The Horn of Africa region could realize rapid economic growth once countries harmonize policy and regulatory frameworks governing remittances from the diaspora and migrant workers, senior officials said on Monday.
Speaking at a forum in Nairobi, the Kenyan capital, the senior officials noted that diaspora remittances in the Horn of Africa region, if optimally harnessed, have the potential to transform livelihoods and enhance integration and social harmony.
Convened by the Intergovernmental Authority on Development (IGAD), an East African bloc, and the United Nations Capital Development Fund, the Nairobi forum calls for policy realignment as a means to facilitate a seamless flow of remittances to the region.
Participants at the May 15-16 forum include central bank governors and their deputies, representatives of regional blocs, diplomats, and scholars.
IGAD Executive Secretary Workney Gebeyehu underscored the critical role of diaspora remittances in propelling growth to a region grappling with climatic shocks, poverty, civil strife, and disease outbreaks.
“Remittances are also a lifeline and vital source of income for many families in the IGAD region, providing them with essential funds for daily expenses, education, healthcare, and even small business investments,” said Gebeyehu.
The IGAD region, according to Gebeyehu, attracted diaspora remittances totaling 8.1 billion U.S. dollars, or 3 percent of its gross domestic product, in 2021, thereby cushioning beneficiaries from the pandemic and weather-related shocks.
Gebeyehu said that a harmonized regional remittance policy will be key to lowering the cost of sending money, in addition to minimizing financial crimes like money-laundering and fraud.
The Horn of Africa nations in 2022 adopted an action plan to guide the harmonization of policies governing remittances from the diaspora community, said Rahma Salih Elobied, chair of the IGAD committee of ambassadors.
Elobied said that harnessing remittances from 9.5 million migrants from the IGAD region, representing 4 percent of its population, will be key to poverty eradication and the provision of essential services like education, health, and clean drinking water.
Patrick Njoroge, governor of the Central Bank of Kenya, said that reducing the cost of diaspora remittance from the current 8.9 percent to 3 percent, as set out in a United Nations target for 2030, will be key to realizing socio-economic renewal.
Njoroge challenged Horn of African states to leverage mobile money and channel diaspora remittances to high-yielding financial instruments like treasury bills to enhance inclusive growth. Enditem
