By Hillary Munedzi
Remittances help millions around the world cover basics such as food and school fees.
Experts warn that the practice of immigrants sending money back to their home countries cannot replace strong public services or fix deep structural inequalities — but some are trying to amplify the power of these funds to make a bigger difference.
In 2023 remittance inflows into Africa totaled an estimated USD90. 2 billion, accounting for 5.2% of Africa’s total GDP.
In 2023, according to the World Bank, over $90 billion flowed into Africa in remittances reaching approximately twice the level of overseas development assistance.
In 2024, global remittances — money sent home by workers abroad — totaled around $685 billion, though even that may be an undercount.
That is more than either foreign direct investment or official development assistance, and with ODA shrinking across the board, some see remittances as a source of cash that can be channeled into development projects.
Remittances cover school fees, food, and medical bills, and sometimes help stabilize communities after conflict. However, experts maintain that they are not a silver bullet.
Remittances are unequal, inconsistent, and not designed to fund public goods.
Such payments also proved resilient during the COVID-19 pandemic, despite predictions that they would collapse. That is fueling hope now, as foreign aid dries up.
So, the multi-million-dollar question is are remittances going to rise and allow communities to channel them into tangible projects?
The African diaspora has become the largest financier of the continent.
The fact that remittances are 100% gifts or grants means that they do not have to be paid back, unlike debt financing.
This makes remittances a valuable source of concessional financing, particularly for livelihood security for millions of Africans.
The value of remittances lies not only in their financial contribution to recipient families but also in their potential to boost the economy by creating jobs and stimulating business growth.
Remittances act as a lifeline for many Africans and as a critical source of funding for the continent’s development.
Diaspora remittances can increase consumption boost local businesses and stimulate economic growth. Additionally, remittances can be used to invest in property or start businesses, which can create jobs and further boost the economy.
Remittances have been shown to reduce poverty levels in recipient countries. This is because remittances provide a reliable source of income for families, which helps to meet their basic needs.
When families have their basic needs met, they are more likely to invest in education and health, which can lead to long-term poverty reduction.
According to the World Bank, Nigeria receives the highest remittance flows in Africa. In 2020, the country received an estimated $24.4 billion in remittances, followed by Egypt with $24.3 billion and Morocco with $7.4 billion.
Other countries such as Ghana, Kenya, and Senegal also receive significant amounts of remittances.
The homework for Zimbabwe and other Sub-Saharan countries is how to reduce the cost of remitting money which remains higher than other regions.