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Money from migrants is lifeblood for Africa

Across Africa, many families  rely on relatives working overseas — often illegally — to pay for their housing, school fees and sometimes even their food and clothes. Remittances often provide the lifeblood for families at home.
/ Source: Reuters

Jumai will soon be moving with her two young children from her tiny, one-room house in a run-down suburb of Ghana’s capital, Accra.

With money sent by her husband, Ibrahim, who works illegally in Amsterdam, she has built a walled compound with two houses — plenty of room for her and her extended family if need be.

“He first sent 25 million cedis ($2,730). That bought the land and paid for the foundation. When it runs out, he sends more,” she said in Accra’s Zongo neighborhood, where homes are squeezed together along gravel streets.

Jumai did not want to give her last name for fear of repercussions for her husband.

Three years ago, Ibrahim, a trained electrician, paid fixers to get the documents he needed to travel to the Dutch capital, where he now works in a wood processing firm.

The money he sends back home also pays for his son, Hamza, 7, and daughter, Munaya, 9, to go to school, at $50 each a term.

Across Africa, many families like Jumai’s rely on relatives working overseas — often illegally — to pay for their housing, school fees and sometimes even their food and clothes.

Remittances building state coffers
The phenomenon is so widespread that it provides a welcome boost to state coffers on the world’s poorest continent.

Last year, Ghanaians received an estimated $1.5 billion from friends and relatives, mostly in the United States and Europe, making remittances the nation’s biggest foreign exchange earner, Bank of Ghana’s director of research Dr Ernest Addison said.

“Almost every household in Ghana has a part of the household living abroad ... There are many new buildings springing up owned by Ghanaians resident overseas,” he told Reuters, adding that the influx reflected greater confidence in the economy.

“Migrants abroad are willing to put their resources back into the country ... Remittances have a major effect on poverty reduction,” he said.

The hundreds of millions of dollars that flow back into Africa from nationals working abroad are a bonus both to the black market and formal economies in some of the world’s poorest countries, economists and government officials say.

“Some of our teachers and doctors are sending money for the construction of houses and this is helping with national development,” said Zambian Finance Minister Ng’andu Magande.

“Many Zambians are buying vehicles which they are sending home to be used as buses and this has improved our transport sector ... The stability of the exchange rate has encouraged more people to send currency home,” he said.

Senegal, from where thousands of young people risk their lives on hazardous sea crossings to Europe, estimates three million of its nationals abroad, most working illegally, send back $570 million a year through official channels.

Ugandans living abroad sent home about $500 million last year in foreign currency — more than the country’s main exports of coffee, fish and flowers combined, officials say.

Unofficial figures show that Kenyans abroad sent home $464 million in 2004 compared with foreign direct investment of a paltry $46 million in the same year.

Kenyan businesswoman Margaret Mugo says her mother, a widow who lives in the coastal town of Mombasa, receives between $200-$500 every month from her other daughter who lives in the United States and works as an assistant in a law firm.

“My mother is completely dependent on the money she receives monthly from my sister through Western Union ... she has no other source of income,” Mugo said.

Providing just enough to get by
Even in north Africa, where most countries are wealthier than those south of the Sahara, money sent back by workers overseas is the leading source of foreign currency.

Remittances from expatriates to Morocco came in at 40.5 billion dirhams ($4.43 billion) in 2005, up 8.3 percent from the previous year and well above the 26.8 billion dirhams received in direct foreign investment and private loans that year.

While the bigger earners may invest in businesses or projects that create jobs at home, for most people remittances are just enough to keep their often numerous dependants going.

In Zimbabwe, which is battling a six-year recession marked by foreign currency shortages, a drive by the central bank to mobilize foreign exchange from the country’s estimated 3 million citizens abroad has hit the rocks on dwindling official inflows.

Zimbabweans, mostly working in Britain, South Africa, Australia and the United States, often send money back with friends and relatives returning home and then trade it on a thriving black market at twice the official rate.

“It’s unfair to expect a relative to send money home through the bank when you get less for that money. The obvious choice is the black market,” said Evelyn Chaziwa, a mother-of-three in Harare who survives on remittances from her husband in Britain.

Best hope to create jobs at home
But in the long term, money earned overseas is best spent by investing to create jobs back home, experts say.

“The whole point of migration is to find a job — whether in the formal or informal sector — to earn, save and send money back home,” said Jean-Philippe Chauzy of the International Organization for Migration.

“For the moment, this is private money sent to families. What we need to do is to encourage migrants to invest in activities that will generate employment and richness in the country of origin,” he said.