Total amount sent back home by citizens of low- and middle-income countries (LMICs) in Diaspora reached a record high in 2018 and has been bet on to become largest source of external financing for recipient countries, the World Bank says in its latest Migration and Development Brief published Monday.
The World Bank says the officially recorded annual remittance flow to the LMICs grew 9.6 percent from its previous high of $483 billion in 2017 to $529 billion in 2018 on the back of “a stronger economy and employment situation in the United States and rebound in outflows from some Gulf Cooperation Council countries and Russia.’’
For 2018, the countries with the top remittance receipt were India with $79 billion, China with $67 billion, Mexico with $36 billion, Philippines with $34 billion and Egypt with $29 billion.
Across sub-Saharan Africa, Nigeria led the front receiving more remittance inflow than next biggest nine countries – Ghana, Kenya, South Africa and the likes.
The inflow into Nigeria in 2018 amounted to $24.3 billion (N8.75trn at 360/$), approximately 6.1 percent of the country’s GDP and similar to the proposed 2019 budget of N8.83 trillion.
Not accounting for China, the remittances of $462 billion into low-and middle-income countries last year, were more than their total foreign direct investment of $344 billion in the same period, a development the World Bank says would see remittances become the largest source of external financing at a projected $550 billion in 2019.
Despite the possible gains large transfers back home from migrant workers hold, the high cost of moving funds across borders was a major concern the World Bank raised.
Average cost of sending $200 to LMICs remained at 7 percent in Q1 2018, compared with the last three quarters of 2018 and more than double the Sustainable Development Goal’s 2030 target of 3 percent while it was lowest at 5 percent in Southern Asia and most expensive at 9.3 in sub-Saharan Africa – even exceeding 10 percent in many areas in Africa and smaller Pacific Island.
The World Bank notes that banks are the most expensive way to transfer money. Remittance cost charged often includes a premium, whereas national post offices have exclusive arrangement with a dominant money transfer operator (MTO) and charge less.
