Remittances in Africa

Remittances
in Africa
A Catalogue of Studies and
Technical Assistance by the
World Bank, Development Agencies
and Government in Africa
November 2013
The World Bank Group

The European Commission
Remittances in Africa
A Catalogue of Studies and Technical Assistance by the World
Bank, Development Agencies and Government in Africa
November 2013
The World Bank

The European Commission
CONTENTS
Foreword ............................................................................................................................................................. 5
Acknowledgments ............................................................................................................................................ 6
Abbreviations and Acronyms ............................................................................................................................ 7
Executive Summary ............................................................................................................................................ 9
1. Introduction .............................................................................................................................................. 11
1.1 About the Document ..........................................................................................................................................................11
1.1 The African Institute for Remittances..........................................................................................................................11
1.2 The AIR Project...................................................................................................................................................................11
1.3 General Background ..........................................................................................................................................................12
1.4 Migration Patterns ..............................................................................................................................................................13
1.5 Remittance Flows................................................................................................................................................................13
1.6 Regulated Remittances ......................................................................................................................................................14
1.7 Unregulated Remittances .................................................................................................................................................15
1.8 Costs ........................................................................................................................................................................................16
1.9 Regulatory Framework .....................................................................................................................................................16
1.10 General Principles for International Remittance Services..................................................................................17
1.11 Partnerships in Remittance Programs ........................................................................................................................18
References: Chapter 1 ...................................................................................................................................................................19
2. Technical Assistance to Governments .................................................................................................... 20
2.1 World Bank ...........................................................................................................................................................................20
2.1.1 East and Central Africa ..........................................................................................................................................21
2.1.2 Southern Africa .........................................................................................................................................................23
2.1.3 West Africa .................................................................................................................................................................23
2.1.4 North Africa ................................................................................................................................................................23
2.2 Development Partners ......................................................................................................................................................24
2.2.1 CGAP ..............................................................................................................................................................................24
2.2.2 IFAD ...............................................................................................................................................................................24
2.2.3 EU....................................................................................................................................................................................25
2.2.4 GIZ ..................................................................................................................................................................................26
References: Chapter 2 ..................................................................................................................................................................27
3. Carrying out Training, Capacity-Building Programs and other projects .......................................... 28
3.1 World Bank ..........................................................................................................................................................................28
3.1.2 Southern Africa .........................................................................................................................................................28
3.1.3 Global ............................................................................................................................................................................28
3.2 Development Partners ......................................................................................................................................................29
3.2.1 AfDB ...............................................................................................................................................................................29
3.2.2 Credit Suisse Bank ...................................................................................................................................................29
3.2.3 DFID ...............................................................................................................................................................................29
3.2.4 EU....................................................................................................................................................................................30
3.2.5 IFAD ...............................................................................................................................................................................31
3.2.6 The Government of the Netherlands...............................................................................................................32
3.2.7 Opportunity International UK ............................................................................................................................32
4. Study of Remittance Flows within Africa .............................................................................................. 34
2
4.1 World Bank ...........................................................................................................................................................................34
4.1.1 Migratory patterns ..................................................................................................................................................34
4.1.2 Remittance Flows ....................................................................................................................................................35
4.1.3 Costs ..............................................................................................................................................................................35
4.1.4 Regulated and unregulated means of sending remittances..................................................................36
4.1.6 Southern Africa .........................................................................................................................................................37
4.1.7 West Africa .................................................................................................................................................................38
4.2 Development Partners .......................................................................................................................................................38
4.2.1 ACP Group of States ................................................................................................................................................38
4.2.2 AFD .................................................................................................................................................................................38
4.2.3 AfDB ...............................................................................................................................................................................38
4.2.4 DFID ...............................................................................................................................................................................39
4.2.5 EC ....................................................................................................................................................................................40
4.2.6 FAO-UN.........................................................................................................................................................................40
4.2.7 French Ministries of Economy, Foreign Affairs and Interior (former Ministry of
Immigration)..............................................................................................................................................................................40
4.2.8 GIZ ..................................................................................................................................................................................40
4.2.9 IFAD ...............................................................................................................................................................................41
4.2.10 IMF ...............................................................................................................................................................................41
4.2.11 IOM ..............................................................................................................................................................................41
4.2.12 Ministry of Foreign Affairs of Denmark and the Center on Global Counterterrorism
Cooperation ................................................................................................................................................................................42
4.2.13 USAID .........................................................................................................................................................................42
5. Policy Research and Dialogue on How Remittances Contribute to the Development of Sub-Saharan
Africa ................................................................................................................................................................. 45
5.1 World Bank ...........................................................................................................................................................................45
5.1.1 National level .............................................................................................................................................................45
5.1.2 Household level ........................................................................................................................................................46
5.1.3 Community level ......................................................................................................................................................47
5.2.1 ACP Group of States ................................................................................................................................................47
5.2.2 AfDB ...............................................................................................................................................................................47
5.2.3 DFID ...............................................................................................................................................................................48
5.2.4 EC ....................................................................................................................................................................................48
5.2.5 Finmark Trust ...........................................................................................................................................................49
5.2.6 GIZ ..................................................................................................................................................................................49
5.2.7 IFAD ...............................................................................................................................................................................49
5.2.8 ILO ..................................................................................................................................................................................50
5.2.9 IMF .................................................................................................................................................................................50
5.2.10 IOM ..............................................................................................................................................................................51
5.2.11 USAID .........................................................................................................................................................................51
References: Chapter 5 ................................................................................................................................................................53
6. Development of Content and Technology Platforms for Remittances................................................. 55
6.1 World Bank ...........................................................................................................................................................................55
6.2.1 CGAP ..............................................................................................................................................................................56
3
6.2.2 BIS...................................................................................................................................................................................56
6.2.3 BMZ (German Federal Ministry for Economic Cooperation and Development) .........................57
6.2.4 DFID ...............................................................................................................................................................................57
6.2.5 GIZ ..................................................................................................................................................................................57
6.2.6 IFAD ...............................................................................................................................................................................57
6.2.7 Finmark Trust ...........................................................................................................................................................58
6.2.8 Government of France ...........................................................................................................................................58
6.2.9 Government of Italy ................................................................................................................................................58
6.2.10 Government of the Netherlands .....................................................................................................................59
6.2.11 Opportunity International UK .........................................................................................................................59
6.2.12 UPU ..............................................................................................................................................................................59
6.2.13 Others .........................................................................................................................................................................59
References: Chapter 6 .................................................................................................................................................................61
7. Examples of Country Programs .................................................................................................................. 62
7.1 Ethiopia — Leveraging Remittances through Diaspora Bonds and Securitization .....................................62
7.2 Zambia — Improving Payment Systems through Technology ...........................................................................62
7.3 Uganda — Improving the Regulatory Framework for Payment Systems .......................................................62
Annex 1. Countries Originating Most Tertiary- Educated Migrants, 2000 ................................................. 66
Annex 2. Top 10 Remittance Recipients (Sub-Saharan Africa), 2011 .......................................................... 67
Annex 3. MTOs in Sub-Saharan Africa .......................................................................................................... 68
Annex 4. Venues for Dissemination of Remittance Research and Studies ................................................... 69
Annex 5: Some terminology concerning RSPs ............................................................................................... 75
Attachment 1. FATF Recommendations 2012................................................................................................ 76
4
Foreword
Remittance inflows to Sub-Saharan Africa continue to rise and recover from the global financial crisis. In 2012 the
region received approximately $31 billion in remittance flows from a stock of more than 21.8 million emigrants. It is
estimated that remittance inflows could increase by 25%, reaching $39 billion in 2015 1 . However, despite the
importance of remittances, Sub-Saharan Africa is still the most expensive region to send to, with an average transfer
cost of 12.29% in the third quarter of 20132. The undeniable importance that remittances have for the economic
livelihood of the region and the need to continue to reduce prices has reinforced the demand for more efforts and
projects by different organizations in the region.
One such effort is the African Institute for Remittances (AIR). AIR is one of five Africa Legacy projects and will
aim at improving the impact migrant remittances have on social and economic development in Africa. In order to
establish AIR as a specialized institute of the African Union Commission (AUC), an initiative known as the AIR
Project was launched amongst key development partners, namely the European Commission (EC), the African
Development Bank (AfDB), the International Organization for Migration (IOM) and the World Bank, which aims at
providing assistance to the AUC and its member states in these efforts. At its core, the main objectives of the AIR
Project are not only to facilitate the process leading to the creation of the institute, but also develop the capacity of
the member states of the African Union (AU), remittance senders and recipients, and other stakeholders to
implement concrete strategies and operational instruments to use remittances as development tools for poverty
reduction.
Remittances in Africa: A Catalogue of Studies and Technical Assistance by the World Bank, Development Agencies
and Government in Africa provides a comprehensive review of such efforts, including studies, policies and technical
assistance programs on remittances in Africa that have been carried out by the World Bank, other development
agencies and governments. The document should be considered as an annotated catalogue providing a useful tool for
remittance practitioners who would like to know what is being done in the field and which organizations are
involved, and pointing the reader in the right direction to find relevant and exhaustive information.
The report was produced in the context of activities undertaken by the AIR Project, which is pleased to present the
latest version of the catalogue and hopes it proves helpful to those who read it.
____________________________________
Gaiv Tata
Director
Financial and Private Sector Development in the Sub-Saharan Africa Region &
Financial Inclusion and Infrastructure Global Practice, Financial & Private Sector Development Network
The World Bank
1 The World Bank Migration and Development Brief 20-April 19, 2013
2 Remittances Prices Worldwide September 2013 Report
Acknowledgments
This latest report was authored by Ricardo Valencia Córdoba, Africa Region Financial and Private Sector
Development Consultant, the World Bank. Overall guidance and supervision was provided by Soheyla Mahmoudi,
Task Team Leader, Senior Operations Officer, African Institute for Remittances (AIR) Project, Africa Region
Finance and Private Sector Development (AFTFE). Key assistance was provided by Thilasoni Benjamin Musuku,
Senior Financial Sector Specialist, AFTE; comments were also received by the following colleagues from the
Financial Infrastructure and Remittances Service Line (FFIFI), Financial and Private Sector Development: Massimo
Cirasino, Manager, Carlo Corazza, Senior Payment Systems Specialist and Marco Nicoli, Payment System
Specialist. Comments and key assistance were also received from Pedro de Vasconcelos, Financing Facility for
Remittances Coordinator, International Fund for Agricultural Development (IFAD); Kenneth Coates, Peer
Reviewer, Global Remittances Specialist (Consultant); Hailu Kinfe, AIR Project Consultant and Ron Hendrix,
Program Manager, Migration, Mobility, Employment and Higher Education, European Union (EU) Delegation to
the AU, Addis Ababa.
The World Bank would also like to acknowledge and thank the African Union Commission (AUC) and other
institutions: the European Commission (EC), the African Development Bank (AfDB), the Making Finance Work for
Africa (MFW4A), the EU Delegation to the African Union (AU), IFAD, the International Organization for
Migration (IOM), the European Central Bank (ECB), the Central Bank of Colombia (Banco de la República-BRC),
the United States Agency for International Development (USAID), the Center for Latin American Monetary Studies
(CEMLA) and Developing Markets Associates for their helpful insights, comments, and contributions. Comments
were provided by the following colleagues from the AfDB: Bernadette Dia Kamgnia, Division Manager of
Development & Policy Dialogue Division, and Habib Attia, Donor Relationship Officer; Yvon Resplandy, Senior
Advisor for Diaspora and Remittances, USAID; the following colleagues from BRC: Enrique Montes, External
Sector Chief and María Mercedes Collazos, Economist and Balance of Payments Specialist; the following
colleagues from CEMLA: Jesús Cervantes, Real Sector and General Principles for Remittances Program
Coordinator, and René Alberto Maldonado, Remittance Measurement Program Coordinator; Josiah Ogina, Head of
Mission and Rep AU/UN Economic Commission for Africa (ECA)/Intergovernmental Authority on Development
(IGAD), IOM; Leon Isaacs, CEO, Developing Markets Associates; and Elitza Mileva, Economist, European Central
Bank.
6
Abbreviations and Acronyms
ACP African, Caribbean, and Pacific Group of States
ACH Automated Clearing House
AECF Africa Enterprise Challenge Fund
ADM African Diaspora Marketplace
AFD Agence Francaise de Development
AfDB African Development Bank
AML/CFT Anti-Money Laundering/Combating the Financing of Terrorism
API Arab Payments and Securities Settlement Initiative
AIR African Institute for Remittances
ARPI African Remittances Payment Initiative
CAEMC Central African Economic and Monetary Community
AU African Union
AUC African Union Commission
CEMAC Economic and Monetary Community for Central Africa
BIS Bank for International Settlements
BCEAO Banque Centrale des États de l’Afrique de l’Ouest
BEAC Banque des Etats de l'Afrique Centrale
BRCA Bilateral Remittance Corridor Analysis
BMZ Bundesministerium für wirtschaftliche Zusammenarbeit und Entwicklung(Eng. German Federal
Ministry for Economic Cooperation and Development)
CamCCUL Cameroon Cooperative Credit Union League
CGAP Consultative Group to Assist the Poor
CPSS Committee on Payment and Settlement Systems
DEC Development Economics Group
DFID UK Department for International Development
DIA Diaspora Investment in Agriculture
DOS United States Department of State
DRC Democratic Republic of Congo
DRIL DFID Remittance Information Library
EADI European Association of Development Research and Training Institutes
EC European Commission
EIB European Investment Bank
EU European Union
FAO Food and Agriculture Organization of the United Nations
FAR Future of African Remittances
FATF Financial Action Task Force
FDI Foreign direct investment
FedACH Federal Reserve Automated Clearing House
FFIFI Financial Infrastructure and Remittances Service Line
FFR Financing Facility for Remittances
FINCA Foundation for International Community Assistance
FIRST Financial Sector Reform and Strengthening Initiative
FSAP Financial Sector Assessment Program
FSS2020 Financial System Strategy 2020 (Nigeria)
7
GDP Gross Domestic Product
GIZ German Agency for International Cooperation (Formally GTZ-German Agency for Technical
Cooperation3)
G8/G20 Group of Eight/Group of Twenty
GRET Groupe de Recherche et d’Echanges Technologiques (Eng. Group For Research and Technology
Exchanges
GRWG Global Remittances Working Group
HIRDA Himilo Relief and Development Association
IAMTN International Association of Money Transfer Networks
ICT Information, Communications and Technology
IDA International Development Association
IDB Inter-American Development Bank
IFAD International Fund for Agricultural Development
IFC International Finance Corporation
ILO International Labor Organization
IFS International Financial System
IMF International Monetary Fund
IOM International Organization for Migration
IT Information Technology
KFW Kreditanstalt für Wiederaufbau (Reconstruction Credit Institute)
M-Banking Mobile Phone Banking
MFI Microfinance Institution
MFW4A Making Finance Work for Africa
MIDA Millennium Development Authority
MTO Money Transfer Operator
NGO Non-governmental Organization
ODA Official development assistance
OECD Organization for Economic Co-operation and Development
PARMEC Projet de Décret d'Application de la Loi Portant Réglementation des Institutions Mutualistes ou
Coopératives d'Épargne et de Crédit.
PIN Personal Identification Number
POS Point of Sale
PSDG Payment Systems Development Group4
RPW Remittance Prices Worldwide
SADC Southern Africa Development Community
SAMP Southern Africa Migration Project
SIDA Swedish International Development Agency
SME Small and medium-size enterprise
SROs Somali remittance organizations
SWIFT Society for Worldwide Interbank Financial Telecommunications
UN United Nations
UNCDF United Nations Capital Development Fund
UPU Universal Postal Union
USAID United States Agency for International Development
WAEMU West African Economic and Monetary Union
WEPPN Worldwide Electronic Postal Payments Network
3 In January 2011 GTZ merged with the German Development Service and the International Training and Capacity-
Building to form GIZ.
4 Now the Financial Infrastructure and Remittances Service Line
8
Executive Summary
In recent years, much emphasis has been placed on the magnitude, growth and leveraging of remittances for
development in the African continent. Remittances in Africa is a review that catalogues the main studies, policies
and technical assistance programs on remittances in Africa that have been carried out by the World Bank, other
multilateral and bilateral development agencies, and governments. These activities have lead up to and influenced,
directly or indirectly, the initiative of creating an African Institute for Remittances (AIR). As one of five Africa’s
Legacy projects, AIR is to be established with the objective of harnessing migrant remittances for social and
economic development in Africa. The contents of Remittances in Africa should prove useful in undertaking further
research in support of this goal.
The AIR Project5 is an initiative in which the World Bank and selected development partners European Commission
(EC), African Development Bank (AfDB) and the International Organization for Migration (IOM), are cooperating
with the African Union Commission (AUC) and its member states to facilitate the establishment of the institute. The
Project is funded by a grant from the EC to the World Bank, which is responsible for the overall implementation.
The Project was signed in December 2009 and launched in June 2010. The preparatory phase of the project will end
in April 2014.
This review includes work on remittance costs and trends, the scope and the importance of remittances to Africa,
financial markets and infrastructure that influence remittance costs, the impact of new technology on remittances,
the legal and regulatory framework governing remittance flows, and the impact of remittances on households and
national policy. The review is considered a “living” document and will be revised and updated periodically to reflect
ongoing activities and trends.
Migrant remittances have become a major source of financing for developing countries and are particularly
important in Sub-Saharan Africa. The increasing role of remittances, especially their ability to remain resilient
during periods of economic and financial crises, has spurred an interest in development practitioners who wish to
understand the nature, potential development impact, and policy implications of remittance flows.
The main findings from the review reveal that:
(a) Remittances are used mainly for household consumption and investment. The evidence from studies
reveals remittances reduce the level and severity of poverty among households, but there have been very
few attempts to channel remittances toward development activities; moreover the remittance market in
Africa is largely undeveloped. This situation indicates that the potential exists for the improvement of
remittance services and introduction of consumer products that will be valued by migrants and Diaspora.
(b) The cost of remittances to Sub-Saharan African countries is high, which makes regulated remittance
channels unattractive to remittance senders.
5 The AIR Project covers the following eight (8) activities: (i) Providing technical assistance to government institutions
(central banks, ministries, financial and nonfinancial institutions) on putting in place the necessary regulatory
frameworks; (ii) Carrying out training and capacity building programs of relevant institutions and organizations
(e.g., national statistical services departments); (iii) Studying remittances flows within Africa, which includes North
Africa; (iv) Conducting policy research and dialogue and sharing information on how remittances can contribute to
the development of African countries; (v) Developing content and technology platforms for country-based payment
and settlement systems for remittances; (vi) Developing partnerships between African central banks and remittance
service providers and non-bank correspondent agencies to improve financial access; (vii) Disseminating data and
research findings; and (viii) Preparing annual reports, conferences and meetings of policy makers. The expected
results from the AIR Project are: (a) Facilitation of the creation of the AIR; (b) Reduction of remittance transaction
costs; (c) Dissemination of data on remittance fees in major corridors; and (d) Improvement of the development
impact of remittances in selected African countries.
9
(c) Estimates suggest that 45-65 percent of remittances in Sub-Saharan Africa are transferred through
unregulated channels.
(d) Data on remittance flows to, from and within Africa need to be improved. Due to the large amount of
remittances that are channeled through unregulated means, in some cases limited attempt is made to
estimate these flows or include them in Balance of Payments statistics.
(e) The regulatory framework in many African countries is a hindrance to non-bank financial institutions such
as microfinance institutions (MFI) and other money transfer operators (MTO)—the existing regulatory
framework highly favors banking institutions. This leads to a lack of competition among remittance service
providers, increases costs for remittance senders, and prevents access for rural dwellers that are not reached
by existing MTOs.
(f) In Kenya, South Africa and other such countries, where the provision of payment services by non-bank
financial institutions has been allowed, innovative payment services have grown and some providers are
now potentially able to provide remittances services to millions of people in rural and remote areas.
(g) A key objective of various stakeholders such as governments, international organization, regional banks,
privet sectors, and development partners is to reduce the cost of remittances through improvements in the
payments systems infrastructure and the regulatory framework affecting remittance services.
In addition, it is generally held among remittance stakeholders that governments and multilateral organizations can
help leverage the development impact of remittances on families and communities by assisting them in using these
resources for purposes other than just consumption.
Note: The term remittance used throughout this document refers, in most cases, to international remittances, which
are defined (in the General Principles for International Remittance Services prepared by the Committee on Payment
and Settlement Systems (CPSS) and the World Bank) as typically recurrent cross-border person-to-person
payments of relatively low value sent by migrant workers to their families in their home country.
10
1. Introduction
1.1 About the Document
This review has been prepared to help inform about the activities of the AIR project and other initiatives on
remittances in Africa. Its purpose is to catalogue and report the most pertinent activities; it does not seek to provide
in-depth analysis or be considered a formal publication. It is a practical tool for remittance practitioners who would
like to know what is being done and by whom. Any further information should be requested from the authors or
project implementers and/or researched on each partner’s individual website.
The methodology used includes desk reviews of reports, policy papers, research publications, project documents,
interviews and academic literature on remittances in Africa. Each of the chapters of this report on the discussion of
AIR-related activities provides an overview of the work on remittances conducted by the World Bank, divided
regionally into East and Central Africa, Southern Africa, North Africa, and West Africa. Each chapter further
reviews projects and research carried out by various development partners and organizations.
Following this introductory chapter, Chapter 2 provides an overview of the technical assistance to governments.
Chapter 3 describes training, capacity building programs, and other pertinent projects that are carried out to enable
governments in remittance-receiving countries to increase the development impact of remittances. Chapter 4 looks
at the remittance flows within Africa, including their uses, and provides information on pertinent studies. Chapter 5
looks at the programs and literature that discuss the policy research and dialogue within the World Bank and
development partners. Chapter 6 covers development of the technology platforms that are bringing innovation to the
payment and settlement systems for remittances. Finally, Chapter 7 summarizes some examples of programs
initiated by countries to maximize the impact of remittances and reduce remittance costs.
1.1 The African Institute for Remittances

The AIR is one of five AUC’s Legacy 6 projects, to be established with the objective of harnessing migrant
remittances7 for social and economic development in Africa. In recent years, countries, bilateral and multilateral
donors, and international and regional organizations have put emphasis on the growth, size, amounts and leveraging
of remittances for development in the continent.
The establishment of AIR was conceived within the framework of African Union (AU)-European Union (EU)
Partnership on Migration, Mobility, Employment and Higher Education (MME) in the joint AU-EU Strategy (JAES)
adopted in Lisbon in 2007.
1.2 The AIR Project

The AIR Project is an initiative in which the World Bank and selected development partners, AfDB, EC, and IOM,
are collaborating to facilitate the AUC and its member states in establishing the AIR. The Project is funded by a
grant from the EC to the World Bank, which is responsible for the overall implementation. The Project was signed
in December 2009 and launched in June 2010. The preparatory phase will end in April 2014.
The core objectives of the AIR Project are to facilitate the process leading to the creation of the institute and develop
the capacity of the member states of the AU, remittance senders and recipients, and other stakeholders to implement
concrete strategies and operational instruments to use remittances as development tools for poverty reduction. The
AIR will be specialized institute of the AUC.
6
Declaration of AU’s Global African Diaspora Summit, Sandton, Johannesburg, South Africa, 25 May 2012.The five project are:
(i) The Skills Database of African Professionals in the Diaspora; (ii) The African Diaspora Volunteer Corps; (iii) The African
Institute for Remittances (AIR); (iv) the African Diaspora Investment Fund; (v) The Development marketplace for African
Development as a framework for promoting entrepreneurship and innovation.
7
Remittances sent by over 30 million African migrants reached a reported $31 billion in 2012, supporting at least 120 million
family members living back home.
1.3 General Background
According to the World Bank, remittances to developing countries have been steadily increasing in the past years.
Aggregate global remittances are estimated to have reached US$401 billion in 2012, an increase of 5.3 percent
compared with the previous year8. Remittance flows are expected to grow at an average of 8.8 percent annually
during 2013-2015 to about $515 billion in 2015. These remittances are the lifeline of approximately 700 million
people globally.
Migrant remittances to Africa have increasingly become a major source of financing for households and
communities, and can prove an external source of capital for African countries. More than 31 million Africans living
outside their countries of origin sent nearly US$40 billion to their families and communities back home in 2010.
This is equivalent to 2.6 percent of Africa’s gross domestic product (GDP). In Sub-Saharan Africa alone 21.8
million emigrants sent an estimated US$21.5 billion, equivalent to 2.2 percent of GDP (World Bank 2011a).
Remittances are the continent’s largest source of net foreign inflows after foreign direct investment (FDI).
Remittance flows in many African countries are also larger than private capital flows, such as FDI and portfolio debt
and equity flows. Private capital flows are more important for South Africa, the largest economy in Sub-Saharan
Africa, and for oil and mineral producers (for example, Angola, Gabon, and Sudan) that receive substantial FDI
flows. But for many low-income African countries, remittances exceed private investment flows and represent a
lifeline to the poor (AfDB 2009a and World Bank 2011a). In Morocco, for example, remittances represent 637
percent of FDI and 452 percent of official development assistance (ODA); in Egypt, 467 percent of FDI and 225
percent of ODA; and in Cape Verde, 929 percent of FDI and 103 percent of ODA (AfDB 2009a).
African migrants residing in member countries of the Organization for Economic Co-operation and Development
(OECD) were found to send twice as much as migrants in other developing countries—with those from poorer
African countries more likely to remit than those from relatively wealthier African countries. In Ethiopia,
remittances from migrants totaled US$513 million in 2011. Kenyans in the diaspora sent home nearly
US$934million in 2011 while Ugandans in the diaspora sent US$949 million. Rwanda received US$171 million in
2011 from Rwandans abroad (World Bank 2011b). North Africa is the largest remittance recipient region in Africa,
followed by East Africa, West Africa, Southern Africa, and Central Africa (Bollard and others 2010).
Actual remittance flows for Africa are likely to be much higher than the statistics suggest, as they are heavily under-
reported. Less than two-thirds of African countries (one-third of Sub-Saharan countries) report remittance data; and
most often, flows through unregulated channels are not captured at all. As mentioned in more detail in Section 1.5,
Sub-Saharan Africa is believed to have the highest share of remittances channeled through unregulated modes of
transfer, partly due to high formal transfer costs. Surveys of migrants and remittance recipients and other secondary
sources suggest that unregulated remittance flows, which are not included in the International Monetary Fund (IMF)
estimates, could be equal to or exceed official figures for Sub-Saharan Africa (Page and Plaza 2006; IFAD 2009a).
At the household level, remittances have become an important source of consumption and social investment. They
help take care of daily consumption needs such as food, education, and healthcare. They also help households
increase their savings and investments in small and medium-size businesses and play a significant role in financing
housing construction and development. The use of household surveys, as a complement to direct reporting by the
main intermediaries in the remittances market, could be a valuable tool to address the issues involved in improving
the accuracy of the remittances statistics (Coates 2006).
Estimates suggest that 30-40 percent of all remittance flows go to rural areas. Studies show that households, which
receive remittance transfers, are typically better off than those that do not have remittances as a source of income.
Remittances are also sometimes known to be counter-cyclical —meaning that in times of crisis they can be relied on
to stimulate the economy when there is a downturn, thus providing a stable source of finance. In times of natural
8Migration and Development Brief 20: Migration and Remittances Unit, Development Prospects Group
12
disasters, they have been known to help households cope better with losses. They also have a substantial effect on
improving balance of payments and increasing foreign exchange earnings at the national level in countries.
1.4 Migration Patterns

By 2012, the stock of migrants from Sub-Saharan Africa had reached an estimated 30 million. Among the countries
with highest migration, Burkina Faso and Zimbabwe have sent approximately 1.6 million and 1.3 million migrants,
respectively, to other countries. In addition to the two previously mentioned countries the top ten emigration
countries of Sub-Saharan Africa are Mozambique, Côte d’Ivoire, Mali, Nigeria, Sudan, Eritrea, the Democratic
Republic of Congo (DRC) and South Africa (World Bank 2011a).
The Burkina Faso – Cote d’Ivoire corridor is among the top 20 migration corridors in the world, with about 1.3
million migrants. Other important corridors within Sub-Saharan Africa are the Zimbabwe – South Africa corridor
with 0.9 million migrants as well as Uganda–Kenya, Eritrea–Sudan, Mozambique–South Africa, Mali–Côte
d’Ivoire, DRC–Rwanda, Lesotho–South Africa and Eritrea–Ethiopia In North Africa, Egypt - Saudi Arabia corridor
is the largest, with about 1 million migrants, while the Algeria – France migration corridor constitutes about 0.9
million (World Bank 2011a).
The destination of African migrants varies. Most migrants from African countries stay within Africa, with over 69
percent of total migration flows from Sub-Saharan Africa occurring within the region. Ratha and Shaw (2007)
estimate that the volume of South-South migration (i.e., migration between developing countries) is more than
South-North migration in Sub-Saharan Africa. This is determined largely by social, family, ethnic, and religious
networks; other factors are cultural proximity, seasonal migration opportunities, low travel documentation
requirements and civil conflicts.
About 25.2 percent of migrants from Sub-Saharan Africa migrate to high-income OECD countries—with about 9
percent settling in other countries (1.5% developing and 7.5%unidentified) and 3% in non-OECD countries. Europe
is the second-most popular destination for African migrants and is a particularly popular destination for migration
from North Africa. Morocco and Algeria have their largest share of migrants in this region. Most African countries
do not send many migrants to the Asia–Pacific or Middle East, regions, with the exception of Egypt, which has a
large share of migrants in the Middle East. Migration to North America is also not very common, although a
significant fraction of countries send 10–20 percent of their migrants to that corridor (Singh and others 2009).
Smaller countries tend to have higher rates of migration and of skilled migration. For example, The Gambia, Sierra
Leone, Cape Verde, and Liberia have among the highest rates of emigration of tertiary-educated professionals (see
Annex 1 for a list of the top emigration countries of tertiary-educated migrants). A significant number of migrants
from Sub-Saharan Africa are also refugees fleeing conflict. Refugees and asylum seekers made up 16.3 million, or 8
percent, of international migrants in 2010. The share of refugees in the migrant population was 14.6 percent in low-
income countries compared with 2.1 percent in high-income OECD countries. The Middle East and North Africa
region had the largest share of refugees and asylum seekers among immigrants (65 percent), followed by South Asia
(20 percent), Sub-Saharan Africa (17 percent), and East Asia and Pacific (8.8 percent) (World Bank 2011a).
1.5 Remittance Flows

Total remittances to Africa increased slightly from 2011 to 2012. In general, officially recorded remittance flows to
Africa are estimated to have increased from $9.1 billion in 1990 to nearly $40 billion in 2010 and approximately $60
billion in 2012 (divided roughly equally between North Africa and Sub-Saharan Africa), benefitting approximately
120 million residents. The true size of remittances, including unrecorded flows, is believed to be significantly higher
and African countries could benefit from a coordinated effort to improve the measurement of remittance flows. Yet,
Sub-Saharan Africa still receives only 7.7 percent of total remittances received by developing countries and just 45
13
percent of that received by India9. Nigeria was the only country within Africa among the top 10 remittance-receiving
countries with an estimated $10 billion in 2010. These figures have since been updated and migrant remittance flows
to Nigeria have now surpassed $20 billion in 2011. Outside Sub-Saharan Africa, Egypt and Morocco fall among the
top 20 with $14.3 billion and 7.2 billion respectively in 2011.
Other countries receive a larger share of remittances as a share of their GDP (2011): Liberia (31 percent), Lesotho
(26.8 percent), Senegal (10.3 percent), Togo (9.3 percent), Cape Verde (9.3 percent), Nigeria (8.7 percent), the
Gambia (8.1 percent), Uganda (5.6 percent), Guinea-Bissau (4.7 percent), Mali (4.5 percent), Sierra Leone (3.4
percent) and Kenya (2.7 percent). See Annex 2 for a 2011 list of the top 10 remittance recipients in Sub-Saharan
Africa.
1.6 Regulated Remittances

Remittances estimates would be even greater in Africa if the amount of flows going through unregulated channels
were taken into account (See Annex 5 for more about terminology concerning Remittance Service Providers).
Regulated remittance channels include banks, electronic payment systems, MFIs, MTOs, non-bank financial
institutions, remittance service providers and post offices.
Remittances are often the only relationship that many poor people have with the formal financial system. If
remittances are received through banks or other financial intermediaries (such as MFIs or savings cooperatives),
there is a high likelihood that some part of the remittance will be saved (Aggarwal, Demirgüç-Kunt, and Martinez
Peria, 2006; Gupta, Pattillo, and Wagh, 2009).
Remittance service providers (RSP) tend to be businesses that provide remittance services to clients and charge
fees directly or through agents. Remittance recipients receive transfers in stores, banks, post offices or MFIs. The
International Fund for Agricultural Development (IFAD) (2009a) reports that bank remittance service providers in
Africa constitute over 50 percent of the businesses paying money transfers.
Banks in several African countries are the only financial institutions authorized to perform money transfers. This
provides limited options for remittance services. Currently, 80 percent of the banks in 39 African countries disburse
remittances, but the percentage jumps to 90 percent in countries where only banks are authorized to pay remittances.
IFAD estimates that banks in partnerships with Western Union service about 41 percent of payments and 65 percent
of all payout locations. In countries where only banks are authorized to pay remittances, half are agents of Western
Union and MoneyGram, the largest MTOs in Africa. Teba Bank, a miners’ bank in South Africa, on the other hand
offers low-cost transfers from South Africa directly to the accounts of migrant families that have bank accounts in
Mozambique and Swaziland (Orozco 2003)
Non-bank financial institutions are not under bank regulation or supervision and do not require a banking license to
operate. Examples of non-bank financial institutions include credit unions, cooperatives, and MFIs. However, in
most cases they can only serve as payment agents for MTOs, as many are not authorized to pay remittances directly.
They play a significant role in serving populations in rural areas in Africa. Authorizing MFIs to pay remittances
directly would most certainly increase competition in the market and would also provide the MFIs with a source of
cheaper capital to finance their lending operations. In addition to microfinance services, many MFIs also provide
money transfer services. MFIs account for only 3 percent of remittance payout locations in Africa (McKay and
Pickens 2010); however MFIs have large networks, in particular within the rural areas, and could substantially
increase the share of the remittances market, but are hindered by regulatory requirements which tend to favor Banks.
The DRC, Ghana, and Kenya are the only countries in which MFIs are allowed to carry out international money
transfers. However, they serve as payout locations for other MTOs within Africa.
9 Based on US$401 billion Total Remittances received by developing countries, US$31 billion by Sub-Saharan African
(2012e) and US$69 billion by India (2012e) - World Bank Development Prospects Group.
14
MTOs offer both cash-to-cash transfers as well as electronic money transfer services. Annex 3 lists participating
MTOs in the African remittance market by country and shows that the largest MTOs in Africa are Western Union
and MoneyGram, which are estimated to control 65 percent of the remittance market in Africa (IFAD 2009a). Both
companies have agreements with several banks, foreign exchange bureaus and post offices that act as payment
agents in several African countries. In Nigeria, for example, nearly 80 percent of transfers are handled by one MTO
whose exclusivity agreements with banks (the only authorized remittance disbursers in the country) prevent other
MTOs from operating in the country (IFAD 2009a). The large market shares controlled by MoneyGram and
Western Union create a de-facto oligopoly, which does not promote fair competition.
Post offices typically have strong networks in both urban and rural areas, with significant potential to reach poor
populations. They also have the right business model of serving the poor. While commercial banks are inaccessible
to the poorest in many countries, post offices are typically more familiar and more accessible. A study in 2011,
Clotteau and Ansón (2011) of the Universal Postal Union (UPU) estimated that more than 80 percent of post offices
in Sub-Saharan Africa are located outside the three largest cities, in areas where more than 80 percent of people in
the country live. This provides postal networks a unique opportunity to become key players in both international and
domestic remittances—and to bring the unbanked into the formal financial system (Mohapatra and Ratha 2011).
However, in total, only about 20 percent of all post offices in Africa pay remittances, with the notable exception in
Algeria where post offices account for 95 percent of remittance payments (IFAD 2009a).
New opportunities are also available for remittance transfers using mobile phones and SMS messages. The rapid
adoption of innovative mobile-money transfer and branchless banking technologies is transforming the landscape for
remittances and broader financial services in Africa (Morawczynski and Pickens 2009; Aker and Mbiti 2010).
Although the adoption of these innovative technologies has been limited mostly to domestic money transfers (in part
because of concerns about money laundering and terrorist financing related to cross-border remittances), the
technologies have the potential to vastly improve access to both remittances and broader financial services,
including low-cost savings and credit products, for African migrants and remittance recipients. Electronic payment
systems, which involve the use of technology and other innovative mechanisms in the financial services arena is on
the increase within Africa, but still represent a very minor fraction of the overall flows to the region. Increasing use
of branchless banking and electronic payment systems could possibly increase competition, reduce costs, and reach
underserved customers in rural areas. A study by the Consultative Group to Assist the Poor (CGAP) (McKay and
Pickens 2010) shows that, on average, branchless banking is 19 percent cheaper than traditional banks, while smaller
transactions are cheaper when using branchless banking than traditional banks. Remittances via electronic channels
are also 54 percent cheaper than unregulated methods of money transfer. Currently, electronic payment channels are
being used in Kenya (M-PESA and Google’s Beba), Tanzania, Uganda (Zap), Ethiopia (Z-Birr), South Africa and
other countries within Africa.
1.7 Unregulated Remittances

Unregulated transfers between migrants are largely based on trust and confidence among customers. Sub-Saharan
Africa is believed to have the highest share of remittances channeled through unregulated modes of transfer, partly
due to high transfer costs. Estimates of unregulated remittances in Africa are difficult - if not impossible - because
they are largely unrecorded. Surveys of migrants and remittance recipients and other secondary sources suggest that
unregulated remittance flows, which are not included in the IMF estimates, could be equal to or exceed official
figures for Sub-Saharan Africa (Page and Plaza 2006; IFAD 2009a). However, due to the high costs of regulated
channels and financial services, it is well known that these flows are often transferred through unregulated channels
such as friends and family members traveling home, or unregulated money-transfer networks such as the hawala
system in Somalia.10 Other methods include the use of taxi services between South Africa and towns in Botswana,
10 A hawala service is a remittance service provided by an individual (rather than an incorporated entity).
“Hawala” is Arabic for transfer. Hawala services are also known by other terms - eg hui kuan (Hong Kong) or
15
Malawi, and Mozambique. The estimated remittances sent to Sub-Saharan Africa through unregulated channels
could increase formal flows by 45–65 percent (Ratha and Shaw 2007). The most prominent exception to the view of
domestic remittances in Africa being sent through mostly unregulated channels is Kenya, where nearly two-thirds
(62 percent) of domestic remittance transfers were conducted through mobile phones at the time of the household
survey in late 2009 (Mohapatra and Ratha 2011).
1.8 Costs
Remittance costs are one of the key determinants as to whether migrants use regulated or unregulated modes of
transfer. Regulated channels of transferring remittances have been known to be more expensive and complicated. In
general, the cost of sending money to Africa remains relatively high and subject to wider variations than other
migration regions due to the lack of competition among remittance service providers. Transfer costs from the United
States of America to Africa are generally among the lowest, followed by transfer costs from Europe. The cost of
sending remittances within the African continent is far higher and the cost of sending remittances to Sub-Saharan
Africa and within Africa is the highest among all developing regions. Data for select intra-African remittance
corridors suggests that the average cost of sending remittances ranges from 7.48 percent in Sierra Leone to 26.01
percent in Malawi. Others are not far behind with Botswana averaging 18.06 percent and Mozambique at 22.34
percent. Additionally, Africa has 10 of the most expensive remittances corridors in the world ranging from 19.3
percent to 26.6 percent average cost, of which 6 originate in South Africa. Even though an analysis by the World
Bank’s Financial Infrastructure and Remittances Service Line (FFIFI) showed that the yearly cost variation in Sub-
Saharan Africa revealed a 0.11 percentage point decrease, with 14 out of the 27 countries evaluated showing cost
decreases, only 6 of the 27 countries are currently below the global average (9.05 percent) and only Liberia and
Somalia close to reaching 5 percent (RPW 2013). Large parallel market premiums between official and parallel
market exchange rates in many African countries imply that the true cost is likely to be larger (Mohapatra and Ratha
2011). It is also estimated that if the cost of sending remittances decreases by 5 percentage points relative to the
value sent, remittance recipients in developing countries would receive over $20 billion dollars more each year11.
1.9 Regulatory Framework

The high cost of remittances in Africa is due to several factors, not the least of which is the banking, regulatory, and
monitoring framework. Reducing the cost of remittances and encouraging competition in the payment system
market will thus be achieved also through the improvement in payments systems infrastructure and regulations
affecting remittance services. Additionally, it is strongly encouraged that other aspects of the remittance market
where weaknesses may emerge, such as transparency and consumer protection, market structure, competition,
governance and risk management, should be addressed.
Regulations in several African countries highly favor banking institutions, which severely limits MFIs and other
non-bank institutions from carrying out international money transfers. Typically, central banks and other such
national institutions authorize foreign currency transactions and cross-border payments.
In countries where only banks are authorized to perform money transfers, the market for remittance service
providers is small and tends to be concentrated in urban areas. A study of 50 countries in Africa shows that 8
countries authorize banks only, 32 authorize banks and foreign exchange bureaus to perform foreign exchange
transactions. Six countries allow banks, foreign exchange bureaus and MFIs to pay out remittances directly, and 4
allow banks, foreign exchange bureaus, and MFIs plus retail locations to pay remittances (IFAD 2009a). Only the
DRC, Ghana, and Kenya permit MFIs to carry out international money transfers. Even in those three countries, MFI
participation is limited by a lack of technical capacity that prevents them from functioning as payers.
padala (the Philippines) - CPSS/World Bank - General principles for remittances

11 Financial Inclusion & Infrastructure Global Practice – The World Bank
16
In countries where only MTOs are authorized to conduct international money transfers, MTOs have exclusivity
agreements that limit the number of agents (microfinance and other non-bank financial institutions) they can conduct
business with. Market competition would be enhanced by the removal of these exclusivity arrangements, which
reduces the choices of many remitters and reduces the level of competition in the country.
The payment system infrastructure in some African countries is also not adequately developed to handle money
transfers. Small value transfers are conducted using products and platforms of the Society for Worldwide Interbank
Financial Telecommunications (SWIFT), which processes the payment through correspondent bank networks.
However, the existing international correspondent banking networks in several African countries are not well
adapted to process low-value retail flows. Therefore, it is important that regulatory frameworks are updated to allow
non-bank players to enter the market. Changes in regulations encouraging the development of innovative products
and other technology-based instruments and regulations governing access of remittance agents to clearing and
settlement systems would foster competition among remittance service providers and encourage migrants to use
regulated methods of transfer. The Making Finance Work for Africa (MFW4A) team and the World Bank found in
their research notes that regionally integrated payment systems tend to be more efficient and stable than national
ones (World Bank 2007). The study identifies the need for an appropriate framework to include laws and regulations
of broad applicability to payment systems. The appropriate regulatory framework must also address insolvency and
the enforcement of contractual relationships, rules, standards, and procedures in payments or securities system as
well as the harmonization of laws and regulations governing the cross-border operations of financial sector firms
and banks.
The legal and regulatory framework of Anti-Money Laundering and Combating the Financing of Terrorism
(AML/CFT) protects the integrity of remittance flows from these potential abuses. In principle, financial institutions
should be required to undertake measures in customer due diligence to identify and verify customers. Particularly
relevant to cross-border transfers and remittances in this context are regulations implementing AML/CFT
recommendations such as those issued by the Financial Action Task Force (FATF). FATF is an inter-governmental
body comprised of 36 member countries and provides 40 recommendations on the Prevention of Money Laundering
and Terrorist Financing. The objectives of FATF are to set standards and promote effective implementation of legal,
regulatory and operational measures for combating money laundering, terrorist financing and other related threats to
the integrity of the global financial system. One FATF Recommendation on transfers allows countries to adopt a
minimal threshold of no more than US$1,000 or Euro 1,000 in obtaining sender’s information. This threshold
creates room for migrant remittance transfers, which are usually much less than US$1,000. The FATF
Recommendations contain language that permits countries to some degree to adopt a risk-based approach to
combating money laundering and terrorist financing. The risk-based approach enables competent authorities and
obligated institutions to use measures to prevent or mitigate money laundering and terrorist financing commensurate
with the risks identified. In February 2012 FATF published an updated version of the recommendations and grouped
the 9 special recommendations into the 40 recommendations. See Attachment 1 for the list of FATF
Recommendations 2012.
1.10 General Principles for International Remittance Services

The FFIFI, within the World Bank Financial and Private Sector Vice-Presidency, in partnership with the CPSS
published the General Principles for International Remittance Services (BIS/World Bank 2007), which are
recognized as the international standards on remittances. The document provides guidance on five general principles
for analyzing the payment system aspects of remittances, in order to assist countries that want to improve their
market for remittance transfers. The general principles include detailed guidance and implementation strategies on
improving transparency, infrastructure, the legal and regulatory framework, competitive market conditions, sound
and appropriate governance and risk management practices. The General Principles’ ultimate objective is the
reduction of the cost of sending remittances by assisting counties in the improvement of their market for
17
remittances. The Group of Eight (G8), Group of Twenty (G20) and Financial Stability Forum have endorsed the
General Principles.
1.11 Partnerships in Remittance Programs

With the growing demand by governments for studies and policy advice on leveraging remittances for development,
the World Bank intends to strengthen remittance flow measurement, assist countries to improve supervision and
regulation of remittance markets, and facilitate collaboration with other development partners to improve financial
service outreach, particularly to rural areas. One of the main implementing actions of the WB in this area was
precisely the completion of the General Principles for International Remittance Services mentioned above.
Additionally, the World Bank and development partners have conducted many conferences to discuss remittance
issues and disseminate their research and studies (see Annex 4); and have entered into partnerships, in addition to
the AIR project, as summarized below.
 The MFW4A partnership to promote private and public sector initiatives held a partnership forum on
Making Finance Work for Africa in 2008.
 Southern African Development Community (SADC) Payments Systems Initiative, which was started in
1996 to improve national and regional payment systems in the region.
 A Private-Public Sector Partnership on remittances was launched in 2008 under the General Principles for
International Remittance Services to develop an actionable structure between regulators and the operators
on implementing the general principles.
 The Global Remittance Working Group comprises representatives from the World Bank Group and
interested national authorities.
 The Global Knowledge Partnership on Migration and Development (KNOMAD) is envisioned to be a
global hub of knowledge and policy expertise on migration and development issues. KGNOMAD entered a
5-year implementation phase in May 2013.
18
References: Chapter 1
AfDB. 2009a. Approach to African Migrant Remittances: The Migration and Development Initiative. OVIP. Tunis,
Tunisia.
Aggarwal, Reena, Asli Demirgüç-Kunt, and Maria Soledad Martinez Peria. 2006.“Do Workers’ Remittances
Promote Financial Development?” Policy Research Working Paper 3957, World Bank, Washington, DC."
Aker, Jenny C., and Isaac M. Mbiti. 2010. “Mobile Phones and Economic Development in Africa.” Working Paper
211, Center for Global Development, Washington, DC."
BIS (Bank for International Settlements)/World Bank. 2007. General Principles for International Remittance
Services. Prepared by the CPSS and World Bank. BIS, Basel, Switzerland; and World Bank, Washington,
D.C.
Bollard, Albert, David McKenzie, and Melanie Morten. 2010. The Remittance Patterns of African Migrants in the
OECD. World Bank Policy Research Working Paper 5260. Washington, D.C.
Clotteau, Nils, and José Ansón.2011. ʺRole of Post Offices in Remittances and Financial Inclusionʺ.Migration and
Development Brief 15, World Bank, Washington, DC. March.
Coates, Kenneth “Measurement Problems in Household International Remittances”, Irving Fisher Committee on
Central Bank Statistics, BIS, Basel. (2006)
Gupta, Sanjeev, Catherine A. Pattillo, and Smita Wagh. 2009. “Impact of Remittances on Poverty and Financial
Development in Sub-Saharan Africa.” World Development 37 (1): 104–15."
IFAD. 2009a. Sending Money Home to Africa: Remittance Markets, Enabling Environments, and Prospects. Rome,
Italy: IFAD.
McKay, Claudia, and Mark Pickens. 2010. “Branchless Banking 2010: Who’s Served? At What Price? What’s
Next?”CGAP Focus Note No. 66. CGAP. Washington, D.C. www.cgap.org.
Mohapatra, Sanket, and Dilip Ratha. 2011. Remittance Markets in Africa. Washington, DC: World Bank.
Morawczynski, Olga, and Mark Pickens. 2009. “Poor People Using Mobile Financial Services: Observations on
Customer Usage and Impact from M-PESA.” CGAP Brief, CGAP, Washington, DC.
Orozco, Manuel. 2003. Worker Remittances: An International Comparison. Working paper commissioned by the
Multilateral Investment Fund. IDB.
Page, John, and Sonia Plaza. 2006. “Migration Remittances and Development: A Review of Global Evidence.”
Journal of African Economies 15 (Suppl. 2): 245–336."
Ratha, Dilip. 2003. “Worker's Remittances: An Important and Stable Source of External Development Finance.” in
World Bank, Global Development Finance: Striving for Stability in Development Finance, Volume I:
Analysis and Statistical Appendix. Washington, D.C.: World Bank
Ratha, Dilip, and William Shaw. 2007. South-South Migration and Remittances. Development Prospects Group.
World Bank Working Paper No. 102. Washington, D.C.
Sander, Cerstin, and Samuel Munzele Maimbo. 2003. Migrant Labor Remittances in Africa: Reducing Obstacles to
Development Contributions. Africa Region Working Paper Series No. 64. World Bank. Washington, D.C.
Singh, Raju Jan, Markus Haacker, and Kyung-woo Lee. 2009. Determinants and Macroeconomic Impact of
Remittances in Sub-Saharan Africa.IMF Working Paper 9/216. Washington, D.C.
World Bank. 2011a. Migration and Remittances Factbook Second Edition. Development Prospects Group.
Washington, D.C.
World Bank. 2011b. AnnualRemittances Data (Inflows, April 2013). Development Prospects Group. Washington,
D.C.
19
2. Technical Assistance to Governments
Technical assistance provided to government institutions improves the regulatory and legal framework and expands
and strengthens existing payment system infrastructure to increase the flow of remittances through regulated
channels. The WB also performs missions aimed at providing local authorities with a review of their remittance
markets on the basis of the CPSS-World Bank GPs. This chapter describes the activities of the World Bank and
other development partners in providing technical assistance to governments in Africa.
2.1 World Bank

Many countries in Africa face difficulties in improving payment and remittance systems. A good and reliable
payment system is crucial in providing dependable and efficient remittance systems and in helping flows of
remittances through regulated channels. For this reason, the WB set up a series of initiatives to address the
significance of remittances to African countries, and assess the importance of improving payment systems
infrastructure in order to make effective and functional transfer systems accessible to all populations.
The World Bank is engaged in various projects and programs across the continent and has actively supported
reforms of the national payment systems in the last 15 years. It has been working on reforms of the national
payment systems in Rwanda, Angola, South Africa, Nigeria and Ethiopia; and the countries served by the regional
banks, Banque Centrale des Etats de l'Afrique de l'Ouest (BCEAO), and Banque des Etats de l'Afrique Centrale
(BEAC). In addition to grants and loans for supporting payment system development, the Payment Systems Group
of the World Bank has provided specific technical advisory services to develop payment systems components with a
financial sector/payment systems component. 12 In addition, four FFIFI assessment missions were completed by
February 2012 in Malawi, Tanzania, Liberia and Sierra Leone with the objective of supporting these countries to
improve their national markets for remittances, based on the GPs.
 Liberia: The Central Bank of Liberia (CBL) is undertaking an overall reform of the National Payment
Systems and is looking for support in the legal and regulatory field for the drafting of relevant laws and
regulation. They expressed interest in receiving assistance in this field and any other kind of support to
implement actions based on the report that will be delivered.
 Malawi: The Reserve Bank of Malawi (RBM) is undertaking a modernization of the legal and regulatory
framework and has requested immediate support. In addition to a draft Payment Systems Act, they are also
reviewing the new AML/CFT legislation and might be open to also review the Exchange Control Act.
Also in Malawi the modernization of the retail payment systems infrastructure is at the center of the
discussion between the RBM and the industry.
 Sierra Leone: The assessment of the national market for remittances against the General Principles for
International Remittances Services was completed in February 2012.
 Tanzania: Bank of Tanzania (BOT) expressed strong interest in (i) receiving support in the revision of the
legal and regulatory framework and in particular of the draft Payment Systems Act; and (ii) upgrading its
Automated Clearing House (ACH) to allow the provision of a wider ranges of services and the straight
through processing of the payments among the participants in the system.
The Finance and Private Sector Development unit within the World Bank Africa Region provided technical advice
and analysis to governments, central banks, and MFIs through the Future of African Remittances (FAR) project for
helping improve financial capacity in countries in promoting transparent and fair pricing and the use of technology
to improve operational services, and strengthening the quality of financial services—thereby lowering remittance
costs, increasing flows and encouraging innovation. The FAR Program launched a series of country-specific
initiatives in May 2010 with engagements in Ethiopia, Kenya and Uganda and has now closed. The lessons learned
12By requests of the Governments of Libya and Mauritius.

during the program’s existence are now being used as inputs in other operational work across the Africa region
involving the retail aspects of payment services.
On a larger scale, the AIR Project, which is being carried out by the World Bank – in cooperation with the AUC,
EC, AfDB and IOM- will provide the technical support to build and strengthen the capacity of remittance senders
and recipients, as well as financial intermediaries, to develop and implement strategies and operational instruments.
This support will be designed to use remittances as development and poverty reduction tools among AU member
states. The AIR Project has completed several relevant projects in this area.
Technical Assistance Project for Remittance Operations of Postal Operators. The key objective of this project is to
provide technical assistance to post offices in different countries in Africa for the implementation of the
International Financial System (IFS) remittance technology provided by UPU. The technical assistance under this
proposal furthers the key objective of the AIR. The UPU Project enables Postal Operators to enter the remittance
market and provide remittances services in rural areas where they were previously unavailable. This will make
receiving remittances more efficient and cheaper for the recipients, saving them time and money for travel to the
next city where remittance payments would otherwise only be available.
Technical Assistance and Training for the Ethiopian Postal Service. The mission team consisting of FFIFI
experts, and supported by the AIR Project, addressed different issues by setting up an operational and customer
support desk at EPS that will function as a central processing hub for the post addressing operational problems (lack
of connectivity of branches, lack of computers, lack of training of branch staff etc.) and deal with customer requests.
The mission team designed operational procedures (disaster recovery, customer service, user support) and provided
training on these procedures and training on a helpdesk software for the support desk.
As part of the process leading up to the establishment of AIR, the partners desired to open a dialogue between key
stakeholders from AU member states. To that end, it was decided to establish online consultations with key
stakeholders, including government agencies, financial institutions, beneficiaries and members of the African
Diaspora.
The overriding purpose of these consultations was to involve the broadest possible spectrum of stakeholders from
Africa and the African Diaspora in building consensus as to the best form for the proposed AIR and determining
what sort of role such an institute should play. Mango Production, an Addis Ababa based media company, was
selected as the implementing partner for the online consultations.
The Africa Region is also working with national authorities to strengthen the financial system by modernizing the
financial sector infrastructure and payment systems. Through the World Bank’s Financial Sector Assessment
Program (FSAP), recommendations were made to produce a comprehensive clearing and settlement infrastructure,
which includes the automation of small-value transactions (checks and transfers) within an electronic clearing
system and a real time gross settlement system for large transactions.
In 2011, the Global Remittances Working Group (GRWG) from the World Bank, in consultation with the members
of the Public and Private Partnership on Remittances, put together a special purpose note intended to provide
guidance to reform efforts in the remittances arena both nationally and globally called Working Toward a Legal and
Regulatory Framework: Identifying Standard Approaches (GRWG 2010). Specific technical assistance programs
conducted in regions of Africa are discussed below.
2.1.1 East and Central Africa

Central African Economic and Monetary Community (CEMAC) Regional Institutions Support Project. The
World Bank provides credit and grant support to CEMAC. The Project support is used to strengthen the capacity of
the telecom and information technology (IT) sector. The Bank-financed project, launched in 2003, supports
measures to encourage the use of a regional payments system to expand access to financial services through banks
21
and MFIs by simplifying access to the system, encouraging the use of the systems by MFIs, discouraging paper-
based transactions and encouraging electronic means of payment.
Burundi. The Africa Region is working with national authorities to strengthen the financial system by modernizing
the financial sector infrastructure (payment systems) and improving financial sector regulations in ways that create
synergies among different service providers such as commercial banks and the country’s postal service, including
inter-operability of payment processing platforms.
Ethiopia. Enhanced Regulatory Framework for Remittances. The project aims to improve competition and
product innovation in Ethiopia’s remittance market through targeted regulatory reforms to address the limited
participation of non-bank Remittance Service Providers (RSPs) in the market, to enable new delivery channels (e.g.
via non-bank agents) and to encourage product innovation (e.g. remittance-linked saving, insurance, direct education
or health payments, etc.). In the longer term, these reforms should lead to increased competition in the remittances
market and ultimately to improved services, lower costs, and greater financial inclusion for remittance recipients.
In addition, the World Bank supports national efforts to build a more transparent, well-governed, well-regulated, and
competitive financial sector through implementation of an automated transfer system in Ethiopia.
Rwanda. The World Bank provides support for the implementation of new payment and securities settlement
systems, and creation of a new legal framework and oversight department. The Bank also supports the Central Bank
of Rwanda on advancing the branchless banking model and on various issues relating to the modernization of
payment systems infrastructure with particular emphasis on ensuring the involvement of “buy-in” by all
stakeholders.
As part of Rwanda’s Financial Sector Development Program, the Africa Region diagnosed and recommended
solutions for a number of weaknesses in the financial sector—the key component being recommendations related to
strengthening the national payment systems by improving processing efficiency.
Kenya. Financial and Legal Sector Technical Assistance Credit (2004) facility provides support for the review and
amendment of Kenya’s financial sector laws, including the acquisition of an integrated real time gross settlement
system and Scripless Securities Settlement System and Central Depository System to facilitate safe, secure, and
efficient transfers in Kenya. 13 A technical assistance project aimed at creating a sound financial system and
strengthening legal and judicial capacity will ensure broad access to financial services. Kenyan authorities have used
the project to identify measures to upgrade all aspects of the national payment system and consult on improving the
regulation of mobile and electronic payments.
Tanzania. Through the Second Financial Institutions Project, the World Bank issued a credit of US$27.5 million
through the IDA aimed at increasing financial sector competition by enhancing the national payment system. A
component on financial education was included to address low awareness of available financial products and
benefits promoting increased household access to financial and payment services and to facilitate efficient financial
intermediation.
Uganda. The report “Making Finance Work for Uganda” reviews the performance of the Bank of Uganda in
improving payments and remittance systems.14 The report identifies several legal and regulatory constraints facing
the Bank of Uganda and suggests swift enactment of payment systems legislation in order to increase the
13A Scripless Securities Settlement System is an electronic means of conducting transactions that enable the electronic
settlement of transactions without the use of a paper certificate, through a computer-based central depository and
settlement system.
14 For more on Making Finance Work in Africa, see World Bank website, http://go.worldbank.org/WVFPF5CYJ0.
22
effectiveness and competition among financial institutions. The report builds on earlier efforts in strengthening the
financial sector and ensuring increased access to formal financial services by rural savers and micro-entrepreneurs.
2.1.2 Southern Africa

Botswana. The FSAP of Botswana (2008) provided guidance to formalize and publicize the Botswana Interbank
Settlement System governance arrangements. The Botswana Interbank Settlement System is an electronic interbank
payment system that allows funds to be transferred between participating institutions on an irrevocable and real time
basis. The FSAP helped to expand the real time gross settlement system and introduce an expanded set of
settlement mechanisms.
Malawi. The Financial Sector Reform and Strengthening Initiative (FIRST) in Malawi provided technical assistance
to help prepare the Financial Sector Development Strategy, which targeted the creation of an efficient retail payment
system with banking sector involvement, and the improvement of the legal and regulatory framework to enable
contractual efficiency. As part of efforts to increase rural access to financial services, the Africa Region of the
World Bank provided technical advice to Malawian authorities on harmonizing competing switching infrastructure
and thus strengthening the payment system by establishing communications platforms and inter-operable networks
to facilitate efficient transmittal services.
SADC Payment System Project. This project provided assistance to SADC countries to define domestic payment
systems reform strategies and plans that would contribute to the development of harmonized policies and systems
for cross-border payments. The project was broadly in line with the economic integration strategy for member states
with a significant positive impact on strengthening regional cooperation and economic integration. Authorities are
using the basic structure of the project to facilitate an ongoing assessment of development needs, strategic plans, and
policy approaches to payment systems. In recent years, attention has been focused on the cost of remittances in the
SADC region. National authorities are seeking re-engagement with the World Bank to assess the practical use of
existing transmittal infrastructure and application of the resulting payment instruments, procedures, processes, and
market practices as well as the enforcement issues in existing legislation and regulatory guidelines to reduce costs
and promote financial access.
2.1.3 West Africa

West African Economic and Monetary Union (WAEMU). The Private Sector Development Rural Finance Study
assesses the effectiveness of the PARMEC15 Law (1993), a law governing mutual or cooperative savings and credit
institutions enacted by the WAEMU on MFIs in WAEMU countries. CGAP was involved in adjusting the
PARMEC Law in order to make it more acceptable to international standards.
Nigeria. By leveraging ongoing policy dialogue with the authorities under the Making Finance Work for Nigeria
project, the Finance and Private Sector Group of the World Bank applied its technical expertise in payment system
development and provided policy advice to improve the country’s remittance market as part of its implementation
support for the country’s financial sector reform strategy called the Financial System Strategy 2020 (FSS2020). In
this regard, the authorities limited exclusivity clauses in contracts between banks and MTOs.
2.1.4 North Africa

Algeria. In partnership with the IMF, the World Bank conducted a Financial System Stability Assessment to
strengthen the AML/CFT regime in all sectors.
15
PARMEC: Projet de Décret d'Application de la Loi Portant Réglementation des Institutions Mutualistes ou Coopératives
d'Épargne et de Crédit.
23
Morocco. The Financial Sector Development Policy Loan Project aims to strengthen the enabling legal and
institutional environment for financial intermediation and risk management, and to increase the private sector’s role
and participation in the provision of financial services.
In the context of the Arab Payments and Securities Settlement Initiative (API), a World Bank-led team conducted a
review in November 2006 of the remittance market in Morocco on the basis of the General Principles for
remittances. 16 The mission team provided local authorities with a broad analysis of the remittance market and
specific comments on proposed regulations for MTOs. In particular, the Central Bank of Morocco adopted a
regulation for MTOs based to a large extent on the General Principles.
2.2 Development Partners

Development partners have been playing a significant role in providing technical assistance on both small and large
scale to various African countries. The development partners IFAD, the EU and the German Agency for
International Cooperation (GIZ) have initiated the projects described below.
2.2.1 CGAP
A comprehensive Microfinance Institution Guideline was developed by CGAP in 2008 for MFIs wishing to
introduce money transfer payments into their operations. Guidelines include understanding the business environment
of financial and regulatory issues, assessment of operational strategy for increasing profits and staying in business,
product development, and marketing services.17
2.2.2 IFAD
IFAD has provided technical assistance for several projects in West Africa.
Strategic Framework 2007-2010. The Strategic Framework includes guidelines on integrating rural finance
institutions into national payment systems, developing inclusive financial systems, and fostering innovations to
increase the rural poor people’s access to remittances (IFAD 2007).
The Rural Finance Policy 2009. The Rural Finance Policy 2009 (IFAD 2009c) builds on the Rural Finance Policy
of 2000 and provides guiding principles to develop and improve rural finance systems. The policy report provides
advice to governments on public-private partnerships as well as an operating framework on how to use information
and communication technologies, such as mobile phones, to provide remittance services, and ways to leverage the
growth in migrants’ capital and remittances flows to rural areas.
Financing Facility for Remittances (FFR). In partnership with the EC, IDB, CGAP, the Government of
Luxembourg, the Government of Spain, and the United Nations Capital Development Fund (UNCDF), IFAD
launched a FFR with a US$28 million investment to increase competition in the remittance market, especially in
rural areas (IFAD 2009b). The FFR supports the development of innovative, cost-effective, and easily accessible
international or domestic remittance services within African, Asian, European, Latin American, and Middle Eastern
countries.The FFR combines its expertise in the field of migrant remittances with the experience of almost 50
projects in more than 40 countries around the world. Furthermore, it acts as an information broker to facilitate the
dissemination; replication and scaling up of remittance-related best practices. In conjunction with its operational
16
Refer to the following study (p. 5), which makes reference to assessment and operations carried out in Morocco:
http://siteresources.worldbank.org/FINANCIALSECTOR/Resources/282044-
1260476242691/PaymentsWeek2009Cirasino.Remittances.pdf
17
See more on microfinance guidelines at CGAP website, www.cgap.org/p/site/c/.
24
activities, the Facility fosters strategic cooperation among governments, international development institutions, and
leading organizations in the field of migrant remittances.
Expansion of Tele-cash in Rural Cameroon. A €133 000 grant by IFAD introduced tele-cash remittance systems to
24 low-income, underserved localities that rely mainly on remittances (using costly unregulated means) from their
relatives in urban areas in Cameroon. This tele-cash remittance system, operated through the Cameroon Cooperative
Credit Union League network, reduced transaction costs by almost 20 per cent, catalyzing US$1.8 million in
remittance transfers during the 18 months of the project.18
Sierra Leone Remittances Plus Grant. In Sierra Leone, the African Foundation for Development (AFFORD),
supported by IFAD, worked closely with three local MTOs, facilitating use of an innovative online remittance
platform and creating strong and tangible links between remittances, enterprise development, investment and
personal savings. The RemitPlus™ product enabled Finance Salone, the local MFI with the largest network of rural
branches, to become a remittance-paying agent and to seek a deposit-taking license from the Central Bank. The
project helped Fadugu, a diaspora-owned MTO, develop the capacity to operate in 20 countries. It also helped Afro
International, the largest independent MTO in Sierra Leone, link remittances to enterprise development.
IDF Grant for Strengthening the Africa Union Commission’s Diaspora Program in North America. The grant is
part of the World Bank’s support in enhancing capacity of AUC, specifically the AU’s Representational Mission to
the United States of America, to carry out its core functions of developing and maintaining productive institutional
relationships with the African Diaspora in the Americas.
Implementing a User-Owned, Low Cost Remittance Service. IFAD has provided the funding and support to the
International Network of Alternative Financial Institutions (INAFI International) for this project. The Project aims to
harness the development potential of remittances by Senegalese migrants for social and economic development in
Senegal through a user-owned, low-cost remittance service that will become an enabling platform for local social
and economic development. The Project intends to implement a user-owned remittances service platform using the
Universal Method of Value Access (UMVA) solution. This system will substantially reduce the cost of remittance to
Euro 1 per month per user, which is very low compared to charges levied by MTOs. In addition, the project builds
the capacity of MFIs to handle and leverage remittances for development, by leveraging on networks of migrants,
migrant organizations, remittance beneficiaries, MFIs, and Project partners.
2.2.3 EU
EIB Regmifa Microfinance Fund for Africa. This fund from the European Investment Bank (EIB) provides
technical assistance in the form of equity and direct lending to regulated and non-regulated MFIs, local banks, and
other financial institutions, which provide financing to micro, small, and medium-size enterprises in Sub-Saharan
Africa. The support is targeted to the growth of MFIs in Africa; improvement of the quality, availability, and
accessibility of financial services; and development of modern financial institutions and sustainable microfinance
operations.
Tunisia. The EIB is providing technical assistance to the Government of Tunisia to increase savings and the use of
banking services for transfer purposes by Tunisian migrants. The desired impact is to channel remittances into
small-scale and infrastructure projects financed by public-private partnerships.
The Cameroon Cooperative Credit Union League Tele-cash Remittance System, in partnership with MTN
18
Cameroon, will provide SIM cards and assist in solving network problems for the municipalities served. The League
also partners with a local company, SoftTech.
25
2.2.4 GIZ
Uganda: Financial System Development. The GIZ has provided technical assistance and training to support
Uganda’s financial sector development program. The effort addresses issues that deal with the lack of access to
suitable financial services for the rural population, particularly women and small-scale farmers. The program
provided policy advice and training to MFIs to improve their efficiency and performance, and supported financial
service organizations with product development.
Remittances in Development Cooperation: Guidelines for Practice. These guidelines bring together experience
from recent years of German and international cooperation in the field of remittances. They aim to identify the
conditions for utilizing the development policy potential of remittances, discuss the risks of economies’ dependence
on remittances, and present openings for practical treatment of the issue in the context of DC (GIZ 2010).
Partnership for Economic Growth in Namibia. The GIZ Program on Sustainable Economic Development in
Namibia advises the Central Bank of Namibia in the regulation of mobile financial services, agents and E-Money.
The project has undertaken a thorough analysis of the current regulatory framework and supports the
implementation of the adaption of regulation to international standards.
26
GIZ. 2010. Remittances in Development Cooperation: Guidelines for Practice. Eschborn, Germany.
IFAD. 2009b. FFR Update: FFR. IFAD Newsletter. 4th Quarter 2009. Issue 1.
http://www.ifad.org/remittances/newsletter/1.pdf
IFAD. 2013. The FFR Brief. Five years of the FFR. Rome, Italy.http://www.ifad.org/remittances/pub/fiveyears.pdf
IFAD. 2009c. Rural Finance Policy 2009. Rome, Italy.www.ifad.org/ruralfinance/policy/index.htm
IFAD. 2007. Strategic Framework 2007-2010. Rome, Italy. www.ifad.org/sf/strategic_e.pdf
27
3. Carrying out Training, Capacity-Building Programs and other
projects
Training and capacity-building programs are carried out to enable governments in remittance-receiving countries to
increase the development impact of remittances by building and strengthening their remittance capacity. This
chapter discusses other key projects and programs supported by the World Bank and development partners.
3.1 World Bank

The African Migration Project conducted pilot surveys of migrant households in Ghana. The Migration,
Remittances, and Development in Africa Household Survey (World Bank 2010a) will be replicated in other
African countries to fill the knowledge gap on the magnitude, causes, and impacts of migration and remittances in
the targeted country—and to build and strengthen the capacity of countries in conducting surveys. Other regional
capacity-building programs are discussed below.

Tanzania: The Financial Institutions Development Project. This project’s component on financial education
addressed low-level awareness about available financial products. The project included benefits to promote
increased household access to financial and payment services and to facilitate efficient financial intermediation.
East African Community Regional Financial Integration Study. The World Bank (2007) study on the East Africa
community identified the use of retail payment systems as an important tool in leveraging greater connectivity at the
wholesale level.19
Uganda. The Making Finance Work for Uganda study focused on increasing the breadth and depth of the Ugandan
financial sector.20 The report included recommendations focused on improving access by strengthening payment and
remittance systems—building up on earlier work on financial sector strengthening and ensuring increased access to
formal financial services by rural savers and micro-entrepreneurs. In addition, other studies on Uganda have
explored the role of cost-effective technology in increasing outreach and reducing the trade-off between outreach
and cost.21 This includes the use of MFIs, post offices, and other shared platforms through which migrants receiving
remittances can access financial and payment services from different MTOs.

The Mobile Banking in Southern Africa Study. The objective of this regional study was to positively influence the
expansion of access to finance through the rapid but safe takeoff of domestic and cross-border branchless banking
(Maimbo and others 2010). The key focus of the study is on cross-border payment services in Angola, Malawi,
Mozambique, South Africa, and Zambia. The findings from the study will be discussed at a policy discussion
workshop bringing together a select group of policy champions from each of the focus countries to discuss
appropriate incentives that encourage innovating bank and non-bank led domestic and international mobile banking
solutions.
3.1.3 Global
Knowledge Partnership on Migration and Development (KNOMAD).The Global Knowledge Partnership on
Migration and Development is a four-year initiative launched in May. The objective is to highlight the benefits and
19 For additional information on East Africa, see www.africaremittances.org.

20 For more on Making Finance Work in Africa, see World Bank website, http://go.worldbank.org/WVFPF5CYJ0.
21 For more studies on Uganda, search World Bank website under Access Finance newsletters and Financial and
Private Sector Development (FPSD Uganda).

challenges of migration for sending and receiving communities, as well as for migrants. The Knowledge Partnership
will provide an open, multidisciplinary platform to debate, discuss and exchange knowledge on migration issues,
generate a menu of policy choices based on evidence and peer-review, and will assist sending and receiving
countries in implementing a few pilot policy operations and capacity building efforts to evaluate and mainstream
some policy choices.
The Knowledge Partnership will be a resource for policy makers, the member agencies of the Global Migration
Group (GMG), regional development banks, donors, different organizations involved in mainstreaming migration
and remittances into national development plans, country strategies and projects/programs on migration and
remittances, and will build on existing partnerships involving the World Bank, IOM, other members of the Global
Migration Group, Global Forum on Migration and Development, AU, EU, World Economic Forum, Africa
Economic Research Consortium, ADB, AfDB, IDB, the G8 and the G20, universities, research institutes and think-
tanks on migration and remittances.

The AfDB, UK Department for International Development (DFID), EU, IFAD, Credit Suisse Bank, the United
States Agency for International Development (USAID), Netherlands Ministry of Foreign Affairs and Opportunity
International UK have supported various training and capacity-building programs on remittances in Africa through
projects and initiatives.
3.2.1 AfDB
The Migration and Development Initiative. The objectives of this AfDB initiative are (a) to set up a multi-donor
trust fund to support projects initiated by migrants and diasporas, (b) initiate and support the development of
innovative financial products, (c) support pilot projects with high success potential but still considered too risky by
financial institutions because of their innovative character, (d) support the development of local infrastructure
projects sponsored by migrants and (e) facilitate sharing knowledge and experiences among African countries.
Migration and Development Fund (MDF). The MDF aims to promote and support local initiatives and those from
the diasporas aimed at improving knowledge of remittances, reducing the costs of transfers, optimizing the use of
the resources transferred and supporting local development in migrant home countries. In a first phase the Migration
and Development Fund will finance activities in North Africa, West Africa, and Central Africa. In a second phase, it
will expand financing to the entire African continent.
3.2.2 Credit Suisse Bank

The Credit Suisse Microfinance Capacity-Building Initiative. The main objective of this initiative is to support
enhanced human resource capabilities of MFIs by setting up structures that will foster innovation among MFIs,
finding new ways to facilitate poor people's access to financial services, and providing staff training to build
capacity and facilitate financial innovation and learning in these institutions.
3.2.3 DFID
Africa Enterprise Challenge Fund (AECF). The AECF is part of the larger Financial Deepening Challenge Fund of
DFID to stimulate the private sector to develop innovate ways of improving agriculture and financial markets for the
poor in rural areas. The AECF will be launched in 10 African countries. It will ultimately improve access to
financial services and livelihoods in rural areas through grants to private companies and NGOs in amounts between
US$150,000 and US$1.5 million.
29
3.2.4 EU
Leveraging remittances to promote Migrant Entrepreneurship Program has been set up in the Netherlands, Ghana,
and Suriname to facilitate the creation of new businesses by entrepreneurial and enterprising migrants. Its services
are primarily offered to migrants who wish to set up a business in their countries of origin.
Migration and Asylum Thematic Program. The EU has provided assistance with funding through the Migration
and Asylum Thematic Program. It is implemented by various organizations and agencies.
 Profiles in selected countries in West and Central Africa. A tool for strategic policy development in
Cameroon, Cape Verde, DRC, Ghana, Ivory Coast, Mali, Mauritania, Niger, Nigeria, and Senegal, the
program is implemented by the IOM to strengthen administrative capacity to collect and analyze policy-
relevant migration data and to improve the utilization of migration data and policy analysis within and
between the selected countries of West and Central Africa.
 Returning Enterprising Migrants Adding Development and Employment (REMADE) in Ghana.

REMADE has been designed to strengthen the link between migration and development through the
development of the private sector in Ghana. The project aims at fostering the diaspora (in the Netherlands
and UK) to strengthen bonds with the communities of origin, make their remittances more effective,
promote circular migration and counter brain drain by development of the private sector in Ghana. Also,
the establishment of healthy small and medium enterprises (SMEs) by returning migrants through a more
effective use of remittances for economic development and adequate business support structures.
 Linking MFIs. Organizations in the EU are harnessing the potential of migration for development by
linking MFIs with immigrant associations in Benin, Burkina Faso, Ethiopia, Ghana, Kenya, Mali, Nigeria,
Senegal, Tanzania, and Uganda.
 Successful Paths, Supporting Human and Economic Capital of Migrants in Senegal. This initiative for
migration, implemented by the Italian Veneto Region, takes aim at strengthening the institutional
cooperation between sending and receiving countries. It has been derived to eradicate difficult access to
credit for migrants by improving the system of guarantees needed to promote entrepreneurship and
business start-ups in Senegal. It is also promoting innovative paths to support the return of human and
economic capital to Senegal through successful implementation of adequate tools.
 Global initiative. Promoting innovative migrant remittances in Africa, Asia, Eastern Europe, and the
Middle East aims to support remittance services that are cost-effective, easily accessible, and offer broader
economic opportunities to the rural poor.
Harnessing the Potentials of Migration for Development: Linking MFIs and Immigrant Associations. The overall
objective of the project was to contribute to improved capacity of immigrant associations based in ten EU countries
to actively support the development of their countries of origin and to enable MFIs to facilitate the transfer of
migrant remittances in a safer and cheaper manner. The project trained and enabled MFIs located in 10 Sub-Saharan
Africa (SSA) countries(Benin, Burkina Faso, Ethiopia, Ghana, Kenya, Mali, Nigeria, Senegal, Tanzania, and
Uganda) to increase their competitive edge in money transfers services and other financial-driven instruments. The
project was implemented by Oxfam Novib and International Network for Alternative Financial Institutions (INAFI
International).
“FACE Morocco” Project. Funded by the EU, FACE Morocco was launched in 2009 in collaboration with AFD,
the Dutch IntEnt foundation, CIM (Centrum für internationale Migration und Entwicklung) and IntEnt in Morocco.
Implemented in Germany, the Netherlands and France, the project aims at facilitating the creation of new businesses
by the Moroccan Diaspora living in these countries.
30
3.2.5 IFAD
Postal financial services. IFAD seeks to build capacity for the use of postal services in rural areas of Western
Africa. Extension of international and domestic postal financial services, including remittance-related services, will
be extended to rural areas of French-speaking countries in Western African partnership with postal organizations
and related ministries. The extended postal service would increase the number of remittance recipients by linking
them with rural post offices, which will have the ability to deliver remittances through postal checking or savings
accounts, and other non-postal financial institutions.
Expanding the availability of remittance services in rural Malawi. Through an IFAD co-funded project,
Opportunity International upgraded its existing technology in rural branches in Malawi and trained MFI staff to
conduct remittance services through a new software platform. Thanks to this upgrade, its customers in rural areas are
now able to send and receive domestic remittances not only through bank offices, but also through electronic access
outlets such as Point of Sale (POS) terminals, automated teller machines (ATMs) and mobile vans. All the newly
equipped kiosks will provide a full range of financial services to remittance senders and receivers (account opening,
deposit, withdrawal, funds transfer, loan, insurance, and savings).
Improving Access to Remittances in Madagascar’s Rural Malagasy Highlands. In collaboration with

AccèsBanque Madagascar (ABM) and co-funded by IFAD, the project seeks to contribute towards improving access
to professional domestic and international remittances services mainly for the rural population in the Malagasy
highlands by extending domestic and international transfer services in this area to enable the population to access
remittance services. The target groups are people living in the highlands of Madagascar, the majority of who are
remittance recipients and who have limited or no access to the formal banking sector. All ABM branches will be
connected online in real time and will offer all basic products such as loans, deposits (current accounts, saving
accounts and term deposits), and domestic and international money transfer services to micro- and SMEs.
Enhancing Migrants’ Savings. The project is being implemented by Appui au Développement Autonome (ADA)
and supported by IFAD. The goal is to improve the living conditions of the migrants and their families and
communities of origin through a more productive use of remittances, thus increasing the contribution of migrants to
the socio-economic development of Mali. The project will direct remittances both at migrant and beneficiary level
towards more productive activities by offering a remittances system and financial products that are adapted to the
needs of the Project’s Target Group. The Project will increase the membership and awareness of the MFI “Réseau
des Caisses d’Epargne et de Crédit du Mali – Nyèsigiso. In addition, it will carry out a sensitization campaign to
build awareness of savings as a productive investment for generating long-term income, and will provide
information on ADA’s real-estate financing products.
Support to AfDB Migration and Development Fund. IFAD, in conjunction with the French government,
participated in the joint launch of the AfDB program in 2009. The seed funding of this initiative is aimed at jointly
promoting and addressing core issues in the migration and remittance field in Africa.
Diaspora Investment in Agriculture (DIA). IFAD and the United States Department of State (DOS) have
launched the DIA initiative that seeks to foster job growth in local communities, contribute to poverty reduction and
reduce the need to migrate. The initiative will focus its efforts on supporting sustainable agricultural projects and
stimulating the agricultural industry in fragile countries including Afghanistan, Angola, Burundi, Congo, Côte
d’Ivoire, the Democratic Republic of the Congo, Egypt, Haiti, Iraq, Liberia, Sierra Leone, Somalia, Sri Lanka, the
Sudan and Tunisia.
African Postal Financial Services Initiative. The African Postal Financial Services initiative is a joint regional
program launched by the IFAD and the EC in collaboration with the World Bank, the UPU, the World Savings
Banks Institute/European Savings Banks Group (WSBI/ESBG) and the UNCDF. The partnership seeks to enhance
competition in the African remittance market by promoting and enabling post offices in Africa to offer remittances
31
and financial services. The objectives are to reduce the cost of remittance in the African region, reduce transaction
times, broaden the network of rural locations and deepen the range of financial services.
3.2.6 The Government of the Netherlands

Financial Sector Development. The project seeks to improve the financial and economic infrastructure (e.g.
payment systems) in countries of origin in order to simplify the remittance process and improve access to financial
services (via World Bank/IMF donor funds FIRST and the International Finance Corporation (IFC); work to make
more people financially literate (particularly women) by making information available (through Dutch Microfinance
Platform); strengthen financial institutions through technical assistance (e.g. increase opportunities to open saving
accounts) (via IFC, FIRST); and exploit technological advances such as mobile banking (e.g. through FMO, the
entrepreneurial development bank of the Netherlands).
Enterprising Migrants. Funded by the Dutch Ministry of Foreign Affairs, the IntEnt foundation launched the
“Enterprising Migrants” project in April 2012. The aim of the project is to support Dutch migrants in starting new
business in their countries of origin including Angola, Ghana, Ethiopia, Suriname, Morocco, Sierra Leone and
Burundi.
IS Academy: Migration and Development. The main objective of the IS Academy is to strengthen the quality of
policies in the area of development cooperation through the interaction between policy makers and academia. The
program aims at stimulating new approaches to development cooperation using the available knowledge on
sustainable development and poverty reduction and creating new evidence on effective policies. Research is
conducted on different topics in the migration and development field including remittances.
3.2.7 Opportunity International UK

Opportunity International UK supports several African countries through MFIs. It does this by enhancing the
institutional viability of seven of its network partners in Ghana, Malawi, Mozambique, Uganda, Zambia, and
Zimbabwe. By strengthening the capacity of MFIs in product development, the network partners can better respond
to client demands and financial transparency requirements, and secure access to larger amounts of domestic and
international capital needed for expansion. Opportunity International UK helps MFIs develop new credit, savings,
insurance, and remittance-related products.
3.2.8 USAID
African Diaspora Marketplace Competition (ADM-II). In collaboration with Western Union, ADM
(www.diasporamarketplace.org) is an initiative that encourages sustainable economic growth and employment by
supporting U.S.A based African Diaspora entrepreneurs. The project takes the form of a Business Plan competition,
which promotes economic development in Sub-Saharan Africa by facilitating diaspora direct investment in viable
start-up companies.
32
World Bank. 2010a. Africa Migration Project. Website: go.worldbank.org/V6Y4QOL7A0
33
4. Study of Remittance Flows within Africa
By using the resources from various studies of remittance flows within Africa, the lessons learned and good practice
examples can help improve financial services and access to banking products and services for remittance senders
and recipients. This chapter provides an overview of major studies conducted on patterns of remittance flows,
players and uses of remittances in Africa prepared by the World Bank and development partners.
4.1 World Bank

Various units and departments within the World Bank have conducted studies to understand migratory patterns,
costs, and modes of remittance transfer within Africa.
4.1.1 Migratory patterns

In Supporting Remittances in Southern Africa, Truen and others (2005) estimate that approximately 2.1 million
migrants from the SADC region reside in South Africa due to working opportunities in the mining sector, the
relative economic stability, and other opportunities. This study categorizes legal migration to South Africa into 4
components: (a) migrants employed by mining companies and sub-contractors, (b) migrants with work permits, (c)
seasonal agricultural workers, and (d) asylum seekers and refugees. Estimates suggest that there are about 280,000
Mozambicans who remained in South Africa after fleeing the civil war in Mozambique in the 1980s.
South-South Migration and Remittances (Ratha and Shaw 2007) highlights migration patterns between developing
countries using census data and methodology developed by the World Bank in 2005. Their study claims migration
patterns between developing countries are quite significant and tend to occur between countries of different income
levels (e.g., South Africa attracts migrants from Lesotho, Mozambique, Namibia, and Zimbabwe) and between low-
income countries of different levels (e.g., migration from Mali, Niger, Cote d’Ivoire, and Ghana). South-South
migration also tends to be influenced by proximity and costs (which are usually lower because most of the migration
between these regions is cross border); by the lack of documents needed to travel across these borders; and, to an
extent, by ethnic, family, and religious ties.
The Migration and Remittances Factbook (World Bank 2008) presents numbers and facts behind the stories of
international migration and remittances, drawing on authoritative, publicly available data. It provides a snapshot of
statistics on immigration, emigration, skilled emigration, and remittance flows for 194 countries and 13 regional and
income groups. The current edition of the Factbook 2011 updates the information in the popular 2008 edition with
additional data for 71 countries collected from various sources, including national censuses, labor force surveys,
population registers, and other national sources. In addition, it provides selected socioeconomic characteristics such
as population, labor force, age dependency ratio, gross national income (GNI) per capita, and poverty headcount for
each country and regional grouping (World Bank 2011).
Leveraging Migration for Africa: Remittances, Skills, Investments is a joint effort led by the AfDB and the World
Bank and is considered the first comprehensive publication on harnessing migration, remittances, and other diaspora
resources for the development of Africa. It comes at a time when countries in Africa and elsewhere are grappling
with difficult choices on how to manage migration. Policy makers can help leverage the contributions of migrants to
the development of Africa, reduce remittance costs, improve the efficiency of remittance markets in both origin and
destination countries, and address the needs of the origin countries without restricting the emigration of high-skilled
professionals. Innovative financing mechanisms such as issuance of diaspora bonds and securitization of future
remittance flows can help finance big-ticket projects, such as railways, roads, power plants, and institutions of
higher learning that will, step by step, help to transform Africa. It contributes to a greater understanding of migration
and its potential role in Africa’s development (AfDB and World Bank 2011).
4.1.2 Remittance Flows
Outlook for Remittance Flows 2012-14 notes an increasing trend in remittances over the years within Sub-Saharan
Africa due to strong south-south flows and weaker currencies in some countries that attracted larger remittances.
Despite the crises in North Africa, the civil conflict and unrest related to the “Arab Spring” and the difficult
economic situation in Europe, remittance flows to Sub-Saharan Africa are estimated to have increased by 7.4
percent in 2011. Remittances from Kenyan migrants grew to $644 million in the first nine months of 2011. Inflows
surged by 45 percent on a year-on-year basis in part because the weak Kenyan shilling made it more attractive to
invest in local currency assets. Remittance flows to Ethiopia are reported to have increased to more than $1.5 billion
in the 2010-11 fiscal year (Ratha and others 2011).
Supporting Remittances in Southern Africa (Truen and others 2005) highlights how remittance flows between
developing countries, or the South-South corridor, are quite significant. A good example of South-South remittances
is discussed in this work, which assesses remittance patterns, flows, regulatory framework and latest technological
advances in the remittance market in the South Africa corridor. Characterized by high levels of migration, both short
term and long term, the study on remittances flows between SADC members found that the volume of remittances is
quite large but with only about 41.9 percent carried by formal financial service providers. The volume of
unregulated remittances may be the result of extremely severe foreign exchange restrictions in South Africa, which
is highly regulated and allows only banks to handle foreign transactions. This increases the incentive of sending
transfers through unregulated remittances.
Remittance Markets in Africa is a companion volume to Leveraging Migration for Africa: Remittances, Skills, and
Investments (AfDB and World Bank 2011) and presents findings of surveys of remittance service providers
conducted in eight Sub-Saharan African countries and in three key destination countries. It looks at issues relating to
costs, competition, innovation and regulation, and discusses policy options for leveraging remittances for
development in Africa (Mohapatra and Ratha 2011).
Outlook for Remittance Flows 2011-13. Migration and Development Briefs are prepared by the Migration and
Remittances Unit, Development Economics Group (DEC) and Poverty Reduction and Economic Management
(PREM) network of the World Bank. These briefs are intended to be informal briefing notes on migration,
remittances, and development.
A study by the Development Prospects Group, Migrant Remittance Flows (Irvine and others 2010) based on a
survey of 33 central banks in Africa, sets out to find how data on remittances is collected. The study shows a need
for better coordination between both sending and receiving countries. It also suggests that countries must consider
new channels and technologies (including mobile networks) for collecting data. The study also noted that African
countries have made progress in removing some regulatory obstacles, including rendering exclusivity agreements
illegal, which will help spur competition in the remittance transfer market and decrease costs.
Migrant Remittances and Development in the Global Economy. This work analyzes the way that migrant
remittances operate worldwide and the implications of these inflows for developing countries. It focuses on the main
trends and characteristics of remittance senders and recipients, the context in which migrants send money, and the
relationship of these transfers to development—in particular to asset building, trans-nationalism, and migrant
philanthropy (Orozco 2013).
4.1.3 Costs
Remittance flows through regulated channels are defined by many factors, including costs, cultural familiarity,
convenience, and speed. The cost of sending remittances is one of the key influencing factors, and the use of
regulated channels is likely to increase when costs go down. South-South Migration and Remittances (Ratha and
Shaw 2007), in estimating the cost of remittances, finds it is more costly to send US$200 between the South-South
35
remittance corridor than the South-North and North-South corridors. These findings reveal that the high cost of
remittances between the South-South corridors may be due to the lack of competition in sending and receiving
countries in developing countries.
In 2008, the World Banks Payment Systems Development Group (PSDG), now FFIFI, launched the first Remittance
Prices Worldwide (RPW) Database (updated July 2013). The database, covering 220 “country corridors” from
32 remittance-sending countries to 89 receiving countries, provides information on the cost of sending and receiving
small amounts of money from one country to another. It highlights the efforts by the World Bank to increase
transparency and competition among remittance service providers by allowing comparisons among countries,
supporting consumers’ choices, and putting pressure on service providers to improve their services22. Research on
the cost of sending US$200 across various country corridors, for example, shows that three of the five corridors with
the highest cost of sending remittances are in Africa.
The RPW Reports23 is a series of policy notes by the FFIFI that uses the data from the RPW database’s current
iteration to analyze the global, regional and country specific trends in the average total cost of migrant remittances
during the past 6 months period and the factors influencing these movements.
What Explains the Cost of Remittances? (Beck and Martínez 2009), exploring the characteristics of 119 remittance
sending and receiving countries, reports that countries with a higher number of migrants, a higher number of market
players and greater bank competition (larger numbers of banks) in receiving countries, show lower average costs of
transferring remittances.
4.1.4 Regulated and unregulated means of sending remittances

Remittances may be sent through regulated or unregulated channels. Regulated channels for sending remittances
include the use of banks and non-bank institutions, MFIs, MTOs, credit unions and cooperatives and post offices.
Western Union and MoneyGram have been identified as the two main regulated MTOs within Africa.
New and unconventional methods are being developed to make regulated remittance transfers cheaper, faster, and
safer. Mzansi money transfer (South Africa) allows users to send and receive money anywhere in South Africa
without the need for a bank account. This service is not restricted to Standard Bank branches but is available at any
of the participating banks and the South African Post Office. Evidence suggests that technological innovations in
remittance payments and transfers can increase competition in the market and significantly lower the costs of
transfers (CGAP 2010).
The use of mobile money schemes to facilitate the delivery of financial services is on a steady increase in Africa.
Mobile users of M-PESA24 in Kenya find branchless banking easy to use, accessible, and safe The CGAP study,
Poor People Using Mobile Financial Services (Morawczynski and Pickens 2009) further notes that the introduction
of M-PESA has enabled easier money flows in Kenya and the ability to penetrate previously underserved rural
areas. Furthermore, women in rural areas reported using M-PESA to solicit funds from their husbands (and other
contacts) in cities and urban areas, requiring less frequent visits home. M-PESA is used in Kenya to save money (for
consumption) or to transfer to their relatives. On average, users make about 15 deposits per month into their
accounts. M-PESA now reports more than 11,000 agents (four times the combined number of bank branches and
ATMs in Kenya).
Evidence from Branchless Banking Pricing Analysis (McKay and Pickens 2010) notes that the cost of using
branchless banking for money transfer is 54 percent cheaper than using unregulated remittance channels. Branchless
22RPW can be accessed at remittanceprices.worldbank.org and SMA can be accessed at
sendmoneyafrica.worldbank.org
23These can be found at http://remittanceprices.worldbank.org/Remittance-Resources
24Mobile payment service provided by SAFARICOM has millions of users since it was launched in 2007.
36
banking is also found to be cheaper when the transaction is smaller, encouraging the need to improve branchless
banking models in other African countries.
Unregulated channels. Due to the relatively high costs of remittance through regulated channels, many migrants
prefer to remit through unregulated channels for their ease and lower costs. Remittances: Transaction Costs,
Determinants, and Informal Flows (Freund and Spatafora 2005) notes that migrants prefer unregulated channels
because they are faster and more convenient, are not constrained by any regulatory banking and foreign exchange
regulations, and do not require remitters to have bank accounts. Using a theoretical econometric model, the study
reports that, as expected, bank concentration, financial development and dollarization have a positive and significant
effect on the cost of remittances and suggests that an improvement in financial services and greater competition will
decrease transaction costs.

Studies in East and Central Africa have analyzed remittance transfers, including the improvement of the regulatory
framework and payment systems at the country level.
Uganda. In 2005 a joint team from the World Bank and the IMF conducted a review of the financial sector in
Uganda to determine the progress made and impediments to implementation of the FSAP. Recommendations were
made to identify concrete additional proposals to improve efficiency and outreach of the financial system. A 2008
mission prepared a detailed report on the national market for remittances, and provided the authorities with an
assessment and recommendations.
Uganda's Remittance Corridors from United Kingdom, United States and South Africa (Endo, Namaaji and
Kulathunga 2010) gathers and analyzes a broad spectrum of remittance data related to Uganda and the three
remittance corridors. The comparison highlights similarities and differences and the significance of the remittance-
sending countries to Uganda in terms of volume, corridor formality, risks, and vulnerability to money laundering. It
also describes Uganda as a remittance-receiving country and outlines the remittance flows, market players,
distribution network, access and usage of remittances, regulatory framework, and measures taken toward AML/CFT.
The issues and challenges faced by Uganda are identified and policy recommendations are made for both Uganda
and remittance-sending countries. Being the first Bilateral Remittance Corridor Analysis (BRCA) report to be
conducted with the partnership of a local authority adds to the significance of the endeavor.

Flagship Study on Migration and Remittances. In collaboration with the AfDB, the study aims at improving the
understanding of migration and remittances in Sub-Saharan Africa and providing informed policy recommendations
by analyzing the results of technical surveys launched in over 50 African countries. These surveys collected
information from households, central banks and diaspora communities on remittances and migration flows,
remittances transfer mechanisms, the uses and impact of remittances.
Migration and Remittances in Africa. In partnership with the AfDB, the Migration and Remittances in Africa
research project intends to study remittance trends and flows into Africa using household surveys and analysis to
strengthen the research capacity for policy makers in six African countries: Burkina Faso, Kenya, Nigeria, Senegal,
South Africa, and Uganda.
Role of Post Offices in Remittances and Financial Inclusion describes the efforts being made in Sub-Saharan
Africa to increase access to remittance services through post offices in small towns and rural areas, and discusses
how this improved access could be used to develop crucial savings and other financial services for the poor
(Clotteau and Ansón 2011).
37
4.1.7 West Africa
Mali. Seeking to bridge existing knowledge gaps in the area of rural finance, an Africa Region study of Mali rural
finance was conducted covering the supply of financial services, including case studies of rural finance providers
and the legal environment within which rural financial markets operate and the constraints this represents for
improving access to financial and payment services in rural areas.

Development partners, including the African, Caribbean, and Pacific Group of States (ACP), AFD, AfDB, DFID,
EC, FAO (Food and Agriculture Organization of the United Nations), French Ministries of Economy, Foreign
Affairs and Interior, G8, IMF, Ministry of Foreign Affairs of Denmark and the Center on Global Counterterrorism
Cooperation, GIZ, IFAD, IOM, and USAID have conducted various studies and projects on remittance flows within
Africa.
4.2.1 ACP Group of States

ACP Observatory on Migration. In October 2010 the Secretariat of the ACP Group of States launched the ACP
Observatory on Migration, mainly funded by the EU through the Intra-ACP Migration Facility. The aim of the
project is to establish a network of research institutions and governmental entities dealing with migration in the six
regions of the ACP Group of States, namely West Africa, Central Africa, East Africa, Southern Africa, the
Caribbean, and the Pacific. Activities will be centered in 12 pilot countries, 8 of which are in Sub-Saharan Africa
(Angola, Cameroon, the DRC, Kenya, Lesotho, Nigeria, Senegal, Tanzania); it is foreseen that other countries will
join the process. The Observatory will be able to produce much needed data on South-South ACP migration flows
for migrants, researchers, civil society, general public, governments and policy-makers.
The Remittances Framework in Lesotho: Assessment of Policies and Programs Promoting the Multiplier Effects.
With the assistance of the Southern Africa Migration Project (SAMP), this ACP Observatory study contributes to
the better understanding of the type and volume of remittances inflows and how their development impact can be
enhanced through policy support, mainstreaming remittances into development planning in Lesotho. More
specifically, it aims at improving the programmatic and policy framework on remittances in Lesotho by elaborating
a short- and long-term policy strategy facilitating the potential multiplier effects of remittances on the development
of Lesotho (Nalane, Chikanda and Crush 2012).
4.2.2 AFD
Study on productive collective investment by Senegalese diaspora living in France. The main purpose of this study
is to provide the Senegalese diaspora and government with the essential tools to identify investment' opportunities in
the region and provide the necessary support to advance these opportunities.
MIDDAS Research Project. The MIDDAS project, led by a team of scholars and by Flore Gubert, aims at
identifying the links between migration, remittances and development, focusing on Senegal.
4.2.3 AfDB
Alliance for Improving Remittance Flows to Africa. The AfDB, in partnership with the Multilateral Investment
Fund of IDB, has launched the Alliance for Improving Remittance Flows to Africa with the aim of sharing
knowledge of remittance good practice from Latin America to African countries. The initiative, which focuses on
Uganda, also seeks to strengthen the AfDB operations with improved sector strategies, policies, and project design
and implementation, as well as capacity building for the AfDB in the areas of microfinance, financing of small and
medium-size enterprises (SME), and remittances.
38
The Migration and Development Initiative. The aim of the initiative, launched in 2009, is to maximize the
development impact of remittances by increasing their productive use, promoting business opportunities, and
creating jobs. The AfDB intends to contribute to mobilizing remittances to recipient countries and increasing the
flow of resources to the end beneficiaries while allowing better control on the amount transferred by the migrants,
promoting more effective uses of funds for social consumption (by supporting mutual schemes in health, and public
private partnership in education and health), and supporting productive use of available resources with the
involvement of local entrepreneurs.
Migrant Remittances: A Development Challenge. This study report was prepared at the request of France’s Inter-
ministerial Committee for International Cooperation and Development and analyzed remittance trends in four
country corridors in Africa: the Comoros, Mali, Morocco, and Senegal. In its profile of the corridors, the study
examined trends in the volume of flows, the modes of transfer of remittances, the mechanisms governing the
remittances market, and the supply and demand determinants of remittances. Results indicated that remittances
represent between 9 and 24 percent of GDP and between 80 and 750 percent more than ODA. Remittances tend to
benefit poor households, mainly in remote areas by helping to meet their basic needs and allowing them to
purchasing critical goods and services, including food, education, and healthcare (AFDB 2007).
Remittances to Uganda and Rwanda. The study (2008-9) conducted by the AfDB assesses flows of regulated and
unregulated remittances in Uganda and Rwanda, and highlights the differences between its results and official
figures. In Uganda, the Central Bank statistics have recorded a significant increase over the past few years (tripling
from 2005 to 2007) after a 2006 AfDB survey of recipients.
International Remittances and Income Inequality in Africa. This paper presents empirical evidence of the link
between international remittances and income inequality (Gini coefficient) in African countries (Sub-Saharan and
North Africa) in the light of the financial crisis. The paper examines income inequality and inflow and
characteristics of international remittances to African countries, provides a brief literature review of the income
inequality impact of international remittances and explores some resulting policy implications (Anyanwu 2011).
Reducing the cost of migrant remittances to optimize their impact on development: Financial products and tools
for the Maghreb Region and the Franc Zone. This study, conducted by the AfDB and the French Government,
looks at the cases of Morocco, Tunisia, Senegal, Cameroon and Comoros. More specifically, it studies the regulated
markets and their players, presenting the regulatory and legal measures governing the remittances market and
analyzing their use by the financial sector in the recipient countries. It also analyses the bank and non-bank products
developed for this market, and proposes, on this basis, innovative financial products and services incorporating
recent developments, especially those associated with the use of information and communication technologies.
(AfDB 2011b).
4.2.4 DFID
Informal Remittance Systems in ACP Countries. Using a survey of remittance corridors connected with the United
Kingdom, including Ghana, Kenya, and Nigeria, DFID identified challenges facing the remittance market in the
United Kingdom. These challenges included the inability of remittance service providers to identify potential
customers, uncertainty in the transfer corridors regarding the size of the market, consumers’ preferences and
behavior, and the lack of coordination between the regulators of the market. The survey makes recommendations to
help increase the flow of remittances through registered channels (DFID 2004).
Sending Money Home? A Survey of Remittance Products and Services in the United Kingdom. This survey was
conducted on money transfer products offered to Diaspora members in the United Kingdom to address information
asymmetry between senders and remittance companies. The primary remittance-receiving countries, including
Ghana and Nigeria, were included in the survey. Results showed that fees for sending remittances ranged between
39
2.5 percent and 40 percent, with banks and building societies charging higher fees than MTOs. Banks also required
several forms of identification while MTOs were more convenient and offered better service (DFID 2005).
Cash Transfers Evidence Paper. This paper provides global evidence on the impact of cash transfers in developing
countries, and the impact cash transfers can have in achieving different social and economic policy objectives. In
general, the main focus is specifically on cash transfers as a form of social assistance to empower the poor to use
remittances in more productive ways and improve their quality of life (DFID 2011).
4.2.5 EC
EU Remittances for Developing Countries, Remaining Barriers, Challenges and Recommendations. The report
addresses many different topics pertaining to remittances in Europe and developing countries and aims at providing
recommendations to the EC (Isaacs, Vargas and Hugo 2012).
4.2.6 FAO-UN
A Rapid Situation Assessment of Migration and its impact on agriculture and rural development in Gambia,
Guinea and Senegal. The objective of the project was to assess the impact of migrations and remittances on
agricultural production and productivity, and food security in these three countries. The study aims at enhancing the
impact migration and remittances have on sustainable food security and agricultural and rural development. It also
supports and promotes policy recommendations by providing information on migration and remittances (FAO
2010).
4.2.7 French Ministries of Economy, Foreign Affairs and Interior (former Ministry of
Immigration)
Action Group on Migrant Remittances; ESF study and international Seminar. Experts from the Ministry of
Economy, the Ministry of Foreign Affairs, the Ministry of Interior, the AFD and the Banque de France had worked
to raise awareness on regulatory issues, new technologies, innovative tools and financing opportunities related to
remittances, to formalize and increase the liquidity of remittances and the part of remittances dedicated to
investments, while reducing costs. After regional workshops in Casablanca and Bamako in November 2009 on
remittances in Africa and Maghreb, this group decided in January 2011 to start a new operational study on
remittances in Africa (Zone Franc) and Morocco. This study was financed by AfDB and AFD and had three main
goals: inventory of possible financial products for migrants (for instance, through promoting partnerships between
Banks and MFI's to get to the final beneficiaries), inventory of the legislation and its possible improvements and
inventory of new payment technologies (looking at obstructions and opportunities; experimenting with new
electronic banking products; developing and testing innovative payment systems in remittances receiving countries
like pre-paid cards and mobile banking). The results were disseminated during an international Seminar on the 21st
and 22nd of February 2012 and dissemination workshops took place during the 1st semester of 2012 in Maghreb and
Africa25.
4.2.8 GIZ
Remittances from Germany and their Routes to Migrants' Origin Countries: A Study on Five Selected Countries.
A GIZ study, focusing on five country corridors, including Ghana and Morocco, was conducted to determine the
cost of money transfers from Germany to Ghana and Morocco in order to find out the reasons for the high cost of
remittances. The results of the study indicate that the cost of sending transfers through regulated channels (MTOs
and banks) were high; the difficulty in getting information about transfer services and conditions for transfer
(passport, identification) discouraged people from sending transfers through regulated channels. The findings of the
25 Description provided by MFW4A - AfDB
40
study have encouraged the entry of three new Moroccan banks, which operate financial transfer services in
Germany, into the market (Holmes and others 2007).
4.2.9 IFAD
Design and testing of a housing loan product for Senegalese migrants living in Italy. The main purpose of this
project was to design and test an innovative housing finance product for Senegalese migrants in Italy. The product
was adapted to the specific constraints of the clients but also aiming at financial profitability of the Financial
Institutions implementing it. The project was implemented by the Groupe de Recherche et d’Echanges
Technologiques (GRET) and resulted in 100 families opening a housing savings account. By the conclusion of the
project 10% of the families went on to sign housing savings plans tailored to the purchase of land, construction,
purchase of pre-existing housing, and home improvement.
Fund for Rural Development emigrants in Senegal (Fonds des émigrés pour le développement rural au Sénégal).
The project offers a low-cost remittance transfer service across the Italy-Senegal remittance corridor and is being
implemented by the Mutuelle d’Epargne et de Crédit des Emigrés in partnership with the private MTO Telegiros
S.A. Through the involvement of partner MFIs, a portion of remitted funds will be channeled to savings and
investment in small enterprises.
The FFR Brief: Five years of the Financing Facility for Remittances and the road ahead. The objective of this
report is to provide an overview of the importance of remittances to development, the strategy that the Facility has
implemented to date, and the lessons learned from the projects it has financed. Looking forward, the report
highlights the opportunities offered by large-scale distribution networks, adoption of new technologies, mobilization
of migrant capital and partnering with the private sector (IFAD 2012).
4.2.10 IMF
Rainfall, Financial Development, and Remittances: Evidence from Sub-Saharan Africa. This working paper
examines the impact that negative variations of income that external events have on remittances. The study uses
annual variation of rainfall in a panel of 42 Sub-Saharan African countries during the period 1960-2007 (Arezki and
Brückner 2011).
4.2.11 IOM
Angola: A Study of the Impact of Remittances from Portugal and South Africa. The IOM commissioned the report
on the impact of remittances on Angolans living in Portugal and South Africa. The report highlights the differences
in migratory patterns of Angolans in South Africa, the majority reportedly from poor socio-economic backgrounds
and working in low-skilled jobs, while Angolan migrants in Portugal were reported to have been from middle- and
lower-middle-class backgrounds. Migrants reportedly used two main types of transfer channels: recorded services
(remittance and courier companies) and hand delivery. Remittances were used for consumption and to meet the
household needs (IOM 2010).
Econometric Analysis of The Remittance Determinants Among Ghanaians and Nigerians in the United States,
United Kingdom and Germany. This IOM study measures the effects that different variables have on the remittance
amount sent. The variables used include: Home Country (Ghana or Nigeria), Host Country (United States, United
Kingdom or Germany), Remittance Fees, Relationship to the Receiver, Purpose of Remittance, Financial
Obligations in the Host Country, and Demographics (Ecer and Tompkins 2010).
Gallup World Poll: The Many Faces of Global Migration. This report provides insight to the results found during a
Gallup poll of over 750,000 adults around the world. Data was gathered since 2005 and involved asking migrants
about their own lives. The paper has a strong focus on remittances by looking at social networks and remittances;
remittances and financial help within countries; remittance flows, etc (IOM 2011).
41
Research Project on Remittances - Benin, Senegal (RPRB). The goal of this project was to create a database for
gathering knowledge on the use of remittances sent by Benin nationals to their families in Benin. Another objective
was to inform the Global Remittances Workgroup on fund transfers (Presidency of the Republic) in order to create
an observatory for remittances.
4.2.12 Ministry of Foreign Affairs of Denmark and the Center on Global Counterterrorism
Cooperation
Capitalizing on Trust: Harnessing Somali remittances for Counterterrorism, Human rights and state Building.
This report provides an insight into the operations and organization of Somali remittance organizations (SROs).
Additionally it reviews SRO current regulations and presents regulation recommendations (Cockayne and Shetret
2012).
4.2.13 USAID
West African Financial Flows and Opportunities for People and Small Businesses. This USAID-commissioned
report comprised interviews with 120 individuals, both migrants and traders. The report studied the nature, practices,
and challenges of intra-regional cross-border payments in West Africa(USAID 2006).
West Africa Cross-Border Remittances Pilot. This 2006/2007 USAID-initiated pilot supports the introduction of
cross-border, multi-currency transactions using mobile telephone technology in West Africa, beginning with Ghana,
Nigeria, and Senegal/UEMOA. The project seeks to equip intra-regional traders, intra-regional remittance senders,
and the unbanked with legal options to effectively transfer money over mobile phones across the West African
region. The project identifies barriers to implementation and organizes a pilot program for money transfers between
Ghana, Nigeria, and Senegal/UEMOA.
42
AfDB and World Bank. 2011. Leveraging Migration for Africa: Remittances, Skills, and Investments. Washington,
DC: World Bank.
AfDB. 2007. Migrant Remittances, A Development Challenge. Tunis, Tunisia.
AfDB. 2011b. Reducing the Cost of Migrant Remittances to Optimize their Impact on Development. Tunis, Tunisia.
Anyanwu, John C. (2011), International Remittances and Income Inequality in Africa, Working Paper Series N°
135, AfDB, Tunis, Tunisia.
Arezki, Rabah and Markus Brückner. 2011. Rainfall, Financial Development, and Remittances: Evidence from Sub-
Saharan Africa. IMF Working Paper 11/153
Beck, Thorsten, and María Soledad Martínez Pería. 2009. What Explains the Cost of Remittances? World Bank
Policy Research Paper.
CGAP, 2010. Update of (2008) Notes Regulation of Branchless Banking in South Africa. CGAP. World Bank.
Washington, D.C.
Clotteau, Nils, and José Ansón.2011. "Role of Post Offices in Remittances and Financial Inclusion". Migration and
Development Brief 15, World Bank, Washington, DC. March.
Cockayne, James with Liat Shetret. “Capitalizing on Trust Harnessing Somali Remittances for Counterterrorism,
Human Rights and State Building”. Center on Global Counterterrorism Cooperation. March 2012.
CPSS. 1999. “Green Book”. Payment Systems in SADC.CPSS Publication No. 30. BIS. Basel. Switzerland.
DFID. 2005. Sending Money Home: A Survey of Remittance Products and Services in the United Kingdom.
www.eldis.org/vfile/upload/1/document/0708/DOC17981.pdf
DFID 2004. Informal Remittance Systems in Africa, Caribbean and Pacific (ACP) Countries. Research project
under EC-PREP. http://www.dfid.gov.uk and www.ec-prep.org
DFID 2011. Cash Transfers Evidence Paper. DFID Evidence Paper: April 2011.
Ecer, Spencer, and Andrea Tompkins. 2010. 2010. Econometric Analysis of The Remittance Determinants Among
Ghanaians and Nigerians in the United States, United Kingdom and Germany. IOM.
Onlinelibrary.wiley.com.
Endo, Isaku, Jane Namaaji, Anoma Kulathunga. 2011. “Uganda's Remittance Corridors from United Kingdom,
United States and South Africa.” Working Paper 201, World Bank, Washington, DC.
FAO. 2010. A Rapid Situation Assessment on Agriculture and Migration in Nepal. Pulchowk, Nepal.
French Government and AfDB (2011), Reducing the costs of migrants’ remittances and optimizing their impact on
development: Financial products and tools for North Africa and the franc zone.
Freund, Caroline, and Nikola Spatafora. 2005. Remittances: Transaction Costs, Determinants, and Informal Flows.
World Bank Policy Research Paper No. 3704. Washington, D.C.
Holmes, Elizabeth, Carola Menzel, and Torsten Schlink. 2007. Remittances from Germany and their Routes to
Migrants' Origin Countries: A Study on Five Selected Countries. Eschborn, Germany: GIZ.
www2.gtz.de/dokumente/bib/07-1374.pdf
IFAD. 2012. The FFR Brief: Five years of the Financing Facility for Remittances and the road ahead. Rome, Italy.
IOM. 2010. Angola: A Study of the Impact of Remittances from Portugal and South Africa. IOM Migration Research
Series No. 39. Geneva, Switzerland.
IOM. 2011. Gallup World Poll: The Many Faces of Global Migration. IOM Migration Research Series No. 43.
Geneva, Switzerland.
43
Irvine, Jacqueline, Sanket Mohapatra, and Dilip. 2010. Migrant Remittance Flows: Findings from a Global Survey
of Central Banks.World Bank Working Paper No. 194. Washington, D.C.
Isaacs, Leon, Carlos Vargas-Silva, Sarah Hugo, 2012. EU Remittances for Developing Countries, Remaining
Barriers, Challenges and Recommendations, EC, EDF Funding, EuropeAid/129783/C/SER/multi, Project
No. 2011/266478. http://ec.europa.eu/europeaid/what/migration-
asylum/documents/eu_remittances_for_developing_countries_final_19-11-2012.pdf
McKay, Claudia, and Mark Pickens. 2010. “Branchless Banking 2010: Who’s Served? At What Price? What’s
Next?” CGAP Focus Note No. 66. CGAP. Washington, D.C. www.cgap.org.
Morawczynski, Olga and Mark Pickens. 2009. Poor People Using Mobile Financial Services: Observations on
Customer Usage and Impact from M-PESA. CGAP Brief August 2009. World Bank. Washington, D.C.
Nalane, Lefeela J., Chikanda, Abel and Jonathan Crush. The remittances framework in Lesotho: Assessment of
policies and programmes promoting the multiplier effect. IOM. 2012.
Orozco, Manuel.2013. Migrant Remittances and Development in the Global Economy. Lynne Rienner Publishers.
Boulder, Colorado (USA)
Ratha, Dilip, and William Shaw. 2007. South-South Migration and Remittances. Development Prospects Group.
World Bank Working Paper No. 102. Washington, D.C.
Ratha, Dilip, Sanket Mohapatra, and Ani Silwal. 2011. Outlook for Remittance Flows 2012-14: Remittance flows to
developing countries exceed $350 billion in 2011. World Bank, Washington DC.
RPW. 2013. Retrieved from the Remittance Prices Worldwide Database.
Truen, Sarah, Richard Ketley, Hennie Bester, Ben Davis, Hugh-David Hutcheson, Kofi Kwakwa, and Sydney
Mogapi. 2005. Supporting Remittances in Southern Africa: Estimating Market Potential and Assessing
Regulatory Obstacles. Prepared for Finmark Trust and CGAP by Genesis Analytics (Pty) Ltd. Johannesburg,
South Africa.
USAID. 2006. West African Financial Flows and Opportunities for People and Small Businesses. Prepared by
CARANA Corporation and Dr. Manuel Orozco of the Inter-American Dialogue.
World Bank. 2008. Migration and Remittances Factbook. Development Prospects Group. Washington, D.C.
World Bank. 2011. Migration and Remittances Factbook Second Edition. Development Prospects Group.
Washington, D.C.
44
5. Policy Research and Dialogue on How Remittances Contribute to the
Development of Sub-Saharan Africa
Remittances have been identified as having the potential to contribute to the development of Sub-Saharan Africa
through various means. This chapter looks at research that addresses the need for a strong regulatory framework and
the work done by the World Bank and development partners in the research and dialogue that helps target
appropriate policy that could increase the development impact of remittances.
5.1 World Bank

The World Bank has led efforts to study the impact of remittances on development in Sub-Saharan Africa, leading to
the analysis of the impact of remittances at the national, household, community and regional levels, as discussed in
this section.
The Diaspora for Development in Africa (World Bank 2011) expands on how the diaspora of developing countries
can be a potent force for development through remittances, but also through the promotion of trade, investment, and
knowledge and technology transfers. It aims to consolidate research and evidence on these issues with a view to
formulating policies in both sending and receiving countries in order to maximize the benefits of the diaspora.
5.1.1 National level

World Bank studies of impact on poverty and growth suggest that remittances generally have a positive effect on
economic growth and poverty in Africa. In their statistical analysis, Adams and Page (2005), using 74 developing
countries (including 33 from Africa), estimate that on average a 10 percent increase in the share of international
remittances in a country’s GDP will lead to a 6.1 percent decline in the share of people living in poverty. A later
study by Adams (2006) using household survey data in Ghana shows that both internal and international remittances
reduce the hardship of people living in poverty by increasing household income (expenditure), with international
remittances having a more significant impact on both the level and depth of poverty than internal remittances. Ratha
and Mohapatra (2009) also suggest that remittances may have reduced the share of poor people in the population by
11 percent in Uganda.
The growing role of remittances as a source of external financing has been highlighted in various studies.
Remittances have been identified as a stable, resilient, and more dependable source of income for countries.
Botswana, Cote d’Ivoire, Lesotho, Mauritius, Swaziland, and Togo, for example, receive more remittances than total
ODA or FDI. Ratha, Mohapatra, and Plaza (2008) also note that grants from the United States of America and
European foundations—known as “institutional remittances” to finance development programs—have focused on
HIV/AIDS, malaria, and other such issues in Africa and have increased in recent years.
The evidence that remittances are counter-cyclical and a more resilient source of external financing during economic
shocks is supported by research by the Development Prospects Group (Mohapatra and Ratha 2010), which observes
that remittances to Sub-Saharan Africa during the global financial crisis of 2008 remained resilient and moderately
flat compared to other flows. The authors explain that the counter-cyclical nature of remittances could be due to the
fact that remittances constitute a small part of the migrants’ income and therefore will continue even in times of
financial hardships.
However, in an earlier work, Ratha and Mohapatra (2009) caution that the evidence on the long-term growth effects
of remittances is mixed. This is due to the lack of proper instrumentation to measure the effects and the challenge of
finding a correlation between growth and income, even though there exists causality between growth and
remittances.
African Financial Sectors and the European Debt Crisis: Will Trouble Blow across the Sahara? The paper
reviews potential financial and real sector transmission channels of the crisis and their likely impact on African
financial systems. The European debt crisis will pose some challenges to financial sector development in Africa, but
not on a systemic scale. Most factors that helped financial sectors in Sub-Sahara Africa withstand the impact of the
global financial crisis are likely to continue to keep the region out of harm’s way. The region is significantly less
exposed to European banking sector risks than other regions. In particular the growing depth of domestic financial
markets has reduced the importance of European bank funding for African borrowers. The impact of reduced global
investor confidence will be more important, especially in those countries where portfolio flows add to local market
liquidity. The most significant risk for Africa associated with the European debt crisis is that it might trigger
domestic, homemade financial sector risks.
5.1.2 Household level

Remittances have effects on households through consumption and investment in social and economic goods. Lindley
(2006) shows that households receiving international remittances in Somalia improved their livelihoods and helped
finance education, in some cases allowing the family to choose higher-cost forms of education. Children in the
households of people receiving remittances also had relatively good school attendance rates.
Similarly, female-headed households in Ghana that received remittances spent more on education and health than
male-headed households (who tended to spend on consumption and durable goods). International remittances
lowered the expenditure share for food and increased the expenditure share for all other categories except education.
Internal remittances on the other hand increased the share of expenditure for health and education (Guzmán and
others 2007).
Remittances also contribute to the growth of financial services in a country. Using data from Somalia, Waldo (2006)
demonstrates the importance of remittances as the only provider of financial services during a period of political
strife in Somalia and the absence of financial institutions for most households. With the absence of banks and
inflationary pressures caused by the lack of monetary control on foreign printed currency, Somalia witnessed the
emergence of private activities in trade, money transfer services, transport, and telecommunications, funded by
remittances from the Diaspora (Kulaksiz and Purdekova 2006). Waldo (2006) also notes remittance companies
specializing in global transfers in Somalia grew in response to the need for financial services to deliver money to a
country in conflict.
Remittances have a role in times of economic and political shocks and natural disasters and as a buffer against
household consumption and income. In Somalia, a country without access to international capital markets and a
long history of political instability, remittances in the range of US$50 to US$100 served as a cushion against
economic shocks when economic activity came to a standstill as a result of civil war. The households that received
these remittances were able to consume outside their production-possibility frontier (Kulaksiz and Purdekova,
2006).
In Ethiopia, Burkina Faso and Ghana, remittances served as insurance during natural disasters. Countries with a
higher emigrant-to-population ratio (10 percent) had a larger increase in remittances (0.5 percent of GDP) in the
year following a natural disaster and an increase by 1 percent of GDP over the period of two years after the disaster
(Mohapatra and others 2009).26 In the case of Burkina Faso and Ghana, the evidence suggests that households that
received remittances from high-income OECD countries built houses made of concrete rather than mud to help cope
with natural disasters, while those receiving remittances in Ethiopia relied on cash reserves during natural disasters
for food security rather than sell productive assets such as livestock.
Estimates are based on Living Standards in Burkina Faso (2003), Ghana (2005), and the 2004 Welfare Monitoring
26
Survey in Ethiopia.
46
5.1.3 Community level
Lindley (2006) provides an example of community-level effort by the Somali Diaspora in Australia, New Zealand,
North America, Europe, the Middle East, and Africa. This community is held together by family and clan
connections that make regular contributions to the Irro Primary School in Bursalah in Puntland. These funds go
toward the education of 400 students ranging in ages 5 to 16 years. Similarly a survey of 175 Somali remitters in
London showed that half of them had made average donations of about US$150 for educational purposes in Somalia
in 12 months (Maimbo 2006).
5.1.4 West Africa

Nigeria. The Making Finance Work for Nigeria project in the Africa Region provided policy advice to improve the
country’s remittance market as part of its implementation support for the country’s financial sector reform strategy
referred to as FSS2020. Due to this report, the Nigerian authorities are aware of the impact on competition and
transfer costs caused by exclusivity clauses in contracts between banks and MTOs. The authorities are further
considering an appropriate role for non-bank networks, such as the postal system, in the delivery of financial and
payment services downstream.27
Mali. Seeking to bridge existing knowledge gaps in rural finance, the Africa Region study covered the supply of
financial services and included case studies of rural finance providers and the legal environment within which rural
financial markets operate. The study also covered the constraints this represents for improving access to financial
and payment systems in rural areas.
Remittance Service Providers Survey. Through the Africa Migration Project in the Development Prospects Group, a
Remittance Service Providers Survey was implemented in Burkina Faso, Cape Verde, Ethiopia, Ghana, Kenya,
Nigeria, Senegal, Uganda, the United Kingdom, and France to understand the challenges faced by remittance service
providers.
Migration and Remittances Households Surveys. The surveys seek to improve the current methods of collecting
migration and remittances survey data on households. Surveys have been implemented with the assistance of local
research partners in Burkina Faso, Kenya, Nigeria, Senegal, South Africa, and Uganda.

The ACP Group of States, AfDB, DFID, EC, Finmark Trust, GIZ, IFAD, IOM, IMF, International Labor
Organization (ILO) and USAID have conducted studies on the impact of remittances on development and made
policy recommendations on maximizing the potential impact of remittances in Africa.
5.2.1 ACP Group of States

Research of the impact of South-South migration on development in Cameroon. The ACP Observatory on
Migration commissioned this study to contribute to the understanding of the development impact caused by South-
South migration in Cameroon and to research appropriate development policies that can be implemented to address
the migration rate increase in the country.
5.2.2 AfDB
Leveraging Human Capacity and Financing from the Diaspora. This brief looks into the dilemma of whether
African governments, in response to the development-financing deficit, should encourage migration to increase the
remittances accruable from the diaspora or put in place policies to reverse brain drain to reduce the chronic human
27 For the Nigeria study,
seehttp://siteresources.worldbank.org/INTAFRSUMAFTPS/Resources/Making_Finance_Work_for_Nigeria.pdf.
47
capacity deficit. The paper then makes some recommendations as to the mobilization of migrants for the
development of their countries of origin (AfDB 2011).
Making Finance Work for Africa. The Partnership for MFW4A is an initiative to support the development of
Africa’s financial sectors, overcome fragmentation and increase aid efficiency by addressing key constraints to
efficient development partner support within country-owned development programs. Launched at the Heiligendamm
G8 summit in October 2007, MFW4A’s mission is to establish a common platform for the harmonization and
facilitation of financial sector development and knowledge sharing in Africa. The Partnership brings together donor
partners, African governments, the private sector, and other financial sector stakeholders with the aim of unleashing
the full potential of Africa’s financial sector in order to drive economic development and reduce poverty across the
continent.
In line with its principles, the MFW4A Partnership operates as an open and dynamic platform to encourage better
coordination among key stakeholders, including country and regional officials, the private sector and development
partners, and better knowledge management and generation. It also contributes to increasing support for financial
sector development at the country and regional levels.
The AfDB hosts the MFW4A Secretariat, which acts as the Partnership’s coordinating body. The Secretariat’s
activities broadly include: (i) Knowledge management and dissemination; (ii) Donor coordination; (iii) Stakeholder
engagement; and (iv)Advocacy and networking.
One of the objectives of the MFW4A partnership is to improve donor coordination and provide a platform for
donors and development partners to exchange experiences and better synchronize their intervention in the financial
sector. To that effect, the MFW4A Secretariat has developed two initiatives (i) the MFW4A Remittances Donor
Working Group and (ii) the Remittances Donor Mapping, as part of the MFW4A Donor Projects Database.
The Remittances Donor Mapping is an important tool in the remittances area as it offers an overview on the projects
across Africa and provides extensive information to all development partners on the ongoing projects on the
continent. It helps to build bridges between donors and promotes more joint approaches to tackling remittances-
related topics. In 2012 the MFW4A Secretariat launched the Donor Coordination Portal (DCP), a referential tool
accessible through the MFW4A Platform (www.mfw4a.org) which aims to leverage knowledge sharing and enhance
coordination of the development partners’ activities. It has two components (i) the Donor Projects Database and (ii)
the Online Collaborative Platform, dedicated to Working Groups’ members.
With inputs and contributions from most of the donors and development partners involved in African remittances
issues, the Remittances Donor Mapping includes (end of May, 2013), 82 remittances-related projects from 21
donors and development partners, and spread across the entire continent as regional projects and/or country-specific
projects. Partners’ contribute to the value of the mapping through regularly sharing information and updating of the
database.
5.2.3 DFID
Constraints in the UK to Ghana Remittance Market. This report assesses the UK to Ghana remittance corridor,
addressing the UK and Ghanaian regulatory environments, the products and services available on the market and the
remittance patterns of the UK-based Ghanaian Diaspora (DMA and DFID 2011).
5.2.4 EC
In 2012 the EC commissioned a study with the overall objective of analyzing the state of implementation of the EU
commitments with regard to remittances and of developing recommendations. The study shows that there has been
progress, but at the same time, that there is still significant room for improvement in all remittances related areas,
with initiatives required from EC services, EU Member States and partner countries. The report confirms the
48
significant importance of remittance transfers for recipients and their communities, as a source of income, and for
developing country governments, as a source of foreign exchange. The report shows that there has been significant
progress towards facilitating remittance transfers from Europe. For example, the regulatory and operational
environment for remittance transfers has been significantly improved, and the price of transfers has reduced by a
small amount. Another finding of the study shows that the remittances-related initiatives funded so far by the
Thematic Program for Migration and Asylum (and by its predecessor) have tended toward flows from Member
States to Southern States.
5.2.5 Finmark Trust

Understanding the last mile in cross-border money transfers from South Africa to Zambia. This focus note seeks
to answer the question of how easy is it for a Zambian beneficiary of a remittance, sent from Johannesburg, South
Africa to obtain disbursement in Lusaka, Zambia and at what cost. The study’s findings are that, whilst issues have
been raised regarding “hidden costs” and losses to the beneficiary through the application of exchange rate margins,
it is clear that the first mile (the South African side of the transaction) is the main cost driver and that the legislative
and regulatory framework that governs the remittance space in Zambia is sound, predictable, non-discriminatory and
proportionate (Langhan 2011).
5.2.6 GIZ
Migration and Employment. This discussion paper on migration and employment notes that remittances provide
new insurance and private investment capital opportunities for those who do not migrate (Dayton-Johnson and
others 2008). In especially poor countries, the paper argues that migrants’ remittances reduce risk by enabling
households to undertake risky but profitable investment projects once remittances are received.
Diaspora in Germany: Its Contributions to Development in Ghana. This GIZ study finds that Ghanaian
immigrants contributed to non-profit activities through individuals, churches, and community groups (Schmelz
2009). These contributions went toward financing health and education projects in rural areas of Ghana. The GIZ
also supports family businesses, investment in real estate, and other businesses started by Ghanaian migrants living
in Germany.
Analysis of mobility management systems in technical cooperation partner countries. The purpose of the study is
to analyze and assess policies and individual measures to steer labor migration in Egypt, China, India, Indonesia,
Kosovo, the Philippines, South Africa and Viet Nam, paying attention both to the legal and institutional regulations
on labor migration. As a further area, the comparative study is intended to take stock of relevant strategies,
instruments, measures and programs to manage labor migration. Finally, the country case studies are to be compared
and analyzed to determine the impact of the individual policies on the development performance of these countries
(GIZ 2010).
5.2.7 IFAD
Sending Money Home: Worldwide remittance flows to developing and transition countries. The IFAD report
presented the first global estimate of remittances to developing countries, helping to bring the topic to the top of the
agendas of business, policymakers and development institutions. The methodology developed and used in the report
allowed the creation of the first African continent estimate of both regulated and unregulated remittances flows
(IFAD 2007a).
Sending Money Home to Africa: Remittance Markets, Enabling Environments and Prospects. The IFAD report
highlights the regulatory issues, market competition, and financial access in 50 African countries, using results of a
survey of MFIs. The report finds that low levels of competition between remittance institutions unduly limits the
presence of transfer operators in rural areas—with Western Union and MoneyGram controlling about 65 percent of
all remittance payout locations. The regulatory framework and exclusivity arrangements of about 80 percent of the
49
countries in Africa restrict the type of institutions able to offer remittance services since only banks are permitted to
pay remittances. The report notes the importance of MFIs in remittance transfer but observes they play a limited role
in the money transfer market. The report suggests that while post offices have a strong geographical presence and
could play a potentially significant role in transferring remittances, they have yet to be put to use for remittance
purposes (IFAD 2009a).
RemittanceGateway.org. This is IFAD’s one-stop shop for information on remittances and development from
international organizations, the private sector, government institutions and the media. Specific regional contents are
addressed, including Africa.
Enhancing Microfinance and Remittance Services for Ethiopia In line with reducing the cost of remittances for
remittance senders and recipients through increased competition and innovation, the IFAD Enhancing Microfinance
and Remittance Services for Ethiopia project has fostered the use of improved electronic transfer systems. The
ARIAS transfer system allows more efficient real-time remittance processing, simultaneously cutting transfer times
and lowering costs. As a direct result of the project, fees are now as low as half what is charged by major
competitors.
Transfers and microfinance rural in Madagascar. With the funds provided by IFAD to PlaNet Finance the project
seeks to improve the standard of living of rural populations through extending money transfer services to rural areas
in Madagascar and increasing the impact of remittances on the local economy. The objective of this project is to
foster access to remittances and financial services such as savings, credit, and micro-insurance services, while
ensuring lower transfer costs through a broad distribution network in rural areas. The project will enable the
development of new technologies for efficient money transfer services using mobile banking where Internet services
are unavailable. The new money transfer solution will be progressively deployed in some 300 branches of partner
MFIs and a massive marketing campaign implemented to reach 750,000 rural micro-entrepreneurs, 48,000 members
of the MFI implementing partner networks and 72,000 members of other institutions.
5.2.8 ILO
Linkages between migration, remittances, and insurance. The ILO has conducted a study on the potential linkages
between migration, remittances, and insurance commissioned by the Micro-insurance Innovation Facility of the
ILO. The study evaluates the feasibility of using remittances from France to cover health insurance costs of recipient
families in Mali, Senegal, and Comoros.
5.2.9 IMF
Evidence from IMF research supports the relationship between remittances and economic growth. Giuliano and
Ruiz-Arranz (2005) use a sample size of 73 developing countries for the period 1975-2002 in estimating the
relationship between remittances, financial development, and growth. They find a strong positive and significant
relationship between remittance flows and a negative interaction between remittances and financial depth—
suggesting that the marginal impact of remittances on growth decreases with the level of financial development.
Gupta and others (2007), using data from 233 poverty surveys in 76 developing countries, including 24 in Sub-
Saharan Africa, confirm the poverty-reducing effect of remittances. What their research shows is a 10 percent rise
in the remittances-to-GDP ratio is associated with a fall of a little more than 1 percent of people living on less than
US$1 a day and the poverty gap (i.e., how far below the poverty line for the average poor person’s income). The
research on Sub-Saharan Africa also shows that remittances contribute positively to financial development
regardless of the size of the country in part by facilitating the entry of remittance-receiving households into the
formal financial market (Gupta and others 2007).
50
The evidence on the counter-cyclical nature of migrant remittances finds the relationship between migrant workers’
remittances to movements of GDP in Sub-Saharan African countries (Côte d’Ivoire, Lesotho, Senegal) to be a-
cyclical—suggesting no correlation between the level of remittances during higher economic activity (Sayan 2006).
In Morocco, however, workers increase remittances during periods of higher economic activity at home and cut
them during downturns and crises. Similar research by Singh and others (2009) is consistent with the literature on
the counter-cyclical behavior of remittances and finds that remittances are larger for countries that have a bigger
Diaspora and smaller for those in which the Diaspora is located in a wealthier country.
Recent research forecasting the effect of remittances on a country’s GDP during the financial downturn predicts
little effect in many Sub-Saharan African countries (Barajas and others 2010). This is evident because most of these
African countries do not have large migration ties to Europe and the United States of America, where the financial
crisis was most severely felt, but would have severe effects on countries in North Africa that have strong ties to
Europe.
Do Remittances Reduce Aid Dependency? In 2002, the United Nations (UN) Report of the International
Conference on Financing for Development recognized that ODA (henceforth aid) is, with trade and FDI, an essential
tool for development financing. At that conference, the international community reached a consensus on increasing
ODA to help countries reach the Millennium Development Goals. However, international aid has fallen short of
expectations, and many countries, in particular in Sub-Saharan Africa, will not be able to meet the goal of halving
extreme poverty by 2015.This paper investigates how remittances affect aid flows and how this relationship varies
depending on the channel of transmission from remittances to aid. This paper mainly contributes to assessing the
link between remittances and aid while controlling for reverse causation and simultaneous effects, and taking into
account the different channels of transmission.
5.2.10 IOM
Migrant Remittances as a Development Tool: The Case of Somaliland. This report examines the type of remittance
transfers made by Somalis in the Diaspora, their function and distribution of remittances among different categories
of household income groups (Hansen 2004). It observes that remittances received by urban households trickle down
to rural areas in the form of consumption of food crops and charcoal and other such rural goods and investment in
livestock and seasonal crops produced in rural areas. The study also notes that the efficiency of remittance
companies in Somalia has enabled them to build trust among Somalis even though unregulated systems still exist
openly to serve relatives and friends.
The Future of Migration Policies in Africa. The key objective of this paper is to assess current capacities to cope
with changing migration patterns and processes in formulating comprehensive migration policies in Africa, to
identify existing gaps and to make recommendations concerning capacity‐building in the future (IOM 2010).
The Migration and Development Pendulum: A Critical View on Research and Policy. This paper aims at
demonstrating that migration and development is not necessarily a new topic, and that the debate on migration and
development has swung back and forth like a pendulum between optimistic and pessimistic views. Also, the paper
argues that shifts in the migration and development debate have been part of more general shifts in development
theory, which, in their turn, largely reflect ideological shifts (de Haas 2012).
5.2.11 USAID
The role of remittance payments across borders is an important component in regions of Africa where migration
between corridors is high.
West African Financial Flows and Opportunities for People and Small Businesses. This USAID-commissioned
report examined the scope, extent, and challenges of intra-regional, cross-border payments in West Africa using
51
interviews with individuals, migrants, and traders (USAID 2006). The study estimates that the aggregate value of
financial transactions in West Africa amounts to over US$2 billion annually, and notes that the region is vastly
under-banked, comprised largely of MFIs and credit unions. This type of service forms a part of the unregulated
market and operates under financial regulations that make it difficult to fully serve the clients’ needs. The study also
finds that although intra-regional payments are taking place, they operate within a domestic and regional framework
caused by weak institutions.
Diaspora Networks Alliance. The Diaspora Networks Alliance is a framework set-up to engage development
partners in activities to increase the development impact of remittances (USAID). The Alliance works to encourage
traditional money transfer organizations and banks to develop and market their services to remittance clients and
promote linkages with MFIs. The objectives are to deepen outreach; develop regional and domestic payment
systems to meet the needs of migrants and their families and facilitate international transfers; support pilot programs
that link remittances to financial products (housing loans, health insurance, consumer loans, student loans, education
funds, pension plans, enterprise loans, indigenous rotating saving schemes); explore technological innovations (such
as mobile banking) that could reduce transaction costs; increase security; and provide remittance clients with a range
of convenient services.
52
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3838. World Bank. Washington, D.C.
Adams, Jr., Richard H., and John Page. 2005. “Do International Migration and Remittances Reduce Poverty in
Developing Countries?” World Development 33: 1645-69. October
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Barajas, Adolfo, Ralph Chami, Connel Fullenkamp, and Anjali Garg. 2010. The Global Financial Crisis and
Workers ‘Remittances to Africa: What’s the Damage? IMF Working Paper 10/24.
Cirasino, Massimo, and Jose Antonio Garcia. 2008. Measuring Payment System Development Survey. Payment
Systems Development Group. Washington, D.C.: World Bank.
Dayton-Johnson, Jeff, Antje Pfeiffer, Kirsten Schüttler, and Johanna Schwinn. 2008. Migration and Employment
Discussion Paper. GIZ.
de Haas, H. (2012), The Migration and Development Pendulum: A Critical View on Research and Policy.
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DMA (Developing Markets Associates Ltd) and DFID. 2011. Constraints in the UK to Ghana Remittance Market.
Giuliano, Paulo, and Marta Ruiz-Arranz. 2005. Remittances, Financial Development, and Growth. IMF Working
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GIZ. 2010. Analysis of mobility management systems in technical cooperation partner countries. Eschborn,
Germany.
GRWG. 2010. Working toward a Legal and Regulatory Framework. Special Working Note. Washington, DC:
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Gupta, Sanjeev, Catherine Pattillo, and Smita Wagh. 2007. “Making Remittances Work for Africa.” Finance and
Development, Volume 44, Number 2. IMF.
Guzmán, Juan Carlos, Andrew R. Morrison, and Mirja Sjöblom. 2007. “The Impact of Remittances and Gender on
Household Expenditure Patterns: Evidence from Ghana. Gender.” In The International Migration of Women.
Edited by Maurice Schiff, Andrew R. Morrison, and Mirja Sjöblom. Washington, D.C.: World Bank.
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No. 3, June 2004. Migration Policy Research. Department of Migration, Policy, Research, and
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Italy: IFAD.
IFAD. 2009b. FFR: Call for Proposals 2009. Rome, Italy: IFAD.
IFAD. 2010. FFR:http://www.remittancesgateway.org/
IOM. 2010. The Future of Migration Policies in Africa. IOM WMR Background Paper. Geneva, Switzerland.
Kpodar,Kangni, and Maëlan Le Goff. 2011. Do Remittances Reduce Aid Dependency? IMF Working Paper 11/246.
Kulaksiz, Sibel, and Andrea Purdekova. 2006. “A Macroeconomic Perspective”. In Maimbo, Samuel Munzele
(ed).Remittances and Economic Development in Somalia: An Overview. Working Paper Series No. 38. Social
Development Papers, Conflict Prevention and Reconstruction. World Bank. Washington, D.C.
Lindley, Anna. 2006. “The Influence of Migration, Remittances and Diaspora Donations on Education in Somali
Society”. In Maimbo, Samuel Munzele (ed). Remittances and Economic Development in Somalia: An
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Maimbo, Samuel Munzele (ed). 2006. Remittances and Economic Development in Somalia: An Overview. Working
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Washington, D.C.
Maimbo, Samuel, Tania Saranga, and Nicholas Strychacz. 2010. Facilitating Cross Border Mobile Banking in South
Africa. Africa Trade Policy Notes #1. May 2010. World Bank. Washington, D.C.
Mohapatra, Sanket, and Dilip Ratha. 2010. “Forecasting Migrant Remittances During the Global Financial Crisis.”
Migration Letters, Volume 7, No. 2, pp. 203-213. www.migrationletters.com
Mohapatra, Sanket, George Joseph, and Dilip Ratha. 2009. Remittances and Natural Disasters: Ex-post Response
and Contribution to Ex-ante Preparedness. World Bank Policy Research Working Paper 4972. Global
Facility for Disaster Reduction and Recovery Unit and Development Prospects Group. Migration and
Remittances Team. World Bank. Washington, D.C.
Ratha, Dilip, and Sanket Mohapatra. 2009. Revised Outlook for Remittance Flows 2009-2011: Remittances
Expected to Fall by 5 to 8 Percent in 2009.Migration and Development Brief 9.Migration and Remittance
Team, Development Prospects Group. World Bank.
Ratha, Dilip, Sanket Mohapatra, and Sonia Plaza. 2008. Beyond Aid: New Sources and Innovative Mechanisms for
Financing Development in Sub-Saharan Africa.Policy Research Working Paper 4609. World Bank.
Washington, D.C.
Langhan, Sarah. 2011. Understanding the last mile in cross-border money transfers from South Africa to Zambia.
Prepared for Finmark Trust by Exact Consult. Johannesburg, South Africa.
Sayan, Serdar.2006. Business Cycles and Workers' Remittances: How Do Migrant Workers Respond to Cyclical
Movements of GDP at Home? IMF Working Paper 06/52.
Schmelz, Andrea. 2009. The Ghanaian Diaspora in Germany: Its Contribution to Development in Ghana. Eschborn,
Germany: GIZ.
Singh, Raju Jan, Markus Haacker, and Kyung-woo Lee. 2009. Determinants and Macroeconomic Impact of
Remittances in Sub-Saharan Africa.IMF Working Paper 9/216. Washington, D.C.
USAID. 2006. West African Financial Flows and Opportunities for People and Small Businesses. Prepared by
CARANA Corporation and Dr. Manuel Orozco of the Inter-American Dialogue.
USAID. nd. Diaspora Networks Alliance.pdf.usaid.gov/pdf_docs/PDACM860.pdf.
Waldo, Mohamed Abshir. 2006. “Somalia Remittances: Myth and Reality”. In Maimbo, Samuel Munzele (ed).
Remittances and Economic Development in Somalia: An Overview. Working Paper Series No. 38. Social
Development Papers, Conflict Prevention and Reconstruction. World Bank. Washington, D.C.
World Bank. 2007. “Financial Sector Integration in Two Regions of Sub-Saharan Africa: How Creating Scale in
Financial Markets Can Support Growth and Development”. Prepared by the Africa Region, World Bank, for
the Making Finance Work in Africa. Washington, D.C.
World Bank. 2011. Diaspora for Development in Africa, ed. Sonia Plaza and Dilip Ratha. Washington, DC.
54
6. Development of Content and Technology Platforms for Remittances
Advanced technology platforms and payment systems have the potential to reduce the cost of remittances through
innovative products and services, and fast, efficient remittance transfers. This chapter summarizes the work of the
World Bank and development partners in improving payment systems and developing new technology platforms for
remittances.
6.1 World Bank

Making Money Transfers Work for Microfinance Institutions: A Technical Guide to Developing and Delivering
Money Transfers. This CGAP-issued report (Isern and others 2008) helped financial service providers determine
whether offering money transfer services was in their interests, and to determine what strategy, products, and
institutional structure were needed to support a successful money transfer operation.
Send Money Africa (http://sendmoneyafrica.worldbank.org): Making markets more transparent. Funded by the
AIR project, Send Money Africa provides data on the cost of sending and receiving relatively small amounts of
money from selected countries worldwide to a number of African countries, as well as within the African continent.
The objective of the database is to increase transparency in the market and provide migrants with complete and
reliable information on all the components of the transaction. Send Money Africa allows the users to compare the
costs applied by several providers to send and receive money from 16 major sending countries to 28 African
receiving countries. On April 2013 the FFIFI of the World Bank completed a report that identifies and analyzes
trends in the cost of sending money to Africa utilizing Send Money Africa (SMA) remittance prices database data28.
Also applicable are the four assessment missions completed by the FFIFI team in Malawi, Tanzania, Liberia and
Sierra Leone mentioned in Section 2.1.
Measuring Payment System Development Survey (Cirasino and Garcia 2008) identifies two types of payment
systems: (a) retail payment systems and (b) large value payment systems. Retail payment systems deal with small
value transfers. The potential benefits of a well-developed retail payment system include access for the underserved
population, especially in rural areas, and efficient services for consumers. However, retail systems in several Sub-
Saharan African countries are characterized by a low degree of interoperability due to the lack of appropriate
infrastructure to process electronic payments of retail value. The Retail Payment Systems Sub-Component 1 of the
Survey, which measures the infrastructural ability of a country to process retail payments, showed that only South
Africa scored high on this account.
Large-value payment systems process individual payments of larger value and requiring higher speed. The real time
gross settlement system was developed in response to the growing awareness of the need for sound risk management
in large-value funds transfer systems. A real time gross settlement system offers a powerful tool to the reduction of
settlement risk in securities and foreign exchange transactions and to increase financial stability. Most countries in
the Measuring Payment System Development survey reported using the real time gross settlement system for
handling large-value payments. A few countries in Sub-Saharan Africa reported using the check-clearing system or
other central bank systems in parallel with the real time gross settlement system.

Burundi. The Africa Region is working with the national authorities in Burundi to strengthen the financial system
by modernizing the financial sector infrastructure (payment systems) and improving financial sector regulations in
28 A copy of the report can be found here:
https://sendmoneyafrica.worldbank.org/sites/default/files/Send%20Money%20Africa%20Report%20remittance%2
0prices%20April%202013.pdf
ways that create synergies among different service providers such as commercial banks and the country’s postal
service, including interoperability of payment processing platforms.
Rwanda. As part of Rwanda’s Financial Sector Development Program, the World Bank diagnosed and
recommended solutions for a number of weaknesses in the financial sector, a key component being
recommendations related to strengthening the national payment systems by improving processing efficiency.
Ethiopia. The World Bank supports efforts of the national authorities to build a more transparent, well-governed,
well-regulated, and competitive financial sector, including implementing support for an automated transfer system.
BCEAO Regional Payment Systems Project received support to introduce modern payment instruments and
clearing and settlement processes in the WAEMU. Also, to establish and install an appropriate set of regional
payment mechanisms that would make payments safe, secure, convenient, and deliverable in a timely manner in
accordance with international standards. The BCEAO Regional Payment Systems Project broadly met its goals.
Results from the project included an upgrading of the basic payment systems infrastructure.

Development partners have undertaken studies and initiatives to support the development of technology platforms
for country-based systems.
6.2.1 CGAP
Scenarios for Branchless Banking in 2020. This CGAP-published report (Pickens and others 2009) provides four
scenarios for government and private sector to identify strategies in branchless banking that can maximize the
spread and depth of branchless banking as a means to improving poor people’s access to financial services. It also
highlights key uncertainties, including the regulatory framework, market competition, and businesses (existing and
new) and consumers that could significantly affect the outcomes or attractiveness of new channels to providers and
consumers.
WIZZIT payments Ltd. CGAP supports WIZZIT (a division of the South African Bank of Athens) to deliver
banking services to poor people in South Africa’s small towns and rural areas. WIZZIT is a branchless banking
business that enables customers to use mobile phones to access bank accounts and conduct transactions.29 The
payment service for wholesalers serves more than 500 micro-entrepreneurs, known as “spaza shops” 30 in the
township of Motherwell, where 3 out of 5 people are unbanked.
6.2.2 BIS
The BIS has worked in partnership with other development organizations to serve as a guide to improve payment
systems worldwide.
General Guidance for National Payment System Development. A CPSS task force on Payment System Principles
and Practices was established in May 1998 to consider principles to govern the design and operation of payment
systems in all countries. In 2006, the BIS published the General Guidance for National Payment System
Development to provide an analysis of the remittances payment system and general principles to guide countries in
improving the market for remittance services. The 14 guidelines also include sections and examples on various ways
in which payment systems could be implemented (BIS 2006).31
The CPSS (1999) published the “Green Book”, which covers the SADC countries: Angola, Botswana, Lesotho,
Malawi, Mauritius, Mozambique, Namibia, South Africa, Zambia, and Zimbabwe. The report provided an overview
of the payment systems in the respective countries and assessed the role of non-bank and bank financial
29More information on WIZZIT at http://www.wizzit.co.za.

30Spaza shops are informal convenience shop businesses in South Africa, usually run from a home.
31CPSS also co-operated with the World Bank on the publishing of General Principles for International Remittance
Services (BIS/World Bank 2007).
56
intermediaries, infrastructure to support the system, and the role of the Central Bank in interbank transfers for both
domestic and international transactions.
6.2.3 BMZ (German Federal Ministry for Economic Cooperation and Development)
Mobile Banking Platform-Ghana. In collaboration with the Reconstruction Credit Institute (KFW), the Project
concerns the deployment of a countrywide, biometric payment system (“e-zwich”) in rural areas, in partnership with
financial institutions and through a network of agents and merchants. The purpose of the Project is the improvement
of access to financial services for the rural population that had no or only limited access so far. In the long-term, the
payment system is supposed to be able to link with the European payment system to ease international remittances
transfers.
Mobile Banking Platform-Senegal. The goal of the project is for a private Mobile Banking Operator to establish
and operate, on a commercial basis, a mobile banking IT-platform and a countrywide retail network of agents
to serve as POS. The system shall be interoperable with all Telecom providers.
6.2.4 DFID
SendMoneyHome.org. In 2005, DFID initiated the SendMoneyHome.org platform to provide migrants with
information and advice on fees, exchange rates, and speedier methods for transfer of remittances. The website
provides access to the necessary knowledge to help users make informed choices when remitting through MTOs and
banks, as well as information on any suspected fraudulent activity. The platform is now called fxcompared.com and
currently focuses primarily on exchange rate information.
Mobile Phone Banking (M-banking). DFID has supported M-banking by providing a one-off grant to Vodafone
through its subsidiary Safaricom to pilot and launch a mobile banking solution in Kenya called M-PESA (“mobile
money”). The grant helped to bring about a substantial shift in Vodafone’s internal strategy toward mobile banking.
Mobile payments through M-PESA provide a potential solution to unbanked areas of the country, and efforts are
being made to use the system to also distribute social payments to poor families in remote areas of Kenya.
Kenya Social Protection Program. The aim of this project is to establish a government-led national system for long-
term and guaranteed cash transfers to the poorest and most vulnerable 10 percent of households in Kenya.
6.2.5 GIZ
geldtransfair.de: Remittance website. The GIZ has developed and operates a website that enables migrants to
compare remittance costs across various institutions. The service is available for migrants from Algeria, Egypt,
Ethiopia, Ghana, Mali, Nigeria, and Senegal and is aimed at lowering the costs of remittance transfers by increasing
the transparency of the money transfer market and fostering competition among money transfer institutions.
Partnership MFW4A. The GIZ supports the Partnership MFW4A on behalf of the German Federal Ministry for
Economic Cooperation and Development. The Partnership draws on a wide range of contributors, including African
governments and major partners that include AfDB, CGAP, DFID, EIB, FIRST, French Development Agency,
Swedish International Development Agency (SIDA), and World Bank.
6.2.6 IFAD
Building Remittance Services for the Poor in Ghana through Mobile Technology. In partnership with Opportunity
International Inc. (OI), the goal of this IFAD co-funded project is to help increase standards of living in Ghana by
providing easy access to international and domestic remittances and other financial services mainly in rural areas in
Ghana, and reduce remittance costs and increase the number of banked persons from Ghana’s rural population. The
project will enhance the ability of families in Ghana to remit funds to recipients by means of a safe, cost-effective,
fast and secured platform. This will enable rural and semi-urban poor families to access domestic and international
57
remittances as well as savings and micro-loan facilities in a cost effective, physically secure and reliable manner.
The project will address the challenges of inadequate infrastructure through capacity assessment and installation of
power generators in branches with intermittent access to electricity.
Expansion of Telecash in Rural Cameroon. Supported by IFAD, the Cameroon Cooperative Credit Union League
(CamCCUL) demonstrated that investing in electronic cash transfer systems could be sustainable even with low
transaction volumes. The implementation of a new electronic cash transfer system, ‘Telecash’, reduced transaction
costs by almost 20 per cent. US$1.8 million was mobilized during the 18 months of the project. A critical success
factor was CamCCUL’s promotional strategy, which focused on traditional markets, credit unions, village churches,
schools and meeting points.
Enabling affordable remittance services using card-based technology-Uganda. Through an IFAD co-funded
project, the microfinance pioneer Foundation for International Community Assistance (FINCA) introduced a card-
based solution and piloted the use of POS terminals in its branches in rural Uganda. FINCA issued nearly 3,000
debit cards to its clients, enabling real-time authorization and processing of transfers at fees among the lowest in the
country. Almost 35 per cent of the cards were in active use by the end of the project, and FINCA reports that this
share continues to increase. The project also generated a number of important lessons about what drives account
usage. In order to be successful, deployment of new technologies requires intensive in-person sales, training and on-
site servicing. FINCA’s customer care officers travelled to the field to familiarize clients with card activation and
the use of POS terminals. The successful model piloted in Uganda will now be replicated in the DRC and Ecuador.
Somalia Banking Groceries. Somalia lacks banking and financial services to serve its population. Often rural
remittance recipients must travel to city and commercial centers in order to receive their remittance payments. This
adds to the increasing cost of sending and receiving remittances. Supported by IFAD, Himilo Relief and
Development Association (HIRDA) sought to develop an online remittance transfer platform that would reach rural
remittance recipients in three villages of the Gedo region of Somalia. Through the innovative system set up by
HIRDA, shop owners periodically travel to urban areas to cash remittances, rather than individual recipients needing
to travel. Remittance recipients simply pick up their transfer in the form of groceries and other vital goods directly
from local stores. This arrangement ensures that family members can safely pick up their daily necessities without
being exposed to potential security issues, while at the same time providing remittance senders with a higher degree
of control over how their hard-earned money is spent
6.2.7 Finmark Trust

The Cross-border Money Transfer Experience: Why taxis and buses are still preferred to banks is a study that
explicitly sets out to challenge the commonly accepted paradigm that it is safer and more efficient to make use of
regulated remittance channels (banks and MTOs). The focus note highlights the authors’ experience as “mystery
shoppers”, presents pricing data collected from banks, the Post Office and SWIFT, highlights various process flows
and seeks to document South Africa’s performance from the customer’s perspective against the 2007 CPSS / World
Bank General Principles for International Remittance Services (Langhan and Kilfoil, 2011).
6.2.8 Government of France

Envoidargent.fr. The Ministry of Foreign Affairs, the Ministry of Interior and the Ministry of Economy and
Finance, with support from AFD, have launched a website to compare the cost of remittances for 21 countries with
the objective of "promoting transparency of costs and knowledge transfer methods" in order to reduce the cost of
migrant remittances.
6.2.9 Government of Italy

www.mandasoldiacasa.it. The Government of Italy launched the website that provides comparative information on
the costs of sending remittances. The World Bank has identified 12 key minimum mandatory requirements of a
national remittance price database and certifies only the databases that meet the minimum requirement. This website
is the first to have received certification from the World Bank.
58
Ghana/Senegal Project. The Government of Italy supports the Millennium Development Authority (MIDA)
Ghana/Senegal Project in cooperation with IOM. The project aims to encourage innovative mechanisms for
remittance transfers and lower the costs of remittances. In line with the proposed objectives, the project promotes the
use of rechargeable credit cards, a flexible system that is already being utilized in Italy by other migrant networks,
and the dual bank accounts as instruments to reduce the cost of remittances. It also proposes the use of the savings
accumulation product, guarantee fund, and certificates of deposit, along with the creation of a foundation to pool
together migrants' remittances and channel remittances toward productive use. The project recommends replicating
the Ecuador Cooperative Credit Banks Project, which supports local entrepreneurship in rural areas in Ecuador
through the creation of small local cooperative credit banks to encourage direct Diaspora involvement.
6.2.10 Government of the Netherlands

geldnaarhuis.nl is as a comparison website for money transfer costs originated by the Netherlands government and
includes information on the costs to several African countries.
6.2.11 Opportunity International UK

Banki Mmanj, Malawi. Opportunity International UK launched Banki Mmanj, a strategy using mobile phone
banking in Malawi, with grant support from Credit Suisse. Targeting rural communities, Banki Mmanj relies on the
country’s huge network of mobile phone users who will be able to use cash-back banking products that employ
technology to reduce banking transaction costs when utilizing financial services. These services include savings
accounts, small business loans, insurance and any training available to people living in poverty. This will enable
clients in rural areas without a bank presence to have a cash point where they can make withdrawals and deposits.
Mobile ATMs, Malawi. Opportunity International UK is also piloting a project in Malawi to bring mobile banks to
rural areas without banking infrastructure. Opportunity International designed a mobile banking system using two
bulletproof, all-terrain, 4-wheeldrive vehicles (a five-ton truck fitted with an ATM and a three-ton truck without an
ATM to reach farms and other more remote areas). The trucks travel with two bank employees, and two armed
Police Mobile Force guards. Using solar power, the trucks use a GPS tracking system and satellite technology for
real-time transactions. The vehicles will cover 26 service points in five districts on a weekly basis. Operating
through open windows, the mobile banks will visit designated market places on market days. For a small fee, which
is less than a bus fare to the nearest town, clients will then be able to deposit or access funds using their own bank
cards.
6.2.12 UPU
Development of worldwide electronic postal payments network (WEPPN). Funded by the EC, the UPU partnered
with PlaNet Finance to launch a project aimed at developing the WEPPN in Mali, Burkina Faso, Côte d'Ivoire and
Cameroon. The objective of the project is to expand access to remittances in rural areas of the target countries and to
reduce remittances prices. UPU also partnered with IFAD, the WB's FFIFI, UNCDF and WSBI to develop a similar
project in 10 additional countries, which was officially launched in December 2012.
6.2.13 Others
Financing Africa: Through the Crisis and Beyond is a joint collaboration between the AfDB, BMZ and the World
Bank, with support by the Secretariat of the MFW4A Partnership. This publication looks at Africa’s financial
systems after the financial crisis and all subsequent regulation reforms and technology changes, at the challenges of
expanding the outreach of financial systems, at lengthening financial contracts and at safeguarding financial systems
(Beck, Maimbo, Faye and Triki 2011). Cell phone companies are also developing new and innovative products to
capture remittance transfers in several countries in Africa:
59
CelPlay by Celtel. This M-banking technology is available in Zambia, DRC, and Tanzania. Customers are provided
with a secure Celpay SIM for any GSM mobile that loads a new menu onto the phone. Funds are deposited into a
Celpay account, using the mobile phone to transfer money from a bank account or, if the user is unbanked, to
deposit cash at a partner bank. Purchases can be made via text by entering the amount to be paid into the phone and
authenticating the transaction with a Personal Identification Number (PIN). The service provider instantly transfers
the money to the merchant’s Celpay-enabled account. Merchants pay a commission of the total transaction amount.
ZAP M-banking by Zain. This service will allow ZAP users across Kenya, Tanzania, and Uganda to use their
mobile phones to manage their bank accounts, pay bills for goods and services, make remittances to other mobile
users or bank accounts, top up airtime, and send airtime to other Zain customers within the three countries.
60
Beck, Thorsten, Samuel Munzele Maimbo, Issa Faye and Thouraya Triki. 2011. Financing Africa: Through the
Crisis and Beyond. AfDB, BMZ and World Bank. Washington, DC.
BIS. 2006. General Guidance for National Payment System Development. Prepared by CPSS. Basel, Switzerland.
Cirasino, Massimo, and Jose Antonio Garcia. 2008. Measuring Payment System Development. Payment Systems
Development Group. Washington, D.C.: World Bank.
Isern, Jennifer, William Donges, and Jeremy Smith. 2008. Making Money Transfers Work for Microfinance
Institutions: A Technical Guide to Developing and Delivering Money Transfers. Washington, D.C.:
CGAP/World Bank.
Langhan, Sarah, and Craig Kilfoil. 2011. The Cross-border Money Transfer Experience Why taxis and buses are
still preferred to banks. Prepared for Finmark Trust by ExactConsult. Johannesburg, South Africa.
Pickens, Mark, David Porteous, and Sarah Rotman. 2009. “Scenarios for Branchless Banking in 2020”. Focus Note
57. Washington, D.C.: CGAP.
61
7. Examples of Country Programs
This chapter discusses examples of work being done by three Governments—Ethiopia, Zambia and Uganda—to
leverage the development impact and increase the flow of remittances. These four governments have used different
instruments to maximize remittance flows. Some of these include the use of direct initiatives such as Diaspora bonds
and bank accounts to target remittances, as well as indirect instruments, through reforms in the banking and
regulatory framework of financial institutions. Box 1 looks beyond Africa for lessons learned on migrant
remittances in Mexico.
7.1 Ethiopia — Leveraging Remittances through Diaspora Bonds and Securitization

Large and stable remittance flows have been known to improve the creditworthiness of countries. Banks and at
times national authorities use future remittances in the form of bonds to raise money for financing. The use of bonds
for financing has the potential to be used to finance development projects since they tend to be a stable source of
financing. The World Bank estimates that African countries can raise between US$5 billion and US$10 billion a
year by issuing Diaspora bonds. The State of Israel, Sri Lanka, and India have successfully raised funds for
development by issuing Diaspora bonds.
In December 2009, the Ethiopian government issued Millennium Bonds targeted at Ethiopian nationals and foreign
nationals of Ethiopian origin living and working outside Ethiopia to raise funds to invest in the Ethiopian Electric
Power Corporation for a project that would increase power supply to the country. With a minimum purchase of
US$500, the bond could be bought through SWIFT transfer, a Diaspora foreign currency account, or with cash. The
Millennium bond was not successful and has been replaced by the new Grand Ethiopian Renaissance Dam Bonds,
which can now be purchased as small as 50 US dollars/ Euros/ Pound Sterling.
Ethiopia has also made it easy for its Diaspora members to open foreign currency accounts in domestic commercial
banks. The minimum balance on these accounts is US$5,000 and the maximum permitted is US$50,000 (or
equivalent in Euros or Pound Sterling). Banks are permitted to accept other currencies provided they convert them
to anyone of the three permitted currencies. Account holders can also make payments locally in local currency. The
bank accounts can be used to serve as collateral or guarantees for loans or bids.
7.2 Zambia — Improving Payment Systems through Technology

The Bank of Zambia 2006 report of the National Payment Systems Self-Assessment Workshop on the Observance
of the CPSS Core Principles for Systemically Important Payment Systems assessed the National Payment Systems
in Zambia, particularly the real time gross settlement system. The report notes that significant progress has been
made with regards to the observance of the Core Principles, particularly in integrating the National Clearing and
Settlement Systems to credit unions, which was formerly restricted to commercial banks. With passage of the
National Payments Act before Parliament, central banks will be able to oversee the payment systems and introduce
technology-based payment instruments to increase competition in the remittance market. The report also notes that
the relatively well-developed telecommunications infrastructure in the country has enabled banks to automate their
branch networks and provide platforms for technology-based payments such as the direct debits and credits clearing,
and the real time gross settlement system.
7.3 Uganda — Improving the Regulatory Framework for Payment Systems

Uganda is a strong reformer in the area of mobile payment services and somewhat of a model for remittance markets
in Sub-Saharan Africa. The authorities permit non-bank remittance service providers to disburse remittances but not
to contract directly for services from international MTOs. There also exists scope for improvement by focusing on
the retail payment system aspects of the market in order to move beyond mere access to a disbursement (payment)
service and improve the potential for remittances to contribute to financial deepening. Uganda will need to step up
its efforts on reforming the remittance markets by encouraging greater integration of remittance services with the
domestic payment system and opening up the domestically focused remittance services market to competition.
Bank of Uganda’s regulatory framework takes cognizance of the diverse nature of remittance service providers and
provides licenses under the Foreign Exchange Act 2004 and Foreign Exchange (Forex Bureaus and Money
Remittance) Regulations 2006 in four classes: International money transfer agency license (class A); Foreign
exchange bureau de change and money remittance license (class B); Direct entrants license (class C); and Sub-
agency license (class D). This is important in ensuring that markets are contestable.
63
Box 1. Migrant Remittances to Mexico: Lessons for Africa
In terms of value, Mexico receives the largest flow of remittances to any country in Latin America. In 2011,
remittance flows to Mexico were estimated atUS$23.6 billion, representing about 45 percent of total remittance
flows to Latin America. Remittances to Mexico are currently the second highest earner of foreign exchange for
the country after oil.
The World Bank’s Migration and Remittances Factbook estimates that there are over 11.8 million international
immigrants from Mexico, representing over 10 percent of its population. The majority of Mexican migrants is in
the United States of America and represents the largest immigrant population in that country. Migrants to the
United States of America tend to be at the low end of the income and educational distribution, and typically work
in the restaurant or hotel industries. Remittance recipients also tend to be from poor households in rural areas of
Mexico. Studies show that remittance recipients usually receive between US$280 andUS$370 per month.
Even with the majority of remittance recipients from poor households in rural areas, the means of sending
remittances make it relatively easy for migrants to remit to Mexico. Many migrants use regulated means of
remittances because they are cheap, safe, and fast. Channels for remittances include banks, credit unions, post
offices, money transfer operators, individual businesses and chain stores that have the license to serve as
independent operators or as agents for money transfer operators. The cost of sending US$200 to Mexico through
either a money transfer operator, or a bank account, using the World Bank’s Remittance Prices Database is
US$11.68 and represents one of the least costly corridors in the world.
A large share of remittance collection points in Mexico are at commercial bank branches—showing that banks
can play a significant role in the distribution on remittances. Over the past few years, remittances through the
United States of America – Mexico remittance corridor have been increasing (except in the last 2 years of the
global financial crises) due to the declining costs of sending remittances.
The following points illustrate some reasons for the declining costs of remittances:
Entry of new market competitors. Banking institutions have revolutionized remittances in Mexico. The
remittance market was typically run by Western Union and MoneyGram and used exclusivity agreements with
banks to monopolize the market for remittances. However, once banks began to move away from these contracts
and became transfer operators, prices fell and more remittance recipients enjoyed reliable transactions.
Impact of technology. New technology has made it faster and easier to send remittances across the United States
of America – Mexico corridor. The introduction of card-based products which can be used at ATM terminals has
made it possible for recipients to receive a transfer as soon as it is processed.
Bilateral cooperation. The United States – Mexico corridor has benefitted tremendously from the bilateral
cooperation between the United States and Mexican authorities, which has encouraged the use of regulated
remittance systems. Through bilateral agreements, for example, the U.S. Federal Reserve System is working to
expand its Federal Reserve Automated Clearing House (FedACH) to support two-way credit transactions between
the United States and Mexico.
Source: Hernández-Coss (2005).
64
Hernández-Coss, Raúl. 2005. The U.S.–Mexico Remittance Corridor: Lessons on Shifting from Informal to Formal
Transfer Systems Washington, D.C.: World Bank
65
Annex 1. Countries Originating Most Tertiary- Educated Migrants, 2000
Number of migrants, thousands
Source: Docquier, Frédéric, and Abdeslam Marfouk. 2006. “International Migration by EducationAttainment 1990–2000.” In International
Migration, Remittances, and the Brain Drain,ed. Caglar Özden and Maurice Schiff, 151–99. Palgrave Macmillan: New York; andthe
World Bank: Washington, DC.
Annex 2. Top 10 Remittance Recipients (Sub-Saharan Africa), 2011
US $ millions
Nigeria 20,619
Senegal 1,478
South Africa 1,212
Uganda 949
Kenya 934
Lesotho 649
Ethiopia 513
Mali 473
Côte d'Ivoire 373
Liberia 360
Source: Development Prospects Group, World Bank (Remittance Data Inflows, April 2013)
67
Annex 3. MTOs in Sub-Saharan Africa
Source: IFAD. 2009a. Sending Money Home to Africa: Remittance Markets, Enabling Environments, and
Prospects. Rome, Italy: IFAD
Annex 4. Venues for Dissemination of Remittance Research and Studies
Research and studies conducted by the World Bank and other development partners on remittances have been
disseminated and discussed at conferences and seminars.
World Bank
Listed are recent conferences on remittances hosted by the World Bank.
 Reforming Payment and Securities Settlement Systems in the Middle East and North Africa, Manama,
Bahrain, March 15-17, 2005.
 Panel discussion of the role of migration and globalization, March 2008. A debate of migration experts
was organized on the occasion of the Factbook launch.
 Mobile Money Summit, Cairo, Egypt. May 14–15, 2008. The two-day conference was designed for senior
executives from financial services institutions, mobile network operators, development organizations,
solutions vendors and regulatory and policy makers. Organized IFC, CGAP, DFID and Global System for
Mobile Communications.
 Remittances Public–Private Partnership Meeting, Vienna, Austria. September 12, 2008. The first meeting
of the Remittances Public–Private Partnership took place in the context of the Global Payments Week
2008, organized by the World Bank. Working sessions were held on legal and regulatory issues, industry
codes of conduct, and information disclosure mechanisms.
 Panel discussion of the role of remittances in development financing, October 2008. Organized on the
occasion of the launch of the publication, Innovative Financing for Development.
 Banking on Mobiles: Why, How, for Whom? Washington DC. October 1, 2008. The promise of mobile
banking is well known; harder to find are examples of solid implementation and mass rollout beyond
payments and transfers. The CGAP-organized meeting examined the business case and deployment options
for smaller banks and MFIs.
 Mobile Banking for Poor People: Pioneer Perspectives, Washington D.C., December 11, 2008. A CGAP-
organized roundtable and webinar on how mobile phone banking can deliver a range of financial services
to poor people and change lives for the better.
 Regulating Branchless Banking, Kigali, Rwanda. March 30-31, 2009. A CGAP and World Bank
workshop on the regulation of access to financial services using mobile phones, retail agents, and other
innovative technology-based approaches.
 Redefining the Landscape of Payment Systems, Cape Town, South Africa. April 7-10, 2009. The World
Bank is intensifying its commitment to promote and disseminate the policy and research debate on these
and other topics within the scope of financial infrastructure. For this purpose, the World Bank Group
organized the third global conference for payment system specialists.
 Mobile Money Summit 2009, Barcelona, Spain. June 22-25, 2009. The conference focused on what is new
in the mobile money ecosystem and how the community has evolved in the past year. Organized by IFC,
CGAP, DFID, and Global System for Mobile Communications.
 International Conference on Diaspora and Development, July 2009. The DEC sponsored the event,
focusing on how the Diaspora can be leveraged for trade, investments, skill and technologies transfer.
 International Conference on Remittances. Rome, Italy, November 9, 2009. The Conference represents the
output of an intense activity that the World Bank and the G8 have undertaken during the last year in the
framework of the G8 GRWG. Organized by the World Bank and Italian Ministry of Foreign Affairs.
 Third International Conference on Migration and Development, Paris School of Economics, Paris,
September 10 -11, 2010. Organized by the World Bank International Migration and Development Research
Program, together with the Research Department of the French Development Agency and the Paris School
of Economics.
 Global Payments Week 2010, Amsterdam, The Netherlands, October 19-22, 2010. The event gathering
central banks and securities commissions from all over the world. Organized by the World Bank.
 Financial Infrastructure Week, Rio de Janeiro, Brazil, March 14-17, 2011. The World Bank Group
gathered financial infrastructure practitioners from around the World for a full day of common plenary
sessions and three different streams: Payment Systems - "Expanding the Horizons of Payment System
Development"; Credit Reporting - "Moving beyond the Crisis – The Role of Credit Reporting"; and
Secured Transactions - "Increasing Access to Credit through Secured Transactions Reform".
 Consultative and experience sharing forum on remittances leverage for development. Addis Ababa,
Ethiopia, July 07-08 2011 that discussed and shared experiences on policy and regulatory frameworks for
the remittance sector and provided recommendations leading to a concrete action plan and road map for the
establishment of the AIR. More than 150 participants have attended the forum from 30 AU Member States.
 Global Remittance Working Group Meetings. Bi-Yearly event that convenes governmental authorities,
other international organizations and members of the private sector to discuss the highly relevant policy
issues.
 Global Forum on Remittances: Sending money home to Asia – GFR2013. Bangkok, Thailand, May 20-
23, 2013
 Global Payments Week, Lisbon, Portugal, October 23-26, 2010. The event gathering central banks and
securities commissions from all over the world. Organized by the World Bank.
Development Partners
Tools and resources were provided by development partners, and at conferences organized to disseminate data on
remittances.
 The DFID Remittance Information Library (DRIL) includes links to over 600 articles. It is a tool to be
used by money transfer companies, development organizations, governments and academic facilities to
look for information by subject, author, or title. Many of the texts contain data or information on specific
money transfer markets or on migration. DRIL will continue to be updated as information becomes
available.
 IFAD International Remittances Forum (2005, 2007, and 2009) brought together key players to explore
the links between remittances and banking, technology, and microfinance; and to discuss ways to integrate
development agencies’ agendas on remittances.
 Pan African Remittances Conference: Enhancing the Investment and Development Capacity of
Remittances to Africa, London, UK. February 8, 2007. This conference developed products and strategies
and exchanged ideas among financial service providers, central banks, MFIs, policy makers, and sector-
specific companies on the methods of transferring money to and within Africa. Organized by Africa
Recruit.
70
 Annual Global Forum on Migration and Development. The Global Forum on Migration and
Development (GFMD) is an initiative of the UN Member States to address the migration and development
interconnections in practical and action-oriented ways.This Forum serves as an informal intergovernmental
consultative body to distill possible options for international co-operation on migration. The Forum looks
into ways to facilitate remittances, engage diasporas, and integrate migration into poverty reduction
strategies.
 International Forum on Remittances 2007, Washington D.C., October 18-19, 2007. The forum explored
the links among remittances and banking, technology, and microfinance and discussed ways to integrate
development agencies’ agendas on remittances. The two-day event included a series of roundtable
discussions and working groups devoted to an in-depth exchange of ideas and business models for urban
and rural remittances worldwide. Organized by IFAD, IDB, and the Multilateral Investment Fund.
 Global Diaspora Forum: Annual celebration of diaspora communities held in the US since 2010 and
organized by the US State Department.
 The African Remittances Conference 2009, organized by the AfDB with support of MFW4A32 and
gathered representatives from central banks, commercial banks, non-financial institutions.
 G8 Meeting on Remittances, Federal Ministry of Finance of Germany, November 28-30, 2007. The high-
level meeting had two objectives: (a) assess the progress of measures to facilitate remittances agreed at the
Sea Island Summit in 2004; and (b) initiate a dialogue on new channels for transferring funds, instruments
to promote remittances, and other potential measures.
 Remittances, the Macro-economy, and Public Policy, Atlanta, Georgia, February 21–22, 2008. The
conference was intended to provide a forum for discussing innovative research on remittances and to
facilitate the exchange of views among researchers and policymakers. Organized by The Americas Center
at the Federal Reserve Bank of Atlanta.
 Remittances – Creating Value, Johannesburg, South Africa, February 25–26, 2008. This intensive 2-day
course provided an insight into the payment system aspects of remittances and was designed to assist
financial institutions that want to improve their understanding of this important market as well as develop
the many business opportunities that present themselves. Organized by Citadel Advantage.
 Payments 2008. Nevada, USA, May 18–21, 2008. The event presented the latest research, industry pilot
results, insights, trends, and forecasts delivered by payments system experts representing financial
institution, regulatory, provider, and customer perspectives. Organized by NACHA, the Electronics
Payment Association
 SWIFT Regional Conference for Africa, Durban, South Africa, May 19-22, 2008. A leading forum for the
exchange of ideas and opinions on key issues facing the financial services industry. A unique showcase for
financial technology. The theme for 2008 was “Growing Community Reach in Africa and Beyond”.
 Worker's Remittances, Creating New Markets Opportunities. Rome, Italy. June 2008. Over 100 attendees
gathered for the first annual conference on Workers' Remittances organized by the International Center for
Business Information. All the key players in the industry were represented, including MTOs, banks,
national and government organizations, academics, research organizations, and lawyers and regulators. The
issues covered ranged from the scale and potential for business opportunity of workers’ remittances to new
delivery channels for remittance.
32The MFW4A Partnership, a G8 initiative to support the efforts of African countries to accelerate economic growth
and reduce poverty by promoting financial sector development in Africa.
71
 Mobile Money Transfer, Dubai, UAE, November 10-11, 2008. The conference drew on the experiences of
the people who have “got their hands dirty” launching and marketing mobile money transfer programs to
millions of customers. Sponsored by SEMOPS-UAE.
 Money Transfers London 2008, London, UK. November 17-18, 2008. Participants discussed the business
development, investment opportunities, and service standards in money transfers. The leaders of the
industry shared their views on how the remittances are evolving. Regulators and governmental agencies
from around the world revealed recent and forthcoming changes in the money transfers and financial
services regulatory environment. Organized by International Association of Money Transfer Networks.
 Fundamentals of Smart Cards for Payment. November 18, 2008. The second webinar, "Fundamentals of
Smart Cards for Payment”, provided a foundation on the basics of smart card technology, applications, and
standards. The webinar covered contact and contactless versions of smart cards; applications for payments
(such as credit, debit, EMV, mobile, and transit); and other applications and standards. Organized by the
Electronic Transactions Association and the Smart Card Alliance.
 Global Payment Strategy 2009, Paris, France, February 22-23, 2009. Designed by payments professionals,
for payments professionals, the Global Payments Strategy Conference 2009 provided not only the most
current information and differing perspectives but also established a dialogue with leading industry experts
on current and future business lines and opportunities.
 Mobile Payments and Commerce, Brussels, Belgium, March 17-18, 2009. A focus on the recent
developments of mobile payments to sustain commerce and other economic activities.
 Banking & Payment Technologies West Africa, 2009, Lagos, Nigeria, May 4-6, 2009. The event engaged
with bank customers by inviting them to attend the exhibition and experience the new services available
through the wide range of new payment technologies being offered by banks.
 International Payments Summit 2009, London, UK, May 11-14, 2009. Driven by extensive research with
the payments community, the conference covered topics at the top of the payment systems agenda.
 SWIFT Regional Conference for Africa, Marrakech, Morocco, May 18-21, 2009.
 Mobile Banking and Financial Services Africa, Johannesburg, South Africa, July 20-22, 2009. The
conference delivered timely insights into key business and technical security considerations that all players
in the mobile banking industry and payments industry in Africa must address. Organized by IIR Telecoms
& Technology.
 Alliance for Financial Inclusion (AFI) Global Policy Forum 2009, Nairobi, Kenya, September 14-16,
2009. More than 100 policymakers from over 50 developing countries met at the first Global Policy Forum
to identify and answer key questions that are essential for making breakthroughs in financial inclusion. The
Central Bank of Kenya and Alliance jointly hosted the forum for Financial Inclusion.
 Global Forum on Remittances 2009, Tunis, Tunisia. October 22-23, 2009The Forum focused on the
African remittance market and the role of regulatory frameworks and the private sector in maximizing the
micro, local and national impacts of remittances. A Remittances, Business Models and Technology Fair
took place in parallel with the Forum and provided private-sector entities and other stakeholders with an
opportunity to exhibit their products and services. More than 200 participants from the region and experts
from around the world attended. The “Tunis recommendations” resulting from the Forum were presented to
the Global Working Group on Remittances.
 Virtual Global Forum on Remittances – Africa.The virtual Forum will be the continuation of the Global
Forum on Remittances 2009 on African remittances market and closely follow up on the recommendations
of the Tunis declaration.
72
 MENA Microfinance Forum 2009, Amman, Jordan. October 26-27, 2009. The conference, organized by
Uniglobal Research, discussed questions that still remain unanswered: When and how will the legal
framework be changed? What kind of opportunities in microfinance will be available? What new products
will be developed? How fast will improvements be seen?
 Mobile Money Transfer, Dubai, UAE, October 26-27, 2009. The Mobile Money Transfer conference drew
on the experiences of the people who “got their hands dirty” launching and marketing mobile money
transfer programs to millions of customers.
 Smart Cards in Government 2009, Washington, DC, October 27-30, 2009. As part of a continuing
partnership, the CTST conference is the official annual meeting of the Smart Card Alliance. Over 120
speakers covered a range of topics, including contactless payment, identity management, physical and
logical access security, government-issued credentialing, mobile payments, near field communication, and
new emerging technologies that will be reshaping the smart card industry in the future.
 Prepaid Cards Summit 2009, Rome, Italy, November 12-13, 2009. This event focused on the dynamic and
competitive prepaid market. Leading industry experts on market analysis informed participants on good
practice and new opportunities. Organized by VRL Prepaid Government in association with MasterCard.
 World Cards & Payments Summit 2010, Dubai, UAE, February 1-3, 2010. This event brought together
over 250 senior executives representing world players in financial cards and retail payments industry.
Discussions, case studies and good practice were highlighted in this three-day world conference.
 Remittances and Financial Inclusion Conference, London, UK. February 9, 2010. The UK Remittances
Task Force and the Financial Inclusion Task Force have been collaborating to consider the risk of financial
exclusion among migrant groups and the opportunities to use remittance services as a gateway to financial
inclusion for this group. This conference was co-sponsored by HM Treasury, DFID, the UK Remittances
Task Force, the Financial Inclusion Task Force, and the Payments Council.
 2010 Payments Summit, Salt Lake City, Utah, February 23-25, 2010. This meeting focused on new trends
and projects that are accelerating the widespread acceptance, usage, and application of contactless and near
field communication mobile payments technology for transportation and general retail payment
applications. Organized by Smart Card Alliance.
 International Payments Summit, London, UK, March 8-11, 2010. Now in its 18th year, International
Payments attracts 500+ senior executives from around the globe, including banks, corporations, regulatory
authorities, new payments providers, technology, and infrastructure and service providers.
 Mobile Financial Services, London, UK, March 9-10, 2010. An evolution from Mobile Payments
Conference, this event focused on such crucial subjects as the effect of the current climate on the
development and rollout of mobile financial services, the importance of mobile to the banking and retail
sector, and the role of payments in emerging markets. Organized by Informa.
 Money Transfer Dubai 2010, Dubai, UAE. March 22, 2010. Delegates from money transfer companies,
banks, and regulators took part in a one-day program that addressed the key issues in the remittance world.
Organized by IAMTN.
 Payments 2010, Seattle, Washington, April 25-28, 2010. Rapidly evolving technological advances in
products and services are creating the need for more oversight. This conference equipped participants with
the tools and information that are vital for all organizations—whether as a provider or end-user of payment
services—to strike the proper balance between innovation and risk management. Organized by NACHA,
the Electronics Payment Association.
 SWIFT Regional Conference Africa. Johannesburg, South Africa, May 4-6, 2010.
73
 Mobile Money Transfer Africa, Nairobi, Kenya. May 4-7, 2010. Africa is recognized as the most
significant hub for mobile money activity. Mobile Money Transfer Africa sharply focused on this rapidly
evolving market.
 Tenth Annual Payments Conference, Chicago, Illinois, May 20-21, 2010. The Federal Reserve Bank of
Chicago hosted its tenth Annual Payments Conference. This year's theme was “Payment Innovations in the
Wake of the Financial Crisis”.
 Mobile Money Summit 2010, Rio de Janeiro, Brazil, May 24-27, 2010. This conference agenda included
the cutting-edge topics and issues affecting the mobile money marketplace: Operator Heavyweights
Embrace Mobile Money; The Case for Banks Investing in Mobile Money; Emerging Business Models for
Mobile Money; and New Success Stories - Untapped Areas of Growth and Opportunities for Mobile
Money.
 9th Regional Payment Systems Workshop, Özdere, İzmir, Turkey, May 26-29, 2010. The workshop aimed
to provide a platform for the central banks of the region to exchange views on the payment system reform
process in their individual countries, on the role of the respective central banks in managing change in
payment systems, and on how developments in the region link with broader global trends. Organized
jointly by the BIS/CPSS and the Central Bank of the Republic of Turkey.
 InfoDev Annual Symposium 2010: Clean, Green and Mobile, Making Technology Work for the Poor,
Washington, DC. June 9, 2010. The Mobile Phone Applications Panel discussion focused on how mobile
services can effectively serve the poorest strata of populations.
 5th Annual Under banked Financial Services Forum. Miami, Florida, June 9-11, 2010. This forum
focused on credit, payments, and deposits.
 Money Transfer & Migrant Remittances: In the New Financial Landscape - Where Do the
Opportunities Lie? Barcelona, Spain. June 23-24, 2010. The third annual event organized by the
International Center for Business Information. Among the topics: the latest news on the World Bank 5x5
objective; how the industry has responded to the financial crisis; and mobile money – who will be the
winners and losers?
 Prepaid Cards & Mobile Payments 2010 Conference, Denver, Colorado, June 28-30, 2010. This event
examined innovative payment technologies and forecasted the prepaid role in the evolution, updated
regulatory and legal developments, and shared good practice on mobile payment technologies. Organized
by the International Quality and Productivity Center.
 Effective Oversight of Payments, Clearing and Settlement Systems, Cambridge, UK, August 31-
September 3, 2010. This 4-day program aimed to equip payment systems experts in central banks to
formulate an oversight framework for ensuring the safety and reliability of the payments and clearing and
settlement systems, and for addressing the issues of competition, accessibility, efficiency, and fraud
prevention. Sponsored by Central Banking.
 Global Money Transfers Summit,London, UK. November 15-16, 2011. Organized by International
Association of Money Transfer Networks (IAMTN).
 Tenth Coordination Meeting on International Migration, New York, USA, February 9-10, 2012.
Organized by Department of Economic and Social Affair of the UN.
 Africa Remittances and Money Transfer Markets Forum.Prai, Cape Verde, To be held in November,
2013. Organized by the Ministry of Communities, Cape Verde with the support of the AUC and AfDB.
74
Annex 5: Some terminology concerning RSPs
A distinction is often made between the regulated and unregulated sectors of the industry and also between the
formal and informal sectors.
The distinction between those RSPs that are subject to regulation and those that are not is reasonably clear in itself,
but the implications are less so. In some countries the whole industry may, in theory, be regulated but some RSPs
may ignore or manage to evade the law, in which case they operate illegally. In other countries the existing
regulations may be drafted so that they only apply selectively (e.g. to deposit-takers), in which case the unregulated
sector is legal and the incomplete nature of the regulatory regime is permitted by design.
The distinction between formal and informal is frequently made, with a preference for encouraging use of the formal
sector. However, the difference between formal and informal is often not clear. Sometimes the terms are used
synonymously with regulated and unregulated. At other times, the terms seem to be used instead to differentiate by
size and legal form - i.e. to distinguish those RSPs that are small and unincorporated (e.g. individuals) from the rest
(e.g. global banks). Or they are used as a way to distinguish those RSPs, which only provide remittance services
(e.g. specialist MTOs) from other institutions that provide a wider range of financial services (e.g. banks and credit
unions, which also take deposits and provide credit). The latter distinction may be important from a developmental
point of view (insofar as a developmental objective may be to increase access to other financial services, and
encouraging people to make remittances using RSPs that also provide those services may be one means of doing
this). However, from a payments point of view, neither of these two other definitions of formal/informal is
particularly relevant, nor can there be a presumption that the formal sector (however defined) is in some sense
“better”. Indeed, it may well be the case that small or specialized RSPs actually offer cheaper and faster remittance
services and, provided they do so in keeping with relevant laws, regulations and good practices, they may thus be a
useful source of competition in the market.
CPSS/World Bank - General principles for remittances
75
Attachment 1. FATF Recommendations 2012
A – AML/CFT POLICIES AND COORDINATION
1 - Assessing risks & applying a risk-based approach
2 - National cooperation and coordination
B – MONEY LAUNDERING AND CONFISCATION
3 - Money laundering offence
4 - Confiscation and provisional measures
C – TERRORIST FINANCING AND FINANCING OF PROLIFERATION
5 - SRII Terrorist financing offence
6 - SRIII Targeted financial sanctions related to terrorism & terrorist financing
7 - Targeted financial sanctions related to proliferation
8 - Non-profit organizations
D – PREVENTIVE MEASURES
9 - Financial institution secrecy laws
Customer due diligence and record keeping
10 - Customer due diligence
11 - Record keeping
Additional measures for specific customers and activities
12 - Politically exposed persons
13 - Correspondent banking
14 - Money or value transfer services
15 - New technologies
16 - Wire transfers
Reliance, Controls and Financial Groups
17 - Reliance on third parties
18 - Internal controls and foreign branches and subsidiaries
19 - Higher-risk countries
76
Reporting of suspicious transactions
20 - Reporting of suspicious transactions
21 - Tipping-off and confidentiality
Designated non-financial Businesses and Professions (DNFBPs)
22 - DNFBPs: Customer due diligence
23 - DNFBPs: Other measures
E – TRANSPARENCY AND BENEFICIAL OWNERSHIP OF LEGAL PERSONS AND ARRANGEMENTS
24 - Transparency and beneficial ownership of legal persons
25 - Transparency and beneficial ownership of legal arrangements
F – POWERS AND RESPONSIBILITIES OF COMPETENT AUTHORITIES AND OTHER INSTITUTIONAL

MEASURES
Regulation and Supervision
26 - Regulation and supervision of financial institutions
27 - Powers of supervisors
28 - Regulation and supervision of DNFBPs
Operational and Law Enforcement
29 - Financial intelligence units
30 - Responsibilities of law enforcement and investigative authorities
31 - Powers of law enforcement and investigative authorities
32 - Cash couriers
General Requirements
33 - Statistics
34 - Guidance and feedback
Sanctions
35 - Sanctions
G – INTERNATIONAL COOPERATION
36 - International instruments
37 - Mutual legal assistance
77
38 - Mutual legal assistance: freezing and confiscation
39 - Extradition
40 - Other forms of international cooperation
Source: FATF-GAFI -http://www.fatf-gafi.org/recommendations
78
END
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Remittances in Africa

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Remittances

The World Bank Group

The World Bank

The main findings from the review reveal that:

1.1 The African Institute for Remittances

1.2 The AIR Project

1.4 Migration Patterns

1.5 Remittance Flows

1.6 Regulated Remittances

1.7 Unregulated Remittances

1.9 Regulatory Framework

padala (the Philippines) - CPSS/World Bank - General principles for remittances

1.10 General Principles for International Remittance Services

1.11 Partnerships in Remittance Programs

2.1 World Bank

12By requests of the Governments of Libya and Mauritius.

2.1.1 East and Central Africa

2.1.2 Southern Africa

2.1.3 West Africa

2.1.4 North Africa

2.2 Development Partners

3.1 World Bank

3.1.1 East and Central Africa

3.1.2 Southern Africa

19 For additional information on East Africa, see www.africaremittances.org.

Private Sector Development (FPSD Uganda).

3.2 Development Partners

3.2.2 Credit Suisse Bank

 Returning Enterprising Migrants Adding Development and Employment (REMADE) in Ghana.

Improving Access to Remittances in Madagascar’s Rural Malagasy Highlands. In collaboration with

3.2.6 The Government of the Netherlands

3.2.7 Opportunity International UK

4.1 World Bank

4.1.1 Migratory patterns

4.1.4 Regulated and unregulated means of sending remittances

22RPW can be accessed at remittanceprices.worldbank.org and SMA can be accessed at

4.1.5 East and Central Africa

4.1.6 Southern Africa

4.2 Development Partners

4.2.1 ACP Group of States

25 Description provided by MFW4A - AfDB

5.1 World Bank

5.1.1 National level

5.1.2 Household level

5.1.4 West Africa

5.2 Development Partners

5.2.1 ACP Group of States

27 For the Nigeria study,

5.2.5 Finmark Trust

6.1 World Bank

6.1.1 East and Central Africa

28 A copy of the report can be found here:

6.2 Development Partners

29More information on WIZZIT at http://www.wizzit.co.za.

Services (BIS/World Bank 2007).

6.2.7 Finmark Trust

6.2.8 Government of France

6.2.9 Government of Italy

6.2.10 Government of the Netherlands

6.2.11 Opportunity International UK

7.1 Ethiopia — Leveraging Remittances through Diaspora Bonds and Securitization

7.2 Zambia — Improving Payment Systems through Technology

7.3 Uganda — Improving the Regulatory Framework for Payment Systems

Source: Hernández-Coss (2005).

Listed are recent conferences on remittances hosted by the World Bank.

CPSS/World Bank - General principles for remittances

1 - Assessing risks & applying a risk-based approach