African workers, according to the International Fund for Agricultural Development (IFAD), "send home more than US$40 billion to the region each year," but IFAD thinks "restrictive laws and costly fees hamper the power of remittances to lift people out of poverty, according to a new report by the UN’s rural poverty agency." In this just released paper Sending Money Home to Africa: Remittance Markets, Enabling Environments and Prospects, IFAD proposes:
The majority of remittances to Africa are used to purchase daily necessities. Yet a significant amount is available for savings or investment (around US$5-10 billion). This study reports that remittance recipients do save, but often do not use the formal channels. Bringing these funds into the formal financial system can increase their impact dramatically. The rapid rise of MFIs (Micro Finance Institutions) is a powerful testimony to the ability of the underserved to mobilize their resources in a way that stimulates local development. When remittances are deposited at a financial institution,
they can benefit both the individual and the community. With better financial education and a broader range of financial services to choose from, remittance recipients are empowered to make the financial choices that can advance them towards financial independence. The ability to expand these kinds of services, however, depends on institutions’ capacity, their willingness to offer services to people with a low income, and on a regulatory framework that encourages them to do so.And till now I thought the threat to the Western Union and Moneygram hegemony was the rapidly expanding ways to send money to Africa via mobile phones.



















