Why is the world’s poorest region paying the world’s highest money transfer fees? ODI opened up this debate in April 2014 and is now following up with African central banks and finance ministries, as well as UK and US regulators, to bring about change. These excess fees cost the African continent $1.8 billion a year; enough money to pay for the primary school education of 14 million children in the region.
This is because workers are paying an average of 12% in fees to transfer money back to relatives in sub-Saharan Africa. To put that in context, a worker sending $200 home to provide for a relative’s education would incur a $25 fee.The global community pledged to cut remittance charges to 5% by 2014, yet this ‘super tax’ shows there is a long way to go.
The report urges governments to increase competition in money transfer remittances and to establish greater transparency on how fees are set by all market operators.