Coronavirus: Africa could lose US$37bn in remittances

A World Bank report has said that global remittances could decline by 20%, as the world economy looks set to enter recession, brought on by a shutdown of economic activity due to the coronavirus pandemic.

This would be the sharpest decline on record for what is a lifeline for millions of people around the world.

Migrant workers who send money home will be less likely to do so because their jobs will be more vulnerable as the virus forces people to stay at home.

In Somalia, personal remittances account for 23% of the country’s GDP, in Lesotho, 16%, in Senegal 10%.

In 2018 officially recorded remittances were worth US$46bn in sub-Saharan Africa, far more than foreign direct investment, which only accounted for US$32bn that year.

Across the region it is thought that Covid-19 will cause a 23% decline in money sent home, amounting to US$37bn.

The same report also highlights the fact that transaction fees are much higher when sending money to Africa.

According to The Economist, reducing these fees could save US$1.8bn annually, as fees usually amount to around 9%, against a global average of 5%.

[Photo: Getty Images]