The Eight Region: UK Diaspora Remittance Fees Reduction from 10% to 3% by 2021

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By Yusef Taylor, @FlexDan_YT

The Gambian Diaspora Strategy booklet was issued in London on April 20th, 2018 at a Gambian Diaspora Presidential Meeting. The first page of the document begins with a “Government Diaspora Pledge” recognising the Gambian Diaspora as the eight region of the country followed by a “Gambian Diaspora Pledge” to contribute positively towards the Gambia’s development.

The Gambian Diaspora Strategy is described as thus “The Government of the Gambia is pleased to present the key elements of the Gambian Diaspora Strategy with specific performance targets, as incorporated in the National Development Plan (2018-21), to be validated by 50 Ministries, Departments and Agencies (MDAs).”

One of the most important sections deals with remittance cost reduction. Remittances are the monies sent to The Gambia from abroad. Many Gambians living abroad are concerned about increasing remittance fees and receiving loved ones at home are also concerned that the remittance fees reduce the actual amount that they receive. According to the International Fund for Agricultural Development (IFAD) report on remittances, Gambians living abroad sent remittances contributing to 22% of the GDP in 2016. The report places The Gambia second to only Liberia which contributed to a hefty 31% of their GDP.

The IFAD report claims that Gambians living abroad sent $181 million. Ignoring GDP percentage this is actually one of the lowest total amounts, however, when compared to 2007 Gambia recorded a growth rate of 225.3% in 2016. The 2017 report will make good reading to see if Gambians living abroad have maintained this growth rate and sent even more money in 2017.

Remittance Trends from UK to The Gambia for £300

This is the first of a two-part article on Diaspora Remittances focussing on the remittances sent from the United Kingdom to the Gambia. According to US remittance fee statistics, remittance fees from the UK are considerably more than remittance fees from the US. Speaking to a US Instant Money service provider, they explain that the market size for the US Diaspora is significantly larger than the UK Diaspora which is one reason why the fees are lower in the States.

The next edition of “The Eight Region” will focus on remittances from the United States. This analysis uses World Bank data and is based on a transfer for £300 GBP. Since the new Government took over, the average remittance fees in 2017 was just under 8% but towards the end of 2017, it shot up by almost 2%. The total average remittance fees paid for in the last quarter of 2017 was 9.54%. The cheapest Instant Money Service provider for the last quarter of 2017 was Yahyeh Instant Services which charged less than 1% of the total fee (£2.82).

However, when we look at the remittance fees of the first quarter in 2018 there is a slight increase to 10.15% which means that the trend for remittance fees is on the rise.  Looking at data from previous years indicates that the first quarter of 2018 has been the most expensive period to send remittances home for the last four years.

An important point to note is that if the total amount of remittances sent increases this year, then the Diaspora’s contribution to the Economy will increase. One way to do that is to reduce the cost of remittance fees and this is exactly what the Diaspora Strategy proposes. According to the booklet “the Central Bank of The Gambia (CBG), Ministry of Finance, MSDG and other partners will develop and implement schemes to reduce transaction cost of remittances sent to The Gambia to an average of 3% or lower by 2021”.

It is certainly a challenge that the Gambian Diaspora Directorate will have to rise up to because a reduction from 10% to 3% is no easy task. To achieve this target of less than 3% of remittance fees by 2021 other companies with high remittance fees will need to lower their remittance fees. One such example is Yayeh Instant Services which charges as low as 3.98%. According to World Bank statistics, their nearest competition, Small World, charges up to 6.95%.

2018 Q1 UK Remit GMB World Bank

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