Ghana records $4.5bn remittances in 2021, places 2nd in Sub-Saharan Africa – World Bank
In 2021, according to the World Bank’s Migration and Development Brief, Ghana remained the second-largest recipient of remittances in Sub-Saharan Africa.
The country’s inflows increased by 5 percent to a record $4.5 billion in 2021, as oil export prospects improved. In 2020, the total amount of remittances received by the country was $3.6 billion.
Indeed, remittances accounted for 5.9% of the country’s Gross Domestic Product (GDP), ranking it tenth in the area.
Nigeria ranked first in the region with remittances of $19.2 billion in 2021, an increase of around 11.2%.
Kenya, which saw solid GDP growth (6.7%) in 2021 despite severe drought in its northeast region, attracted a robust 20% increase in remittance receipts and was among the better-performing nations.
The increased prevalence of COVID-19 contributed to a 60 percent increase in Tanzania’s revenue.
Mozambique’s migrant labour eventually responded with some force (a two-thirds increase in flows to $570 million) to support the hard-hit citizens of Cabo Delgado, amidst a rebellion against massive liquefied natural gas projects in the region.
Fortunately, remittance inflows climbed 14.1 percent to $49 billion in Sub-Saharan Africa in 2021, eliminating the 8.1 percent decline seen in the previous year and marking the biggest increase since 2018.
Economic activity in Europe and the United States, which remained robust, and a restoration of recorded inflows to Nigeria, which had declined by around 28 percent in 2020 due to the increased use of informal channels, all contributed to a return to growth.
In the meantime, the analysis identifies Africa as the emerging region most vulnerable to the indirect repercussions of the Russian invasion of Ukraine. The majority of countries, which are net importers of oil and food, are currently seeing a sharp decrease in terms of trade, which is rising deficits and debt, boosting inflation, and stifling real incomes and growth.
Sub-Saharan Africa remained the most expensive developing region to which remittances are remitted, according to the research.
During the fourth quarter (Q4) of 2021, regional average remittance expenses averaged 7.8 percent. In the fourth quarter of 2021, the average cost of sending $200 from nations with the least costly routes was 3.4%.
In comparison, costs for the most expensive corridors increased by 12.3 percentage points during the fourth quarter of 2021, reaching 31,5 percent.
Even though intraregional migrants in Africa account for more than 70% of all international migration from or within the region, intraregional remittance costs are extremely high due to the minimal volume of legal flows and the use of black-market currency rates. For instance, the Ugandan migrant would incur a 29.7 percent tax for sending $200 in remittances from Tanzania to Uganda.
Against the backdrop of global conditions caused by Russia’s invasion of Ukraine, the paper stated that the outlook for remittances to Africa between 2022 and 2023 is particularly unpredictable and fraught with uncertainties.
Wheat, the region’s primary crop, increased by 24 percent throughout the course of 2021, and an additional 22 percent since the invasion in February 2022.
Higher oil prices are anticipated to dominate the external accounts of the 36 net oil-importing countries of Sub-Saharan Africa, according to the analysis, which also predicts wider current account deficits and worsening debt balances.
However, unprecedented increases in wheat prices may be of greater concern, as they will disproportionately harm poorer and urban populations.
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