NAIROBI – Remittances to Sub-Saharan Africa will rise modestly this year despite a sluggish world economy, but its share of such monies trails those of other developing regions, a World Bank official has said.
Funds sent home to the region by citizens living abroad ‘exceed US$21 billion and are forecast to grow by almost two per cent in 2010 despite a weak global economy’, said a World Bank study launched jointly with Kenya’s central bank.Remittance flows represent a significant share of gross domestic product (GDP) for many African countries, but ‘in global terms it is not as high as other regions’, Benjamin Musuku, head of the World Bank’s Future of African Remittances programme, told Reuters after a news conference.He noted that remittances to Mexico alone were roughly the same as those received by the whole of Sub-Saharan Africa.That meant the region was less able to leverage funds from its diaspora for development, Musuku said.He did not detail how remittances can be used to fund development, but in Sub-Saharan Africa they are typically used to finance local investments such as real estate, retail businesses and stocks. Some are sent expressly for consumption, spurring domestic demand for goods and services.Remittances also consist a key source of foreign exchange.Musuku said Sub-Saharan Africa needed a focused strategy on remittances, which can represent more than a quarter of GDP in smaller economies such as Cape Verde and Lesotho.’These are quite significant flows going into these countries,’ he said. ‘Accurate numbers will help private sector players engaged in remittance services to make more investments in products.’’The more they [remittances] flow through official channels, the better for macro-economic management, monetary policies and all those things associated with flows crossing borders,’ Musuku said. – Nampa-Reuters
