By Kizito Makoye in Dar es Salaam and Agencies
The devastating effect of the ongoing global financial meltdown has severely affected remittances from Africans in the Diaspora.
Reports show that there has been a dwindling flow of money from western countries consequently most African families remain vulnerable as they no longer receive enough money from their relatives.
Africans working in Western Markets are now feeling the pinch of the financial crisis as a result remittances worth billions of dollars a year to the continent are declining.
A recent World Bank report indicated remittance inflows to developing countries could fall by anything between 1% and 6% this year from last year, which would have a noticeable effect on communities in Africa.
The Bank says that in 2005 remittances to developing countries, dominated by flows to China, India and Mexico, totaled $188bn - twice the amount of aid to these countries.
Remittances to sub-Saharan Africa had been rising steadily since 1995, increasing by 11 percent between 2006 and 2007. Sub-Saharan Africa took in US$19 billion in remittances in 2007, or 2.5 percent of gross domestic product (GDP), according to the World Bank.
According to the World bank Nigeria receives more in remittances than any other sub-Saharan African country, with $3.3 billion in 2007, followed by Kenya with $1.3 billion, and Senegal with $0.9 billion.
The money has given poor economies a boost, providing funds for food and services, start-up business capital, education and other essentials governments have failed to provide.
In Zimbabwe remittances last year amounted to US$ 1 billion, supporting majority of the households. As Zimbabwean was struggling to rescue its moribund economy remittances money was essential to keeping most people going
A recent trend has Africans in the Diaspora investing their money back home in property and businesses, with a view to returning one day, rather than just providing a cushion for extended families.
Emanuel Augustine is a Tanzanian Journalist based in London who got laid off his job as a British Cable Television Network GTV filed for bankruptcy earlier this year.
Augustine says that ever since he was made redundant he is unable to support his extended family back home.
“ I used to send $1000 every now and then to my mother who is living in Kagera region but it is now a problem yet I have not been able to secure any decent job so far” he lamented.
A lead economist at the University of Dar es Salaam Dr. Haji Semboja said the sharp declined in remittances is a stunning setback for most African economies since remittances have played an enormous role in economic growth.
A widow in Dar es Salaam, Margareth Sambui said her children were forced out of school because her son living in the United States has stopped sending money regularly. "I used to receive $200 every month from my son in Detroit, but...he is out of a job. I can no longer afford to pay for school fees."
Lydia Shaurimoyo whose husband is in the United States said his income has tremendously declined and he is no longer sending $2000 he used to send every couple of months. She said the high cost of living in Dar es Salaam makes it very difficult to sustain life.
Analysts asserted that many of the countries high on Africa’s remittances recipient list rate poorly on the United Nations Human Development Index. They argue that remittances inflows have not generally promoted sustainable economic growth.
“Most remittance money is used for consumption spending and has, in some instances, discouraged recipients from getting jobs or creating businesses.” Remarked John Kamau, an analyst in Dar es Salaam.
He further observed that for every success story, there are other stories of families exploiting their remittances to live a lifestyle they could not otherwise afford.
Large numbers of people in Africa surviving on one person's contribution from abroad also suggest the money is too widely dispersed to be of real long-term value.
Governments are looking for ways to capture these dispersed funds for development. Kenya, for example, is putting together a policy in this regard, while Diaspora bonds have also been mooted. However, the mistrust of the state by many Africans, particularly those who have left because of their governments, means they are reluctant to let officialdom tap into their hard-earned money.
Kizito Makoye is a Tanzania Journalist based in Dar es Salaam.
