent Migration and Mobility Dialogue (C2CMMD), the African Institute for Remittances (AIR) and the European Commission (EC) organised a webinar on 25 November 2021, supported by ICMPD. Reiterating their commitment for continued joint efforts both parties highlighted the importance of looking beyond cost reduction to leverage the potential for inclusive and sustainable development, while harnessing opportunities in innovation and digitalisation.

While experiences have varied greatly across countries and corridors during the COVID-19 pandemic, with the World Bank even forecasting a 20 percent decline in remittance flows for 2020, the pandemic also contributed to expediting online money transfers and increasing the use of digitalisation, including through the remittance of cryptocurrencies. Understanding the drivers for progress in cost reduction and the divergence in development between corridors remains central to the debate in the industry. To this end, the webinar, organised by the AIR and EC within the framework of the C2CMMD, provided an opportunity to bring together relevant stakeholders from both Europe and Africa.

Discussants gave an overview of EU-AU Remittance Corridors from 2015-2021, while highlighting trends and developments in costs, the evolution of remittance market operators, channels, products and flows, as well as strategies in EU-AU corridors where cost reduction measures have been successful and why progress may have been slow in others. Looking forward, the growth of digitalisation and the opportunities it presents were discussed, and the experience of public sector stakeholders in implementing innovative policies to encourage use of digital means. The speakers representing both the private and public sectors, including MFS Africa, Ecobank Nigeria, the Central Bank of Ghana, the Bank of Italy, the French Development Agency (AFD), the German Agency for International Cooperation (GIZ) and the International Fund for Agricultural Development (IFAD), attested to the need for a paradigm shift, while being mindful of the interdependent and complementing roles that the difference players have. Remittances can be a means to an end, or many ends, when seizing the opportunities that they present to improve resilience, and advance social and economic development, particularly in receiving countries.

Such a shift can only generate the potential positive impact towards development that remittances harbour when ensuring that digitalisation does not create inequalities, given the lack of the necessary infrastructure or capacities, and when ensuring financial literacy and consequently access of senders and receivers to formal financial products and services. The need for continued efforts to create a competitive environment was also highlighted, while being mindful that corridor-specific solutions as well as accurate, up-to-date and disaggregated data are critical to that end.