COVID-19 Outbreak and the Trend of Diaspora Remittances Flows to Sub-Saharan Africa

Abstract

This paper investigated the effect of COVID-19 pandemic on the trend of diaspora remittances flows to SSA. This was based on the World Bank estimates that COVID-19 outbreak could trim SSA’s real GDP growth from 2.4% in 2019 to -2.1% at the end of 2020. Diaspora remittances which had grown tenfold, from $4.8 billion in 2000 to $48 billion in 2018, could fall by 23.1% in 2020, dropping from $48 billion in 2019 to $37 billion in 2020 according to World Bank (2020) report. This implies that diaspora remittances declined and became less stable as a result of the COVID-19 pandemic.  It was discovered that the crisis has exacerbated outstanding issues in remittance transfers to SSA countries in particular, such as the high cost of remittance transfer fees or high foreign exchange fees.  The study concluded that the pandemic offered the opportunity for SSA countries to work with service providers as well as the host governments to achieve this target in the short term. Governments should continue to offer preferential exchange rates for remittances, reduced transactional fees for transfers, debt service relief programs, or even a combination of programs to their clients. This can therefore push up the progress made by the region while improving the welfare of millions of SSA households that depend on diaspora remittances.