(Ecofin Agency) - The World Bank reports that sending $200 to Sub-Saharan Africa comes with a 7.9% fee, one of the highest in the world. With remittances being a vital part of the region's economy, the WTO wants to reduce these costs for Sub-Saharan Africa.

Reducing the cost of migrant remittances could significantly support the development of the least-developed countries, according to Xiangchen Zhang, Deputy Director-General of the World Trade Organization (WTO).

Speaking at a panel during the WTO's 2024 public forum, Zhang highlighted the importance of remittances for poor countries and the constraints that hinder their full potential. "Migrants use remittances to support their families and to pay for their siblings' education. So, if we can reduce the cost, we can help drive the development of their countries," he said. He also noted that the investment potential of remittances makes it a top priority for international organizations like the WTO and for developing countries, particularly those in Africa.

According to the World Bank, remittances to Sub-Saharan Africa will increase by 1.5% in 2024, reaching $54 billion. This comes after a slight decline of 0.3% in 2023. While many countries in the region heavily depend on these funds—like The Gambia (23% of GDP), Lesotho (22% of GDP), and Comoros (21% of GDP)—Sub-Saharan Africa continues to have the highest remittance costs globally. According to the World Bank, sending $200 to the region averages 7.9% in fees.

Several factors contribute to these high costs, including regulatory challenges, excessive fees from banks and money transfer agencies, and unfavorable exchange rates. To address these issues, WTO experts advocate for stricter regulations within the industry and greater transparency regarding exchange fees charged by money transfer operators.

Additionally, the panel suggests promoting financial inclusion to weaken the influence of informal money transfer networks that still dominate a significant portion of the remittances market.

"The WTO must work together with other international organizations and financial institutions to tackle these problems collectively," Zhang emphasized.

Moutiou Adjibi Nourou