Africa Needs More English Remittance Men
Barriers on cash sent home to Africa are retarding growth from 'trade not aid'
A study commissioned by the Rome-based International Fund for Agricultural Development shows more than 30 million individuals living outside their countries of origin contribute more than $40bn (£25bn) annually in remittances to their families and communities back home.
Migrants' remittance behaviour is essentially dictated by the regulatory environment and the speed, cost, security, and accessibility of services offered by banks, transfer companies, micro-finance institutions, and informal operators. There are three different strategies in place in Africa.
The Anglophone strategy focuses on freeing up the remittance market by encouraging competition, relaxing regulatory constraints for non-bank operators, offering financial incentives, encouraging technical and financial innovation, and stimulating collaboration among market players. This approach contributes to reducing costs and increasing the overall volume of funds for beneficiaries.
The Hispanic approach emphasises migrants' involvement in banking by offering a range of banking services in both the country of origin and the host country, products of specific interest to migrants, and low commissions on foreign transfers.
Finally, the Francophone approach relies on two types of monopoly. The first is enjoyed by Western Union, which controls up to 90 per cent of the total formal transfer volume within Africa's 16-member Franc Zone. Western Union charges fees as high as 25 per cent on transfers to these countries, compared to an average global benchmark of 5 per cent, and has required that Franc-Zone countries sign exclusivity agreements.
The second monopoly is exercised in the banking sector. France has a veto within the boards of directors of the Franc Zone's two central banks, while two French commercial banks, BNP-Paribas and Société Générale, exercise a quasi-monopoly on lending programs, mainly centred on short-term trade financing and the needs of governments, public and private companies, and the elite.
What would the world do without France to help it? Prosper?
I think we can guess which model the EU is pushing on Africa and it won't be the free market Anglo model...