Remittance 'super tax' costs Africa $1.8 billion a year, says think tank

Apr 17, 2014

Africa is burdened with high money transfer fees, according to a new report on remittances from the Overseas Development Institute (ODI), one of Britain's leading think tanks.

Africa is burdened with high money transfer fees, according to a new report on remittances from the Overseas Development Institute (ODI), one of Britain's leading think tanks.

These excess fees - called "super tax" by the ODI - cost the African continent $1.8 billion (€1.3 billion) a year, which is enough money to pay for the primary school education of 14 million children in the region, according to the report.

This is because workers are paying an average of 12 percent in fees to transfer money back to relatives in Sub-Saharan Africa. For instance, a worker sending $200 home to provide for a relative’s education would incur a $25 fee.

Kevin Watkins, ODI Director, said that the virtual duopoly operated by Western Union and Moneygram in Africa is stifling competition, and should be investigated by the UK's consumer watchdog, The Guardian reports.

Latest World Bank figures show that remittances from foreign workers reached $32 billion last year and an annual increase of more than eight percent is expected until 2016.ADNFCR-2976-ID-801713660-ADNFCR