Sub-Saharan African expatriates working in the U.S. and Europe pay twice as much to wire money home than their Southeast Asian or Latin American counterparts, according to a report from a British economic development organization published this week.
Transaction fees cost the region an estimated $1.8 billion annually, the report from the Overseas Development Institute (ODI) said.
Whereas remittance fees have gone down for people sending money to Latin America and Southeast Asia — in keeping with G8 and G20 targets to reduce transaction costs — the cost of sending money home to Africa has remained the same.
Remittances account for 5 percent of the entire continent’s GDP, but Maria Quattri, one of the authors of the report, argues that a great deal more is “lost in intermediation.”
That money, said Quattri, could be used to educate 14 million children in the region, “half of the number out of school.”
“The message of the report is the poorest people in the world — Africans — are paying the highest charges for remittance fees,” she told Al Jazeera.
Some have resigned themselves to exorbitant fees that ODI says amounts to 12 percent of every $200 sent home.
“We have no choice. You have to send money home to family and friends. We are Senegalese,” said Rahma, who works at a popular restaurant in New York’s Little Senegal called Africa Kine. She did not give her last name.
Calls for better regulation
Quattri called for better regulation of money transfer operators and banks, blaming a lack of competition in the industry for the high fees.
“We want to see greater transparency on charges, in particular charges on currency conversion fees,” she said, explaining that her organization has called on U.S. and British financial regulators to better assess transaction costs. Quattri also called for international governments to promote the creation of more viable money-transfer operators.
Western Union and MoneyGram, her report said, account for two-thirds of remittance transfers, or $586 million of the loss associated with fees.
Western Union spokesman Dan Diaz explained that there are ways around the fees.
“A consumer can transfer money online from the U.K. for cash payout in Africa with no fee when paying via your bank account,” Diaz wrote in an email.
But outside of the U.K., transaction costs for sending money home to Africa from the West can weigh heavily on newcomers. For Ethiopian Rahma Bakar, a nursing student who lives in Edmonton, Canada, and sends home $200, half of her monthly salary as a part-time cashier, a $20 transaction fee is a sizable chunk of her monthly income.
Read the full story at america.aljazeera.com