Our money, our rights: - Consumers International

The global economic slowdown affects remittances sent home by Africans working
abroad, which amount to about $10 billion annually. Those remittances must be
vulnerable in the present climate as unemployment bites in rich countries 31 .
Remittances are important both in and of themselves as a major support for
families, and in terms of the incentives they have provided for technological
evolution. Between 2000 and 2005, remittances to SSA increased by over 55%.
Although lower in volume than aid and direct investment, they have proved to be
less volatile and are often counter-cyclical, helping smooth over difficult times (such
as seasonal problems for crop farmers). Furthermore, remittances can be saved to
a very high degree – an IMF sponsored study found levels of remittance saving as
high as 40% among families 32 .
Traditionally only about one third of remittances go through formal channels,
because even though migrants may have access to banks in the countries where
they work, the recipient families may not. Consumers may be put off by high bank
charges and high transfer charges by money transfer operators (MTOs). The
market is heavily dominated by a few MTOs, notably Western Union, which has a
market share of 65-100% in some countries in Francophone Africa 33 . Many
communities in Francophone Africa rely on ‘porters’ of money, with the obvious
risks that this entails, to carry sums for several families from, for example, a group
of workers in France to a village in Mali.
Some institutions have developed to meet the frustrated demand. Theba Bank, a
miners’ bank, offers low cost transfers from South Africa to families in surrounding
countries, such as Mozambique. The International Remittance Network of about
200 credit unions offers low cost remittance services in many countries and does
not require recipient families to have an account.
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