Based on the estimated values for inward remittances in 2021, the top four countries in the world are; India with approx. $83 billion, followed by China, approx. $60 billion, Mexico $43 billion and Philippines $35 billion. Well the top five countries in Africa for remittances are Nigeria, Egypt, Kenya, Senegal, and Ghana and the inflows have had a massive impact on their economies and go a long way in alleviating poverty by supporting the livelihoods of extended families and especially the elderly. To appreciate the scale of these inflows, it is estimated that the combined remittances for the top 2 African countries, Nigeria and Egypt in 2021 was close to $50 Billion per annum while closer to home, recent figures for Kenya indicate that our East Africa neighbors pocketed a cool $4 Billion in 2023.
What does this have to do with Malawi, you may ask. Well the data for Malawi indicates remittances could range somewhere between $150-$250 Million per annum depending on whether or not informal inflows are included. Granted population is a huge factor, since with one tenth the population of Nigeria, it is unrealistic to expect Malawi to compete with the monetary values we see flowing into West Africa. What I don’t understand is why Malawi remittances appear to be shrinking when everywhere else in the continent inflows are booming. Drawing insights from countries like the Philippines and Kenya, these are some of the strategies that can be considered to increase the value of remittances from the Malawi diaspora :
- Improving Financial Infrastructure: Enhancing the ease and reducing the cost of sending remittances through improved banking systems, digital platforms, and mobile money services can encourage more frequent and higher-value transfers. It still costs too much to send money home. We must do something about it. Reduce reliance on commercial banks, leverage technology, invite more global players etc
- Financial Literacy Programs: Educating the diaspora on the importance of savings, investments, and utilizing formal channels for remittances can lead to more substantial contributions. Actively promote the narrative, use social media, set up a body that does nothing all day but promote remittances in all the diaspora groups.
- Supportive Government Policies: Implementing policies that facilitate remittance inflows, such as tax incentives, reduced transfer fees, and streamlined regulatory processes, can attract more remittances. Introduce specific legislation if you have to. Knowledge share with our neighbors. Promote growth of a pool of global digital workers.
- Diaspora Engagement Programs: Encouraging diaspora engagement through networking events, investment forums, and cultural exchanges can foster a stronger connection and increase their willingness to invest in Malawi. Hype the success stories and activate a sense of national pride to loosen those purse strings.
- Promotion of Investment Opportunities: Showcasing viable investment opportunities in Malawi, particularly in sectors like agriculture, technology, and infrastructure, can attract diaspora investments alongside remittances. For example, when it was noticed that significant portion of Kenyan inflows were being directed towards property, the real estate sector proactively introduced a wide range of diaspora-friendly investment opportunities.
Both Philippines and Kenya have implemented similar strategies, focusing on lowering remittance costs, improving financial access, and promoting investment opportunities. Both countries have also established dedicated institutions and programs to facilitate diaspora engagement and financial literacy.
It is a fact that growing diaspora remittances is an effective strategy to build resilience and reduce dependence on the current sectors that generate all the forex. In a world where global tobacco demand is falling and forex reserves are dwindling it makes sense to be deliberate about promoting remittances as a way to get our hands on the much needed forex. Its not going to magically happen on its own!
