Reduction of cost of remittance transfers to and within Africa
Remittances sent by over 30 million African migrants have been consistently increasing and reached an officially reported more than $66 billion in 2016. Remittances are lifeline for at least 120 million family members living back home. The data on African remittance flows, however, are substantially understated due to the large scale of use of informal/unregulated channels, as a result of a combination of several factors, including the high cost of sending money to and within Africa. Indeed, despite significant achievement in lowering transfer costs, remittances to and within the continent remain the most expensive in the world by a substantial margin.
The need for the promotion of cheaper, safer, faster and legally-compliant transfers of remittances has become a global common interest. In this regard, African and European leaders committed in Valletta, Malta in November 2015 to ‘By 2030, reduce to less than 3% the transaction costs of remittances and identify and eliminate Europe to Africa remittance corridors with transfer costs higher than 5% by 2020. Moreover, the UN General Assembly, in September 2015, endorsed a target (SDG, 10c) for the reduction of remittances transfer costs to 3% level by 2030. In order to achieve these goals, the African Institute for Remittances (AIR), a Specialized Technical Office of the African Union Commission, has been working towards promoting reform of policies and regulatory frameworks on remittances to ensure market competition and efficiency resulting in reduction of remittance transfer costs as well as facilitating ways of leveraging the potential impact of remittances on social and economic development in the continent.