Sending money back home can be a daunting task for African migrants. What should be a straightforward process often becomes a laborious, stressful situation. Take the case of a friend’s relative, for example. While he needed to support the healthcare of a loved one in Africa and wanted to wire money through existing commercial channels, he faced high transfer fees. He did not want to lose a substantial amount of the funds he planned to transfer, so he sent the money through informal channels, exposing himself to the security challenges such a method carries, including fraud and theft. Sadly, this scenario is too common for Africans living abroad who want to wire money home to family and loved ones but face exorbitant transfer fees and inordinate risks that dampen the impact of their support.

The strategic importance of remittances to Africa

Remittances are a critical source of external finance for Africa, with over 200 million African family members leveraging their availability. For many households, they are the difference between survival and destitution, between going to bed on an empty stomach and having a meal. Over the last decade, remittance flows to Africa doubled, reaching $100 billion in 2022, surpassing the funds received through Official Development Assistance (ODA) and Foreign Direct Investment (FDI). In some African countries, remittances represent over 20 percent of Gross Domestic Product (GDP), highlighting their importance to the economy. A recent study by the United Nations Office of the Special Adviser on Africa (OSAA) established that remittances have important income-equalizing effects, and lower transfer costs are usually associated with higher remittance flows.

Remittances are also resilient during crises, such as the COVID-19 pandemic, remaining stable and providing a lifeline to millions of African families while other external sources of finance decline sharply. On the continent, Egypt is among the top five remittance recipients globally, and together with Nigeria and Morocco, accounted for 65 percent of the total remittances flowing into Africa in 2022.