It is the lifeline of millions of Africans. Diaspora money weighs much more than development aid from rich countries. But this year, the amounts are declining due to the economic crisis following the Covid-19 pandemic. According to the UN, it will decrease by 21%.
Sending money to one’s family is the main goal of immigrants. An existential goal that motivates the crazy venture to have abandoned their country and left their family to try the adventure abroad. Since 2009, transfers to the African continent have doubled, exceeding development aid or foreign direct investment. In 2019, $ 85 billion went out of the pockets of migrant workers to fill the parents who remained in Africa. Three-quarters of the money is used to buy food or to finance health, education and housing costs, according to studies from the UN. Amounts necessary to cover the basic needs of millions of people.
The prospect of a reduction in transfers from abroad to Africa is therefore synonymous with disaster for a large number of families. According to the UN Economic Commission for Africa, these transfers are expected to decrease by 21% to reach $ 67 billion by 2020. The global economic crisis affecting all countries, and in particular North America, Europe and the Middle East, the three major labor-intensive regions, is at stake. emigrant work. However, these migrants are among the first victims of the economic crisis. “Many work in the most affected sectors. Hotels and catering, domestic services, seasonal gardening “, often with” temporary employment contracts “, notes the OECD (Organization for Economic Co-operation and Development) in a report on Covid’s effects on migrant workers. 1% before the economic crisis to 10.2% since then.
Countries that depend on immigrants’ money
For some countries, which are heavily dependent on transfers, the reduction in transfers may exacerbate the economic downturn. In Mali, diasporic transfers account for 7% of GDP, in Senegal the interest rate rises to 10%. In fifteen African countries, these transfers amount to more than 5% of GDP. However, the decline in transfers is not homogeneous and will not be the same for all countries. Thus, the Comoros archipelago, the African country most dependent on diaspora money, saw the amounts sent at 32% in the first five months of 2020. In Morocco, after a decline in the months of April and May, the transfers had a catch-up effect from June, so that the case in August was only 2.3% compared to 2019. Because there is also a phenomenon said about “no return”. Given that they could not return to Africa for the summer holidays due to travel restrictions and containment measures, migrant workers sometimes compensated by sending more money home.
Reduce transmission costs
For all countries and throughout 2020, forecasts are still pessimistic and the UN Economic Commission for Africa recommends a series of measures to stimulate diasporic transfers to Africa. The first of these should be to reduce the cost of transferring money, which is still largely unaffordable. For a transfer of USD 200, the global average of taxes levied by financial institutions is 7%. Africa is the region with the highest cost of receiving a remittance, averaging 8%. Very far from the 3% that the UN has set as a goal. The organization also wants banks and operators to reduce fees for money transfers to zero during the pandemic. A policy that makes it possible for households living on the money of migrant workers to make up for the reduction in remittances.