Rome, 15 June 2018 – Postal services can play a pivotal role in delivering remittances, lowering the transfer costs and providing access to basic financial services in Africa, according to a report released today by the International Fund for Agricultural Development (IFAD) and the European Commission (EC) on the occasion of the International Day of Family Remittances to be observed tomorrow.
The report, A success story on remittances at the post office in Africa, analyses the results achieved by African Postal Financial Services Initiative (APFSI), a joint programme led by IFAD and financed by the European Union (EU). The programme has been implemented in 11 African countries in cooperation with the World Bank, the United Nations Capital Development Fund, the Universal Postal Union and the World Savings and Retail Banking Institute.
The APFSI joint programme has helped post offices develop more effective business models, upgrade their computer technology and connectivity, and improve their expertise in order to process real-time payments and offer and manage financial services.
“The remittance market is changing at a rapid pace,” said Pedro De Vasconcelos, Coordinator of the Financing Facility for Remittances at IFAD. “Technology is transforming the payment systems and digitalized financial services are creating new opportunities. In this context, postal operators play a prominent role in delivering remittances to rural migrant families, providing them with financial services they rarely had access to.”
According to De Vasconcelos, the strong presence of post offices in remote and rural areas is extremely valuable. Their historic footprint helps build trust in the provision of rural financial services.
In 2017 alone, African migrant workers sent over US$70 billion to their families back home, representing an increase of more than 10 per cent from 2016 and more than 36 per cent over the past decade.
Sub-Saharan Africa remains the most expensive region in the world to send money home. In 2017 the average cost was 9.3 per cent of the amount sent.
As a result of the AFPSI joint programme, which has been implemented over the last five years, the cost of receiving remittances via post offices in four pilot countries, Benin, Ghana, Madagascar and Senegal, decreased by 42 per cent and post offices delivered remittance services at an average cost of less than 5 per cent. This means an additional $35 million were available to migrant families between 2014 and 2016.
“The EU is committed to work with partners to lower the cost of remittances and promote faster, cheaper and safer transfers. Our collective objective is to reduce to less than 3 per cent the transaction costs and eliminate remittance corridors with transfer costs higher than 5 per cent, as stated in the 2030 Agenda and the European Consensus for Development,” said Stefano Signore, Head of Unit in charge of Migration and Employment in the Directorate General for International Cooperation and Development at the EC.
Financial inclusion remains a challenge in Africa. According to recent estimates, only 41 per cent of the population above 15 years of age has an account and access to formal financial services. In this context, postal operators have an important role to play, especially in rural areas. As a result of the joint programme, at least 100,000 adults opened new postal accounts accessing financial services for the first time.
“Having a savings account and access to credit is fundamental for families to invest in income-generating activities and build their future,” said Mauro Martini, an IFAD expert on remittances and migrants’ investments and co-author of the report. “Remittances can be an engine for development.”
Estimates show that while 75 per cent of remittances are generally spent on basic needs such as food, housing, health and education, another 25 per cent can be invested in asset-building or activities that generate income and jobs and transform economies, in particular in rural areas.
The EC began collaborating with IFAD in 2004, with the intention of increasing the development impact of remittances while enabling poor households in rural areas to access financial services. Since 2005, the EC has mobilized euro 9.5 million for IFAD’s Financing Facility for Remittances, including the APFSI. A new euro 15 million programme focusing on Africa will be launched soon to reduce costs further and improve financial inclusion and impact for development.
Read the report A success story on remittances at the post office in Africa
Nigeria has signed a Memorandum of Understanding (MoU) with John Deere Tractor Manufacturing Company on the procurement of tractors and the provision of farm mechanisation services.
Chief Audu Ogbeh, the Minister of Agriculture and Rural Development, who signed on behalf of Nigeria said in Abuja on Thursday that the country’s agricultural export earnings have increased by 180 per cent, reaching over N5 billion in the last one year.
The minister expressed optimism that the country’s export earnings would continue to increase because of the tractor mechanisation services which would be rendered to smallholder farmers through the partnership with John Deere.
“This partnership means greater wealth, more exports for our country. I like to say how proud we are that agricultural exports in the last one year and half have gone up by 180 per cent, as we earned well over N5 billion from these exports.
“We are on the way and with your support, we will get there,’’ he said.
On delay in the planned recapitalisation of the Bank of Agriculture (BOA) by the Federal Government, Ogbeh said that designed efforts were being made to restructure the bank in a way that people would no longer be able to take loans and refuse to pay back.
“It is taking so long because we have had to remove an entire management and bring in bankers now. The shareholders are mainly the Federal Ministry of Finance and Central Bank of Nigeria (CBN) and they said they are ready to give us money.
“The Bureau of Public Enterprises (BPE) is doing a new restructuring. Farmers are going to own 30 per cent of the shares of BOA.
“And the bank would have a branch in each of the local government areas of the country where they can talk to farmers,’’ he said.
The minister said that the newly introduced Agriculture Input and Mechanisation Services (AIMS), which would replace the Growth Enhancement Support (GES) scheme, would soon be launched.
“We will launch the AIMS once our committee submits its report and we will tell you exactly how things will be done.
“We will screen those people who have applied; there will be no question of just fixing names because of any influence.
“AIMS will help to track fake seed companies and distributors because there are a lot of people who still do fake things in agriculture believing that as soon as they supply inputs, nobody can track them,’’ Ogbeh said. (NAN)
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