Remittances set to fall in 2009

For the first time in over a decade remittances to sub-Saharan Africa are set to fall in 2009, increasing people’s vulnerability to poverty, officials at the World Bank say.

The World Bank’s latest migration and development brief, published on 11 November, says remittance income in developing countries will decline by about 1 percent from 2008 to 2009.

Dilip Ratha, lead economist and manager of the migration and remittances team at the World Bank, told IRIN the drop could be far sharper. "A worst-case scenario would bring them down by as much as 6 percent."

Remittances to sub-Saharan Africa had been rising steadily since 1995, increasing by 11 percent between 2006 and 2007. Sub-Saharan Africa took in US$19 billion in remittances in 2007, or 2.5 percent of gross domestic product (GDP), according to the World Bank.

Worldwide $265 billion flowed to developing countries through remittances in 2007, surpassing official global development aid by 60 percent, the World Bank says.

"These remittances are more important than credits and foreign direct investment," said Josef Schmidhuber, senior economist at the Food and Agriculture Organization.

Remittances are expected to peak at around $283 billion in 2008 before falling in 2009.

West Africa

"West Africa receives a lot of remittances from France and southern Europe and will be directly affected since Europe is expected to go into economic recession in 2009," the World Bank's Ratha told IRIN.

In 2007 slightly under three-quarters of remittances to sub-Saharan Africa were sent from the United States and western Europe, while the rest were sent from Gulf states, other developed countries and developing countries, according to the World Bank.


Photo: Wurie Bah/IRIN
A foreign exchange bureau in Freetown, Sierra Leone

Ten of the 22 countries considered to have the world’s lowest human development indicators are in West Africa, according to the UN 2007 Human Development Index.

Migration link

Remittance income is directly linked to migration flows thus future estimates depend on how destination countries react to the current financial crunch, Ratha said.

"If some countries impose strict...controls on new immigrant flows, this could be a major issue."

Anti-immigrant hostility partly linked to the global financial crisis is also expected to grow in both developed and developing countries, according to World Bank research. This is already happening in the United States and India, Ratha said.

Impact

IRIN spoke to people across West Africa to see whether their remittance incomes have been affected by the international financial crisis.

Dorcas Eyakodevu in Abuja, Nigeria: "We cannot afford to go to the doctor"

Nigeria receives more in remittances than any other sub-Saharan African country, with $3.3 billion in 2007, followed by Kenya with $1.3 billion, and Senegal with $0.9 billion, according to the World Bank.

Dorcas Eyakodevu, 40, mother of two, said when her husband held two jobs in the United States he usually sent $1,250 every three months. He has since lost one job and in September 2008 sent just $800. "I had expected twice that amount for school fees. The high cost of living makes it very difficult to live in Nigeria at the moment, and I rely on the money he sends to keep the family going. It is becoming harder for me to look after my children. We have had to cut back on our food budget and all other expenses, including transport and healthcare. Now we cannot afford to go to the doctor, unless one of us is seriously ill."

Umu Bangura in Freetown, Sierra Leone: "I can no longer pay my daughters’ school fees"

A single parent of four in the capital Freetown, Umu Bangura said she has withdrawn her children from secondary school because an older son living in the United States has stopped sending money regularly. "I used to receive $100 a month from my son in Maryland, but…he is out of a job and now rarely [takes] my telephone calls. I can no longer afford to pay my daughters’ school fees."


Photo: Obinna Anyadike/IRIN
A money changer in Liberia (File photo)

Sorie Barrie, manager of Manan foreign exchange bureau in Freetown, pointing to the empty customer benches in his office, said many families are facing situations similar to that of Bangura. "I have watched with pain the low inflow of cash we’ve been receiving over the last four months."

Mamadou Traoré in Koutiala, Mali: "Amadou is the financial support for our whole family"

Amadou Traoré, who lives in Paris, supports 21 family members in Mali – his father Mamadou, Mamadou’s three wives and 17 children. Mamadou said: "Amadou has become the financial support for our whole family. My monthly pension no longer goes very far with today’s high cost of living, and all of our other children are still in school." Working in finance since 2000, Amadou used to send $195 a month to cover the family’s food and preparations for religious celebrations. But in the past few months he has sent $115 at most per month according to his father. "We no longer eat meat regularly, and we have pulled our children out of private schools to send them to government schools."

Ousmane Diedhiou in Dakar, Senegal: "Their wives think they spend the money on others"

Dwindling remittances are straining family relationships, according to Ousmane Diedhiou, who manages remittances from two cousins in France and Italy. Between them, they have been supporting the extended family of 12 with $290 a month, though they have recently cut back. "Their wives, whom they left behind in Senegal, think they are spending money on others, or are preparing to find new wives. Our cousins often repeat to us that things are getting hard there [in Europe] but my family doesn’t understand this. [Our cousins] used to help out on traditional holidays, Korité and Tabaski, but more and more often we hear: 'It’s impossible; get by on your own for a few more months'."

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