This situation is contrary to Tanzania’s peers within the East African Community (EAC) where remittances are a leading source of the countries’ foreign exchange earnings.
Dar es Salaam. High cost of sending money from abroad
to Tanzania is making it hard for the country to realise the potential
of utilizing remittances as a leading source of foreign exchange
earnings, available data show.
This situation is contrary to Tanzania’s peers within the East African Community (EAC) where remittances are a leading source of the countries’ foreign exchange earnings.
In Kenya for instance, diaspora remittance beat the country’s top traditional export - tea – to remain on top.
Similarly, remittances are also the top foreign exchange earner in Uganda. World Bank figures show that in 2015, Tanzania received only $390 million in remittances. This was a far cry from Kenya’s $1.54 billion and Uganda’s $1.1 billion.
In the same vein, Kenya and Uganda were on the list of African countries that received highest remittances in Africa in 2016, according to World Bank and International Monetary Fund (IMF) figures.
The lineup of top countries and the amount of remittances they received in 2016 include Nigeria ($19 billion), Ghana ($2 billion), Senegal ($2 billion), Kenya ($1.7 billion), Uganda ($1.1 billion), Mali ($0.8 billion), South Africa ($0.7 billion), Liberia (0.6 billion), Ethiopia ($0.6 billion) and Madagascar ($0.4 billion).
Taking the UK as an example, a new report revealed in Dar es Salaam last week that Tanzania was the most expensive country to send money from the UK to Africa.
“More than £44 million (about Sh125 billion on the prevailing exchange rate) is sent each year by more than 38,500 Tanzanians living in the UK. But the cost of sending money is twice as much as sending to neighbouring Kenya or Zimbabwe,” reads a statement in the report.
Commissioned by Financial Sector Deepening Africa (FSD Africa) and written by Developing Markets Associates (DMA), the report says the average cost of sending £120 from the UK to Tanzania is 14 per cent.
On average however, the costs for sending a £120 from the UK to Kenya and Zimbabwe is seven per cent while sending the same amount to Uganda, Mozambique and Rwanda costs nine, 12 and 13 per cent respectively.
Speaking to The Citizen on sidelines of last week’s Mobile 360 conference in Dar es Salaam, the WorldRemit mobile partnerships director Alix Murphy said a good number of Tanzania’s diaspora population lives in UK, USA and Canada.
“The volume of remittances in Tanzania is not that huge due to high transfer costs….The UK, which has the highest population of Tanzanian migrants outside Africa, is the country which sends the highest volume of remittances to Tanzania,” he said.
The Mobile 360 Conference was hosted by GSMA, who represent 800 mobile network operators across the world.
WorldRemit is a leading global provider of remittances which processes 74 per cent of all international transfers to mobile money accounts coming from money transfer operators.
Canada and USA which have 23,000 and 19,000 Tanzanians respectively come second and third in that order.
To send money from the USA and Canada to Tanzania, WorldRemit urges, one pays more than doing the same to other countries in Africa.
“In short, the costs of sending $200 (inclusive of all fees and charges) from, UK, Canada and USA, are well above the global average of $7.45 per cent,” said Ms Murphy.
Little competition and high costs of handling cash abroad and technical integration are to blame for the trend, according to her.
DMA findings show that globally around 90 per cent of the remittance business is offline and cash-based.
This, according to Ms Murphy, is a very expensive way to send money as it requires the involvement of a number of agents both to receive the money and then to pay it out.
World Bank figures show that average remittance costs in Sub Saharan Africa increased from 9.7 per cent during the first quarter of 2016 to 9.8 per cent during the first quarter of 2017.
To reduce costs, analysts recommend the use of digital platforms.
According to WorldRemit, when sending $150 from the USA, the fees would decrease to $7.99 from$12.
It was in the endeavor to address this challenge that World Remit and Huawei announced a partnership deal last week that will make the former’s international money transfer service available to all partners of the latter’s mobile money service platform across Africa.
Through the deal, money will be remitted through digital means.
This situation is contrary to Tanzania’s peers within the East African Community (EAC) where remittances are a leading source of the countries’ foreign exchange earnings.
In Kenya for instance, diaspora remittance beat the country’s top traditional export - tea – to remain on top.
Similarly, remittances are also the top foreign exchange earner in Uganda. World Bank figures show that in 2015, Tanzania received only $390 million in remittances. This was a far cry from Kenya’s $1.54 billion and Uganda’s $1.1 billion.
In the same vein, Kenya and Uganda were on the list of African countries that received highest remittances in Africa in 2016, according to World Bank and International Monetary Fund (IMF) figures.
The lineup of top countries and the amount of remittances they received in 2016 include Nigeria ($19 billion), Ghana ($2 billion), Senegal ($2 billion), Kenya ($1.7 billion), Uganda ($1.1 billion), Mali ($0.8 billion), South Africa ($0.7 billion), Liberia (0.6 billion), Ethiopia ($0.6 billion) and Madagascar ($0.4 billion).
Taking the UK as an example, a new report revealed in Dar es Salaam last week that Tanzania was the most expensive country to send money from the UK to Africa.
“More than £44 million (about Sh125 billion on the prevailing exchange rate) is sent each year by more than 38,500 Tanzanians living in the UK. But the cost of sending money is twice as much as sending to neighbouring Kenya or Zimbabwe,” reads a statement in the report.
Commissioned by Financial Sector Deepening Africa (FSD Africa) and written by Developing Markets Associates (DMA), the report says the average cost of sending £120 from the UK to Tanzania is 14 per cent.
On average however, the costs for sending a £120 from the UK to Kenya and Zimbabwe is seven per cent while sending the same amount to Uganda, Mozambique and Rwanda costs nine, 12 and 13 per cent respectively.
Speaking to The Citizen on sidelines of last week’s Mobile 360 conference in Dar es Salaam, the WorldRemit mobile partnerships director Alix Murphy said a good number of Tanzania’s diaspora population lives in UK, USA and Canada.
$53m remitted from Canada
Official
recorded data show that Tanzania receives around $69 million, $53
million and $49 million in remittances per year from UK, Canada and the
USA respectively.“The volume of remittances in Tanzania is not that huge due to high transfer costs….The UK, which has the highest population of Tanzanian migrants outside Africa, is the country which sends the highest volume of remittances to Tanzania,” he said.
The Mobile 360 Conference was hosted by GSMA, who represent 800 mobile network operators across the world.
WorldRemit is a leading global provider of remittances which processes 74 per cent of all international transfers to mobile money accounts coming from money transfer operators.
Canada and USA which have 23,000 and 19,000 Tanzanians respectively come second and third in that order.
To send money from the USA and Canada to Tanzania, WorldRemit urges, one pays more than doing the same to other countries in Africa.
“In short, the costs of sending $200 (inclusive of all fees and charges) from, UK, Canada and USA, are well above the global average of $7.45 per cent,” said Ms Murphy.
Little competition and high costs of handling cash abroad and technical integration are to blame for the trend, according to her.
DMA findings show that globally around 90 per cent of the remittance business is offline and cash-based.
This, according to Ms Murphy, is a very expensive way to send money as it requires the involvement of a number of agents both to receive the money and then to pay it out.
World Bank figures show that average remittance costs in Sub Saharan Africa increased from 9.7 per cent during the first quarter of 2016 to 9.8 per cent during the first quarter of 2017.
To reduce costs, analysts recommend the use of digital platforms.
According to WorldRemit, when sending $150 from the USA, the fees would decrease to $7.99 from$12.
It was in the endeavor to address this challenge that World Remit and Huawei announced a partnership deal last week that will make the former’s international money transfer service available to all partners of the latter’s mobile money service platform across Africa.
Through the deal, money will be remitted through digital means.
0 comments: