The 30 million strong African diaspora fuels the continents’
budget to the tune of 5% of its total GDP. The International Fund for
Agriculture Development (IFAD) estimates the African remittance flows to and
within the continent reach $40 billion per year. Because about 75% of all
transfers are informal and, therefore, impossible to track, diaspora remittances
would be up four times bigger bringing the actual figure anywhere between $120
billion and $160 billion.
Breaking down the official numbers indicates that the
remittances received on per capita basis equal about $40. Since not every
person is lucky enough to have a diaspora friend or relative, the actual
average estimated remittance value sent by a migrant equals $1,177 yearly. This
is most often shared by a number of relatives.
Morocco tops the chart at over $6 billion. In second place
is Algeria with $5.4 billion then Nigeria with $5.39 billion and Egypt with
$3.6 billion. However, if one looks at the percentage of a country’s GDP that
is supplied through remittance, it is the poorest and relatively smaller
countries that show the highest dependence on foreign transfers: Eritrea (38%),
Cape Verde (34%), Liberia (26%) and Burundi (23%).
Somalia, which receives approximately $1 billion worth of
diaspora transfers every year, is not listed on percentage terms because its
GDP is unclear. Using the Central Intelligence Agency (CIA) economic estimates,
however, shows that the country’s remittance could be approximately 40% of its
total domestic product. Placing Somalia at the top of relative remittance
value. In Somalia, a country with diaspora spanning all continents, money is
spent less eagerly on health and education simply because these facilities
aren’t commonly available and, if they are, reflect poor quality.
In Eritrea, where ¼ of population lives abroad, about one in
three households depends on remittance income, while 75% of all survey
respondents receive at least one form of remittance. A study by Temesgen Kifle
from the University of Queensland noted, “it is evident that remittances
receiving households in Eritrea spend part of the remittances on child
education …’. Kifle’s regression analysis shows that a 1% increase in household
income (including both formal earning and remittance) increases the education
ratio by around 0.04 percentage points.
A World Bank paper titled: “Remittances, Consumption and
Investment in Ghana” concludes that remittances do affect marginal spending
behaviour of households. Most significant findings show that households
receiving remittance spend less at the margin on food by as much as 14%, and
more at the margin on education by as much as 33%.
Another study focusing on Nigeria and Kenya published by the
World Bank in 2011, revealed that more than half of total remittance spending
is invested in home-building, land purchases and farm improvements.
Donna Clifton, in an article in the Population Reference
Bureau, concludes that countries’ economic growth can be directly affected by
remittance levels through consumption and investment patterns. Clifton points
to an important fact related to migration: As the overwhelming majority of
workers living abroad are male, a significantly higher number of female-headed
households emerge in the country of origin. In Ghana, for example, 52% of
households with migrant workers were female headed, compared with only 25% for
households with no migrant workers. It has been empirically proven, many times
over, that female-headed households have a considerably higher inclination to
invest in health care and education – the core sectors of human capital – as
well as having a higher propensity to saving.
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