African business, politics and lifestyle
Will global crisis hurt remittances to Africa?
Just stop someone on the street and ask if they have a cousin, a brother, or a sister living in Europe, the United States or elsewhere around Africa, and most likely they’ll say that they have two or three or more. Remittances from those loved ones total some $40 billion per year, according to the United Nations. In some countries, diaspora money makes up more than 20 percent of the gross domestic product, and analysts say, remittance cash may be as much as 50 percent higher than current estimates due to informal transfers.
But there is growing concern that this money could be a victim of a spiralling crisis in global financial markets.
It’s still too early to tell how much remittances from the estimated 30 million Africans living abroad have been impacted by the crisis, which, world financial bodies warn, could lead to a global slowdown. But some families have already been told to expect less money.
This year, the continent has suffered a dual attack from high oil and commodity prices. And now, if there is a shortfall in remittances, a third front would put an added strain on wallets and purses. But in some ways, Africa is better-placed to weather some of the storm because its banking sector is relatively unexposed and its economic ties with Asia are deepening. For remittances, the fear is that if a recession hits Europe or the United States, traditionally resilient flows could ebb as migrants’ purse strings are pulled tighter and tighter.
Will a slowing of global economies hit remittance money from Africa’s large diaspora? Or, will Africans abroad prove resilient yet again and continue to send the same amount of money to families back home?