Facilitating Southern African Remittance Networks

In this paper, Johannesburg-based consulting company, Genesis Analytics, examines the inflow of remittances into South Africa, and its effect on poverty alleviation. The paper first discusses patterns of migration, including some of the following issues, key findings, and conclusions:

• The level of remittances in Sub-Saharan African in 2005 was based on migration behavior as there were insufficient country level statistics from the Government.
• Although small in absolute numbers, remittance flows in South Africa were sometimes larger than aid flows.
• There needs to be more support for formal remittance channels as it allows for transparency, accountability, and security.

The main regulatory hurdles to establishing strong formal remittance channels included:

• Exchange control,
• Remitter identity,
• Authorized dealer licenses,
• Continuous reporting system even for very small transactions,
• Adverse impact of anti-money laundering on the flow of remittances - remitters may be afraid even if they are not involved in laundering money.

The report states that possible ways to move forward include:

• More compliant and reasonable regulation;
• Passports to be sufficient for those sending money to their homes (i.e. no additional identification should be necessary);
• Fees for remittance services to be adjusted so they are more affordable.