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BREAKING: Ghana records $4.5bn remittances in 2021, ranks 2nd in Sub-Saharan Africa – World Bank

Ghana remained the second-largest recipient of remittances in Sub-Saharan Africa in 2021, according to the World Bank Migration and Development Brief.

With more favorable oil export prospects, the nation saw a 5% rise in inflows in 2021, reaching $4.5 billion. Remittance inflows into the nation were $3.6 billion in 2020.

Indeed, remittances accounted for 5.9% of the country’s GDP, ranking it 10th in the area.

Nigeria placed first in the area, with $19.2 billion in remittances in 2021, up 11.2 percent.

Kenya, with a good GDP growth rate of 6.7 percent but severe drought in its northeast area, was one of the better-performing nations in 2021, attracting a robust 20 percent increase in remittance receipts.

Tanzania’s revenues increased by 60% due to an increase of COVID-19 cases.

The Gambia’s economy grew by 30% thanks to a new government (and new currency), and Mozambique’s migrant workforce finally came together (with a two-thirds increase in flows to $570 million) to help the hard-hit residents of Cabo Delgado, despite a regional insurgency against mega liquefied natural gas projects.

Fortunately, remittance inflows to Sub-Saharan Africa increased 14.1 percent to $49 billion in 2021, more than erasing the previous year’s 8.1 percent decline and marked the largest increase since 2018.

Economic activity in Europe and the United States remained stable, and documented inflows to Nigeria, which had fallen by around 28% in 2020 owing to greater use of informal channels, were both supportive of a return to growth.

Meanwhile, according to the analysis, Africa is the developing area most vulnerable to the consequences of Russia’s invasion of Ukraine, since indirect impacts accumulate over time.

Most nations, who are net oil/food importers, are currently seeing a sharp drop in trade terms, which is raising deficits and debt, driving up inflation, and reducing real incomes and GDP.

Remittance costs

The report said Sub-Saharan Africa remains the costliest developing region to which remittances are sent.

Aggregate regional remittance costs averaged 7.8% during the fourth quarter (Q4) 2021. The average cost of remitting $200 from countries in the least expensive corridors amounted to 3.4% in Q4 2021.

In contrast, costs for the most expensive corridors registered 31.5% during the fourth quarter of 2021, an increase of 12.3% from the year earlier.

Though intraregional migrants in Africa comprise more than 70% of all international migration from or within the region, intraregional remittance costs are quite high due to the small quantities of formal flows and utilization of black-market exchange rates. For example, the fee for sending $200 in remittances from Tanzania to neighboring Uganda would cost the Ugandan migrant 29.7%.

Outlook

The report said the uncertainty and risks in the outlook for remittances to Africa (2022–23) are exceptionally high against the background of global conditions affected by the Russian invasion of Ukraine.

The key staple commodity for the region – wheat – gained 24% over the course of 2021 – and an additional 22% since the February 2022 invasion.

Higher oil prices is expected to dominate external accounts for the 36 net oil-importing countries of Sub-Saharan Africa, and expectations of deeper current account deficits and worsening debt positions are widespread, the report added.

But unprecedentedly higher wheat prices may be of greater concern, as they will hurt households disproportionately, especially poorer and urban populations.

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