Africa’s expat remittances, which amount to more than $110bn, could be a major source of funding for key infrastructure projects across the continent if properly harnessed, Benedict Oramah, the president of the African Export-Import Bank (Afreximbank), said in Washington, D.C., on Friday.
In a keynote address to the Frontier 100 Forum organised by the Initiative for Global Development, Oramah said that those resources, composed of $53bn of savings and $63bn of annual remittances, were well in excess of the continent’s annual infrastructure financing requirements, currently estimated at about $93bn.
Oramah noted that since the early 2000s, expat remittances had become the most important source of foreign currency inflows for many African countries and had become more important than foreign direct investments (FDIs) as a source of foreign currency.
Oramah added that Egyptian expat remittances represent 72% of the country’s export revenues and four times the size of FDI inflows.
Oramah pointed out that in Nigeria, expat remittances, at about $20bn in 2015, were about four times the size of FDI inflows and about 20% of merchandise export receipts in that yearn. In relatively smaller economies, such as Cape Verde, Comoros, the Gambia, and Sao Tome and Principe, expat remittances are at least twice the size of the value of export earnings.
Egyptian remittances increased by 40% in August 2017 compared to August last year, according to the Central Bank of Egypt (CBE).
A total of $16.3bn in remittances was sent to Egypt between November 2016 (when Egypt floated its currency) and August this year.
The period following the flotation of the pound saw a $2.4bn increase in remittances, estimated at 17.35% compared to the same period of the previous fiscal year.
Oramah regretted that many governments were yet to put in place policies and programmes to effectively harness the many significant benefits offered by the Diaspora, saying that lessons could be learned from the experiences of countries like the Philippines, Israel, Bangladesh, India, and Mexico, which had robust programmes to improve the Diaspora participation in national economic activities.
He noted, for instance, that the Philippines allowed its citizens to enroll in or continue their social security coverage while abroad as workers were free to continue contributing to the Home Development Mutual Fund.
“Afreximbank had integrated the Diaspora in its intra-African Trade Strategy, given the Diaspora’s size and importance as well as the experience of other countries. That strategy regarded the Diaspora as the 56th African State,” Oramah noted. “Our goal is to strengthen and support the supply chains between Africa and Africans in the Diaspora; facilitate investments in Africa by Africans in the Diaspora; support joint ventures between Africa and Africans in the Diaspora, especially in making strategic acquisitions in Africa or in the Diaspora country,” he said, adding that Afreximbank also aimed to support businesses operated by the Diaspora population that linked up to Africa.
Afreximbank is the foremost pan-African multilateral financial institution devoted to financing and promoting intra- and extra-African trade.