It has emerged that relatives in the diaspora face significant cost barriers in sending remittances to Ghana and other Sub-Saharan African (SSA) countries.
The International Monetary Fund has revealed that the cost of remittance to SSA countries averages more than 8.5%, which is nearly triple the United Nations’ Sustainable Development Goal (SDG) target of 3%.
Deputy Managing Director of the IMF, Bo Li, says the high fees, long transaction times, and lack of transparency are draining billions from households that depend on remittances for survival.
For many migrant workers, the burden means their families receive far less than what is sent, while transfers can take days to clear.
This, Bo Li says, is unacceptable, and that digital payment systems could offer “a lot of hope” to solve the problem. He stressed that cutting costs will require national authorities to strengthen domestic payment systems, ensure interoperability and interlinking across borders, and explore advanced technologies such as blockchain and tokenization.
“It’s very costly among many SSA countries. And digital payment could potentially offer a lot of hope to cut the cost of remittance in SSA region. Right now, the average cost of remittance is more than 8.5%. That is much higher than the U.N. SDG goal of 3%. The remittance cost is high, and time is long, and there is a lack of transparency,” he said in a media interview.
To minimize these challenges, the deputy director announced that the fund is working with a number of countries to deploy digital technology to address the situation.
He is hopeful that the interventions will start bearing fruit in the coming years, where the cost of remittances, as well as the time and transparency, will improve significantly.
“Digital payment could potentially solve this puzzle, but that requires, as I said, that requires national authorities to strengthen their domestic system, to work together, to provide interoperability and interlinking, and also finally to figure out how to utilise the new blockchain and tokenization technology to further cut down the cost of remittance,” he noted.
He added that, “we are already working with a number of regions in SSA, and we are hoping to continue with those projects. And in the next couple of years, we’re hoping to produce some tangible results that can help countries to continue that journey, to continue to bring down the cost of remittance, and to cut the cost, to cut the time, and also to bring transparency and resilience to the payment system.”
The IMF’s plan, if successful, could transform how remittances flow into the region, boosting household incomes, supporting economic growth, and bringing SSA closer to achieving the UN’s SDG target.
