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Africa: Sending Money Home

AfricaFocus Bulletin
Nov 5, 2007 (071105)
(Reposted from sources cited below)

Editor's Note

"Remittance flows to and within Africa approach US$40 billion. North African countries such as Morocco and Egypt are the continent's major recipients. East African countries heavily depend on these flows, with Somalia standing out as particularly remittance dependent. For the entire region, these transfers are 13 per cent of per capita income." - Sending Money Home, International Fund for Agricultural Development.

In recent years the economic importance of remittances for developing countries has attracted increasing attention. But, with the exception of Latin America and the Caribbean, empirical research has been scanty. "Sending Money Home" is the first report to try to estimate remittance flows from migrants from every continent, concluding that in 2006 some 150 million migrants sent more than $300 billion to their home countries.

This AfricaFocus Bulletin contains excerpts from that report, which is also available on-line at, as well as a recent Foreign Policy in Focus commentary by Francis Calpotura of the Transnational Institute for Grassroots Research and Action (TIGRA, The Oakland, California-based group focuses on organizing migrants to increase the impact of their remittances, including lobbying for better terms with money transfer companies. Working primarily with Mexican hometown associations in the United States, TIGRA has organized surveys among migrants, organizing them into "Million Dollar Clubs" of immigrant communities and groups estimated to be sending at least one million a year home to their communities.

Member organizations are principally from Latin America, but also include African immigrant groups such as the Somali Action Alliance in Minneapolis. They are currently organizing a campaign for Western Union to sign a "Transnational Community Benefits Agreement."

For earlier references to research on remittances and development, see the listing in, available at, and the listing from, at

++++++++++++++++++++++end editor's note+++++++++++++++++++++++

Sending Money Home: Worldwide Remittance Flows to Developing Countries

International Fund for Agricultural Development

This report has been elaborated based on a study commissioned by IFAD to the Inter-American Dialogue in collaboration with the Multilateral Investment Fund of the IDB and contributions from the European Union, Government of Spain, Government of Luxembourg, CGAP and UNCDF.

[Excerpts only. For full report, including summary data for 51 African countries, see

For more information, please contact: Pedro de Vasconcelos, Remittances Programme Coordinator, IFAD (]

Remittances, the portion of migrant workers' earnings sent back home to their families, have been a critical means of financial support for generations. But, for the most part, these flows have historically been "hidden in plain view", often uncounted and even ignored. All that is now changing - as the scale of migration increases, the corresponding growth in remittances is gaining widespread attention.

Today, the impact of remittances is recognized in all developing regions of the world, constituting an important flow of foreign currency to most countries and directly reaching millions of households, totaling approximately 10 per cent of the world's population. The importance of remittances to poverty alleviation is obvious, but the potential multiplier effect on economic growth and investment is also significant.

The driving force behind this phenomenon is an estimated 150 million migrants worldwide who sent more than US$300 billion to their families in developing countries during 2006, typically US$100, US$200 or US$300 at a time, through more than 1.5 billion separate financial transactions. These funds are used primarily to meet immediate family needs (consumption) but a significant portion is also available for savings, credit mobilization and other forms of investment. In other words, the world's largest poverty alleviation programme could also become an effective grass roots economic development programme, particularly in the rural areas that present some of the greatest challenges to financial inclusion.

Three aspects could further enhance this development:

  • Improvements in data collection,
  • Reduction in transaction costs, and
  • Increased efforts to leverage remittance flows for greater development impact.



Sub-Saharan Africa has over 30 million people in the diaspora. Of all the world's regions, however, Africa's predominant migration is intraregional. The fluid migration within West Africa, for instance, is partly due to the region's status as a geopolitical and economic unit, but also by a common history, culture and ethnicity among many groupings. There is also significant international migration to former European colonial powers, such as France, England, the Netherlands and Italy, among other countries.


Remittance flows to and within Africa approach US$40 billion. North African countries such as Morocco and Egypt are the continent's major recipients. East African countries heavily depend on these flows, with Somalia standing out as particularly remittance dependent. For the entire region, these transfers are 13 per cent of per capita income and on a country-by-country average represent 4 per cent of GDP and 4 per cent of exports.

Rural remittances

Remittances to rural areas are significant and predominantly related to intraregional migration, particularly in Western and Southern Africa. The mobility of Africans within theses region has been followed by the sending of regular amounts of money. Two thirds of West African migrants in Ghana remit to rural areas in their countries of origin.

Market and financial access

When compared to other regions, money transfers to Africa are among the most problematic mainly due to the fact that the continent faces two major challenges: high rates of informality, particularly within the continent, and a regulatory environment that foments monopolies. In turn, transfer costs are higher and remittance senders obtain less value for their money. Most African countries restrict money transfers to banking depository institutions, and restrict outbound flows of money unless used for trading.

As a result, informality emerges as a solution to the need to remit. Another effect, however, is the persistence of monopolies by banks and the few money transfer operators handling transfers. In all of West Africa, for example, 70 per cent of payments are handled by one money transfer operator. Moreover, 50 per cent of payments are handled directly by banks and the rest by MFIs either as sub-agents of banks, with some exceptions (in Senegal, for example, MFIs operate as independent agents). Nigeria is a case in point: nearly 80 per cent of transfers are handled by one money transfer agency and banks are the sole remittance payers in the country. Africans in South Africa are also faced with significant regulatory restrictions in sending money, and thus rely on informal networks.

Because regulatory environments often prevent other non-banking financial institutions from making transfers or restrict outbound transfers, financial access is also a casualty. As few institutions participate in the transfers, and banks do not cater to lowerincome individuals, financial access among African senders and recipients is relatively low. In some countries like South Africa barriers to entry relate to their legal status, thus disenfranchising migrants. Other countries such as Kenya are seeking to deepen financial access by leveraging remittance transfers through the use of mobile telephony.

Facts and figures for Africa

*Total number of migrants: 29,199,544

* Total remittances (US$ million): $38,895

  • North Africa: $17,129
  • West Africa: $10,803
  • East Africa: $5,153
  • Central Africa: $1,317
  • Southern Africa: $4,493

* Indicators

  • Annual average remittances per capita: $83
  • Annual average remittances per migrant: $1,358
  • Remittances as percentage of GDP: 4%
  • Remittances as percentage of exports: 4%
  • Ratio of remittances per capita and GDP per capita: 13%
  • Average share of migrants in total population: 7%
  • Average share of migrants in countries with a population under 1 million: 20%
  • Average share of migrants in countries with a population over 1 million: 5%

Top 5 recipients by volume received (US$ million)

  • Morocco: $6,122
  • Nigeria: $5,397
  • Algeria: $5,164
  • Egypt: $3,479
  • Tunisia: $1,491

6 out of 52 countries receive more than US$1 billion

Main destination and migrant percentage to that destination

* North Africa (France): 33%
* West and Central Africa (Cote d'Ivoire): 14%
* Southeast Africa (Tanzania): 11%

Cost of sending $200: 8%-11%

Remittances: For Love and Money

Francis Calpotura | August 14, 2007

Foreign Policy in Policy Editor: John Feffer

[Francis Calpotura is the executive director of the Transnational Institute for Grassroots Research and Action (TIGRA). Originally from the Philippines, he has been involved in cross-border organizing around economic justice for the last 20 years. TIGRA is based in Oakland but has affiliates throughout the United States. To get involved with their current Western Union campaign, visit

Yania Marcelino was a six-year-old girl in the Dominican Republic when her mother left their family to find work in another country. She went first to Puerto Rico, then later to New York City to work as a seamstress. There she began sending money back to Marcelino and her three siblings and four cousins. The children often had to travel 15 or 20 kilometers to get to the wire transfer agency, and sometimes the money sent was lost.

For nine years, her mother tried to be part of their lives through letters, sometimes including money for them to take pictures to send to her. She sent a dress and shoes for Marcelino's first communion, but they never arrived. At 21, Marcelino was ready for university but could not pay for it. Her mother applied to bring her to the United States, but Marcelino had become pregnant and couldn't get a visa. By the time her immigration paperwork went through, she was 24 with a baby to support.

"It took me three months to find work [in the United States]," she says. "And I started to send money."

Today, Marcelino works part-time as a neighborhood organizer for a community organization in Providence, Rhode Island. On weekends, she also works as a hairdresser to support her three children. She continues to raise money to send to her hometown, most recently $2,500 to pay for a local girl's operation.

Part of her community activism involves serving on a local coordinating committee for the Transnational Institute for Grassroots Research and Action (TIGRA). This national network of immigrants like Marcelino together sends millions in remittances, or money transfers, to families throughout the Global South. By coming together, these immigrants have begun to see the power of organizing their dollars and numbers. Remittances from immigrants now represent more than the global total of overseas development assistance. It can be a powerful driver of sustainable economic development.

Labor Moves North, Money Flows South

Globalization has transformed the lives of hundreds of millions of people in this generation. Countless individuals have moved from villages to towns, from cities to overseas in search of ways to provide for their families and escape poverty, violence, and an uncertain future. Many have come to the United States to work as low-wage laborers. Part of the largest influx of immigrants since the turn of the 19th century, they have created an unprecedented level of money transfer from the global North to the South as they send money home to their families.

Sending a remittance is an individual act of love from the sender to the receiver. But if seen as a collective practice, it is transformed into economic power that can be of service to family and community. Cross-border organizing around remittances can ultimately pose a challenge to the current model of unequal development that has forced people to leave their homes.

Neoliberal economic policies of unfettered trade (e.g. under the North American Free Trade Agreement or NAFTA), privatization of state-run industry and services, and the triumph of investor rights over labor rights have together failed to reduce poverty or create economic growth. In fact, they have made conditions worse. Since these economic policies have not been working, people have resorted to a grassroots transfer of labor and capital. Workers migrate away from their families to serve as labor in rich countries and send capital in the form of remittances back to their loved ones in impoverished communities around the world. In this way, mobilizing remittances toward sustainable development can be a means of using neoliberalism against itself.

These remittances have eclipsed the amount rich countries spend on foreign aid. In 2005, migrant workers sent a total of $232 billion to their country of origin, more than three times the amount of official development assistance. In many parts of the developing world, remittances account for 30% or more of the gross domestic product. Inflows from Mexicans living abroad, for example, represent the country's second largest source of foreign income behind oil exports. Hometown Associations

TIGRA is part of the growing grassroots movements linking immigrants with their communities of origin. Many immigrants in the United States, especially from Mexico, have come together in "hometown associations," directly linking communities here with their home communities. These connections can provide a substantial alternative to foreign aid and investment, as these cross-border ties are strengthened. This is crucial since international financial institutions that provide "aid" often contribute to the harmful economic policies that have displaced people from their home countries.

More than 1,000 Mexican hometown associations exist in the United States. These associations send money to rebuild after natural disasters, promote health and education efforts, and support the development of basic infrastructure. As these associations have grown in financial importance, the Mexican government has taken note, matching the contributions of these groups to several Mexican states by 3 to 1.

But the Mexican government's increasing reliance on these associations is part of the flawed neoliberal model that dictates a decreased role for government in providing basic services and investing in sustainable development. Rather than mitigate the economic factors that have forced so many to migrate, the Mexican government has chosen instead to support the export of its second most profitable resource, labor. Building an Alternative

TIGRA encourages community and ethnic associations to conduct surveys to establish that their members contribute at least $1 million of remittances per year. These Million Dollar Clubs (MDCs) have formed across the United States from Oakland to New York, Los Angeles to Minneapolis, and Fargo to El Paso. Involved immigrant and community organizations include the Fifth Avenue Committee in Brooklyn, Pilipino Workers Center in Los Angeles, Casa Aztlan in Chicago, and Somali Action Alliance in Minneapolis. As a MDC, immigrants can speak with one voice as "millionaires" for their local area, demand accountability of those who prey on their vulnerability, and set priorities for reinvestment.

At the next level up, La Liga (The League) networks the Million Dollar Clubs and their allies globally as economic leverage to promote sustainable development. It allows member organizations in both host and home countries to have the ability to jointly apply pressure to receiving and sending governments to respond to community needs and change policies that exacerbate migration. La Liga is also involved in setting up a Transnational Community Reinvestment Fund (TCRF) that will provide an alternative to foreign "aid" and international financial institutions. The founding convention of La Liga is set for May 2008 in Mexico City. In the meantime, TIGRA is conducting consultations across the United States to determine what a truly democratic TCRF would look like.

The Fund seeks to support and promote alternative models of community development whose values of solidarity, sustainability, and holistic human development are central to the economic enterprise. The functions of the Fund will include providing grants, loans, and technical assistance to strengthen and promote alternative economic development initiatives in communities of the global South and North that have borne the brunt of neoliberalism. This can include, but is not limited to, building affordable housing, development of local-serving business ventures, and establishing cooperative and community-owned institutions. TIGRA is expected to launch the Fund in the spring of 2008.

Western Union and the Money Transfer Scam

An immediate challenge faced by immigrant communities is the high fees associated with remittance transactions. Being forced to spend billions in transfer fees to send money back home for food, urgent medical care, and education is a major economic security issue for immigrants. Studies show that if money transfer fees were cut in half, 33 million people could be lifted out of poverty in the developing world. Immigrant workers spend up to a week's wages to pay these monthly fees; for families in their home countries, the fee represents almost two month's worth of wages.

This is why TIGRA organizers have as their current central focus a campaign to pressure the global money transfer giant, Western Union, to lower fees and prioritize community reinvestment in sustainable development. Such a move would make the money transfer industry more accountable to its customer base: immigrants who often work low-paying jobs with little regulation. This scenario is grounded in economic reality; wire transactions cost less than $5 to a company that charges $20 or more.

Specifically, TIGRA is urging Western Union to adopt a Transnational Community Benefits Agreement (TCBA) that would lower fees, establish fairer exchange rates, and provide community reinvestment for sustainable development. A year's worth of dialogue with the company has borne little fruit thus far. Organizers with TIGRA are threatening a September boycott of the company if Western Union continues to deny compliance with the tenets of the TCBA.

Ultimately, however, TIGRA's success depends not on how much Western Union lowers its fees, nor even on the total number of dollars reclaimed for marginalized communities in rich and poor countries. As one Dominican activist said, "We don't want to do this just to get some money in people's hands. If we're going to work on this, it has to be about building a network to stop the monster of neoliberalism."

AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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