Western Union and MoneyGram are by far the most significant players in the region controlling 65% of all remittance payout locations

Increasingly Africans living and working abroad are being called upon to take a more active role in the development of the continent. Some African countries have established Diaspora forums to engage the experience (and financial assistance) of these expatriates and migrants.

An often overlooked fact about the African Diaspora is that the amounts of money migrants send home to relatives and friends each year generally exceeds the amount of money given to Africa through official development aid.

Estimates of the average total annual value of remittances to Africa vary between $32 and $40 billion. (This excludes the informal network of money transfers, which is significant. If taken into account this figure could increase by as much as 50%.) Official development aid is around $25 billion per annum (according to promises issued during the G8 Summit).

In a recently published International Fund for Agricultural Development (IFAD) report called Sending Money Home to Africa: Remittance markets, enabling environment and prospects, the benefits of remittances and challenges of the money transfer market are highlighted.

According to the report, two major money transfer companies control 65% of all remittance payout locations [in Africa]. Western Union and MoneyGram are by far the most significant players in the region.

Karen Kühlcke interviewed Aida Diarra, Western Union’s vice president for the Ecowas region, about remittance flows and the role of the African Diaspora in contributing to the development of Africa.

Has the financial crisis had a significant impact on remittance flows in the last 18 months and if so, what has the impact been?

Yes, it has had a negative impact but this has varied across regions. In Africa remittance flows have declined by between 6% - 8% but in Asia and Europe the decline has been as high as about 15%.  However, I would like to emphasise that the long-term drivers for money flows are positive – these drivers include migration and population growth.  In fact, the World Bank foresees acceleration in remittance flows in 2010, so the outlook is positive.