A NationHela card. NationHela is a money transfer service partnership between Nation Media Group and Diamond Trust Bank. Photo/File
What you need to know:
The World Bank says sending money to Kenya costs about 9.2 per cent of the value of the transfer, which is lower than the 11.89 per cent average cost for remitting cash to African countries.
The UAE and Saudi Arabia were the cheapest destinations to send remittances at respective total average costs of 3.5 per cent and 4.7 per cent.
The global average was 8.96 per cent of the value of transfer.
The cost of transferring money to Kenya from abroad is lower than fees charged on remittances to other African countries, a new survey by the World Bank has shown.
In a report dated January 2013, the World Bank says sending money to Kenya costs about 9.2 per cent of the value of the transfer, which is lower than the 11.89 per cent average cost for remitting cash to African countries.
The report titled Send Money Africa is based on a sample survey of the average cost that one would incur to send $200 (Sh17,200) and $500 (Sh43,000) from selected countries in Europe, the Middle East, North America and within Africa, taking into account the transfer and exchange rate fees.
“The most expensive sending markets in the sample are African countries, specifically South Africa, Tanzania, and Ghana, which measure 20.7 per cent, 19.7 per cent, and 19.0 per cent, respectively where there tends to be a limited number of service options and where, as a consequence, a number of relatively expensive bank account services are surveyed,” concluded the World Bank report.
The report said that limited channels for remittances and the high cost of alternatives make sending money to select African countries cost twice as much as it would cost sending an equivalent amount to Kenya .
The UAE and Saudi Arabia were the cheapest destinations to send remittances at respective total average costs of 3.5 per cent and 4.7 per cent.
The global average was 8.96 per cent of the value of transfer.
The World Bank says that the high transfer costs in Africa are mainly due to limited service options.
“Send Money Africa also finds that banks, which are the most expensive remittance service providers, are often the only channel available to African migrants,” said the World Bank in a statement on the release of the findings.
At 19.8 per cent, the average total cost for sending $200 through a bank is slightly more than the six percentage points what it would cost sending the same amount through a post office.
The World Bank says a reduction to five per cent of the total average cost would be ideal as it would add more money to the budgets of millions of African families who survive on remittances sent from the diaspora.
“Governments should implement policies to open the remittances market up to competition,” said Massimo Cirasino, manager of the financial infrastructure and remittances service at the World Bank in a statement.
The East African Community (EAC) is already working on a system to harmonise money transfer systems and regulations within the region. The project is expected to inter-link EAC banks to facilitate installation of a cross-border real time gross settlement system.
Kenyans living abroad sent $1.17 billion in 2012 as per Central Bank of Kenya (CBK) data. The total remittances figure is, however, much higher since CBK data does not capture cash sent through informal channels. Remittances to Africa are estimated to have hit $60 billion in 2012.
