Compared to Latin America and Southeast Asia, Africa pays twice as much to send money home. Transactions fees cost $1.8 billion annually. This is due to the decrease of transactions costs in Latin America and Southeast Asia but in Sub-Saharan Africa the costs have stayed the same. It is ridiculous that the poorest people in the world are paying the highest price. But the expatriates have no other choice, they must send money home. The Oversees Development Institute calls for better regulation of money transfers and banks, blaming the high fees on the lack of competition. Western union, who makes up a high amount of the remittance transfers says there is not way around the fees.
http://america.aljazeera.com/articles/2014/4/17/african-remittanceseconomy.html
4 comments:
If Latin America and Southeast Asia were able to decrease the fees, why can Sub-Saharan Africa not? Companies are becoming too stringent and refuse to help out people. This is one example of how monopolies and lack of competition are allowed to have full control of the price, which hurts the consumer.
I think an interesting approach by Sub-Saharan African governments would be to either subsidize, or somehow encourage the transfer of money back their citizens from abroad. If more and more citizens in these countries are able to spend money at home, their economies would surely grow faster. I agree that it is ridiculous that the poorest people in the world are forced to pay the highest price in order to access money...
As this article illustrates, it clearly costs a lot to send money from the west to sub saharan Africa in the form of remittances. I wonder if it costs as much, if not more to send money from Africa to the west? My parents send me money (from Zambia, Africa), and there is usually a $15 - $20 flat rate for any amount transferred.
Mainza makes an interesting point. I believe there are greater fees for greater sums of money. But on the other hand, it seems like those who would send money to sub-saharan Africa are trying to find barriers to help these countries. These countries should not have to pay these large fees in order to receive the money. This article related to the book Globalism and its Disconnects and how the author criticized the IMF and how they hinder economic growth in these developing countries.
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