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Sunday, 25 November 2007

Zambian Remittances, 2nd Edition

Last month, the International Fund for Agricultural Development, an arm of the United Nations, and the Inter-American Development Bank released the first complete map of worldwide remittances. You can access the report here. The map compiles the best available information drawn from data collected on migrant populations, percentage of migrants sending remittances, average amounts remitted annually, as well as the average frequency of annual transfers. Central banks and other official government sources, money transfer companies, international organizations and academic institutions were used for reference support.

Zambians in diaspora apparently sent $201m in 2006 or 1.8% of Zambia's GDP (a little more than the government gets from mineral royalties ). Interesting to see that Zimbabweans in diaspora sent $361m (7.2% of Zimbabwe's GDP), and that excludes hand-in-hand transfers. Zimbabweans abroad are certainly keeping Bob and Co in power.

4 comments:

  1. Very useful report.
    Now we can have the sort of disaggregated stats on worldwide remittances I was referring to in my comment to your post about a IMF report a few months ago.
    Sorry I didn't reply to your last question there because I only saw it now...
    The issue is, of course how are remittances defined in national accounts, i.e. as the portion of migrant workers' earnings they send regularly to their families in their countries of origin.
    As such, you don't have 'remittances' directly to the stock exchanges. What may happen is that families who receive remittances may decide to invest them in the stock exchange, depending of course on how much these remittances contribute to their available income.

    Regards.

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  2. Koluki,

    I agree, this sort of map is quite useful. But I guess also can be misleading. Would have been good if the numbers where re-weighted to reflect population.

    The other issue I think centres around unstable nations with a large diaspora population e.g. Zimbabwe, DRC. Their numbers would always be high...but with minimal on growth. But I guess in Zimbabwe's case, it does reinforce the role that diaspora are playing in keeping Mugabe in power.

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  3. Each time this subject of remittances arises, I am always struck by how limited the availability of detailed data is, and perhaps must be, due to the very personal nature of remittance flows within families, as well as variability between nations (both home and host) of formal and informal structural constraints on monetary or collateral transfers. The report itself essentially admits on page 6 ("Improve Data Collection") and page 9 ("Africa") that the reporting from countries like Zambia is extremely inaccurate and that, more than likely, more than half of remittance flows into the country pass through informal channels unmonitored by the local authorities which IFAD relies on for data.

    Therefore it may in fact be the case that Mozambique is getting over four times the % contribution to GDP from remittances that Zambia gets (in absolute terms, US$565M to US$201M), or it may be that Zambians are better at hiding their remittances from formal authorities, or have poorer access to formal remittance channels and so are forced into the informal ones. The per capita averages are equally opaque, and could represent the actions of a large number of consistent but small remitters, or those of a very few erratic but large ones. I don't know, and unfortunately I'm afraid that neither do the IFAD researchers.

    What they are able to tell us is that Africans in general face higher transfer fees than the rest of the world, often due to excessive regulation and/or monopoly operators, as well as consistently poor physical infrastructure. It also seems fairly clear that Africans with a family member abroad are probably better off financially as a result than those without one (however it is important to note that worldwide there is a correlation between higher income households and higher rates of outmigration, even in G8 countries, bit of chicken vs egg causality there).

    Overall I find the report disappointing, and likely only accurate to any extent in the Mediterranean and Latin American contexts. I do not think that IFAD will be able to do better as long as they are relying solely on reports from the formal economy, for as long as the informal economy remains such a potent force in consumer choice.

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  4. Yakima,

    I agree. The level of evidence on remittances is just poor. Earlier in the year the world bank published a collection of research papers on remittances and migration. I attended one of their "launch meetings". It was quite clear from early discussions that this was research in a vacuum. No one really knows the true extent of the remittances and their impact on local communities.

    However, I would suggest that the flow patters we see are probably indicative of the relative rankings of different nations. Its likely that the "unknown flows" whilst higher may be broadly proportional to the "known flows". But as you say, the problem is that the "per capita" numbers then becomes crucial, and those are difficult to pin point as well!!!

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