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Africans Abroad Lose $2 billion Annually In Remittance ‘Super Tax’

Africans Abroad Lose $2 billion Annually In Remittance ‘Super Tax’

African living abroad are losing up to $2 billion a year in remittance ‘super tax’ when sending money back to relatives and friends in their home countries for personal use or investment, a London-based think tank Overseas Development Institute (ODI) said on Wednesday.

A ODI survey, issued in partnership with the Comic Relief charity, showed that Africans in the Diaspora pay some of the most exorbitant remittance charges in the world for sending money back to the continent. On average, the ODI said, Africans pay up to 12 percent of the amount they are sending in charges, which was nearly twice the global average.

The report further said that cutting back African remittance charges to the global average would generate enough revenue “to put some 14 million children into school, almost half of the out-of-school total in the region, and provide safe water to 21 million people”.

“This remittance super tax is diverting resources that families need to invest in education, health and a better future,” AFP quoted Kevin Watkins, the report’s co-author and ODI Director, saying.

“Africans living abroad make huge sacrifices to support their families, yet face charges which are indefensible in an age of mobile banking and internet transfers.”

We are not to blame – Western Union

On its part Western Union, one of the world’s largest money transfer service provider said that the fees were down to a range of local factors and insisted that it had “delivered much-needed services to individuals looking for fast, convenient and reliable ways to send money to family and friends” during its 20 years of operating in Africa.

“Our pricing varies between countries depending on a number of factors such as consumer protection costs, local remittance taxes, market distribution, regulatory structure, volume, currency volatility, and other market efficiencies,” Western Union told AFP.

“These factors can impact the fees and foreign exchange rates offered by corridor and service type.”

The ODI report, however, argued that the high fees were due to lack of competition, pointing out that Western Union and MoneyGram control almost two-thirds of the remittance market in Africa. The two companies and their associated banking partners in Africa account for around one third of the $1.8 billion loss associated with high remittance charges each year.