The postal services can play a pivotal role in delivering
remittances, lowering the transfer costs and providing access to basic
financial services in Africa, says the International Fund for Agricultural
Development (IFAD), reports NaijaAgroNet.
A joint report made available to NaijaAgroNet by the International
Fund for Agricultural Development (IFAD) and the European Commission (EC) on
the occasion of the International Day of Family Remittances to be observed
tomorrow.
The report, entitled ‘A success story on remittances at the post office in Africa,’ analyses
the results achieved by African Postal Financial Services Initiative (APFSI), a
joint programme led by IFAD and financed by the European Union (EU).
The programme, NaijaAgroNet gathered, has been implemented in 11 African countries in cooperation with the World Bank, the United Nations Capital Development Fund, the Universal Postal Union and the World Savings and Retail Banking Institute.
NaijaAgroNet
also reports that the APFSI programme has helped post offices develop more
effective business models, upgrade their computer technology and connectivity,
and improve their expertise in order to process real-time payments and offer
and manage financial services.
"The remittance market is changing at a rapid
pace,” said Pedro De Vasconcelos, Coordinator of the Financing Facility for
Remittances at IFAD, pointing out that technology is transforming the payment
systems and digitalized financial services are creating new opportunities.
“In this context, postal operators play a prominent role in
delivering remittances to rural migrant families, providing them with financial
services they rarely had access to,” Pedro said.
According to De Vasconcelos, the strong presence of post
offices in remote and rural areas is extremely valuable. Their historic
footprint helps build trust in the provision of rural financial services.
In 2017 alone, African migrant workers sent over US$70
billion to their families back home, representing an increase of more than 10
per cent from 2016 and more than 36 per cent over the past decade.
Sub-Saharan Africa remains the most expensive region in
the world to send money home. In 2017 the average cost was 9.3 per cent of the
amount sent.
As a result of the AFPSI joint programme, which has been
implemented over the last five years, the cost of receiving remittances via
post offices in four pilot countries, Benin, Ghana, Madagascar and Senegal,
decreased by 42 per cent and post offices delivered remittance services
at an average cost of less than 5 per cent. This means an additional $35
million were available to migrant families between 2014 and 2016.
"The EU is committed to work with partners to lower
the cost of remittances and promote faster, cheaper and safer transfers. Our
collective objective is to reduce to less than 3 per cent the transaction costs
and eliminate remittance corridors with transfer costs higher than 5 per cent,
as stated in the 2030 Agenda and the European Consensus for Development,"
said Stefano Signore, Head of Unit in charge of Migration and Employment in the
Directorate General for International Cooperation and Development at the EC.
Financial inclusion remains a challenge in Africa.
According to recent estimates, only 41 per cent of the population above 15
years of age has an account and access to formal financial services. In this
context, postal operators have an important role to play, especially in rural
areas. As a result of the joint programme, at least 100,000 adults opened new
postal accounts accessing financial services for the first time.
"Having a savings account and access to credit is
fundamental for families to invest in income-generating activities and build
their future," said Mauro Martini, an IFAD expert on remittances and
migrants’ investments and co-author of the report. "Remittances can be an
engine for development."
Estimates show that while 75 per cent of remittances are
generally spent on basic needs such as food, housing, health and education,
another 25 per cent can be invested in asset-building or activities that
generate income and jobs and transform economies, in particular in rural areas.
The EC began collaborating with IFAD in 2004, with the
intention of increasing the development impact of remittances while enabling
poor households in rural areas to access financial services. Since 2005, the EC
has mobilized euro 9.5 million for IFAD’s Financing Facility for Remittances,
including the APFSI. A new euro 15 million programme focusing on Africa will be
launched soon to reduce costs further and improve financial inclusion and
impact for development.
Isaac Oyimah/GEE