LONDON, June 22, 2012 /PRNewswire/ --
Leading figures from Africa's financial services industry, including those from the African Development Bank (AfDB) believe remittances can play a crucial role in fostering social development and increasing financial stability in developing countries.
AfDB hosted a conference in Arusha, Tanzania on 29 May to discuss how efficient financial markets and access to finance can aid economic development. Speakers at the conference - a side event held during the 2012 Annual Meetings of the Boards of Governors of the African Development Bank Group - included Agnes Soucat, Director, African Development Bank and Abdirashid Duale, CEO of Dahabshiil.
Speaking at the event, Mr Duale praised the significant progress being made to improve access to finance and aid economic growth in developing countries. He stressed the comparative stability of large areas of the Somali territories - citing growth in businesses and industries as well as improved education and employment prospects. Discussing the role of microfinance in combating poverty, he acknowledged its early promise, asserting the growth of a formal financial infrastructure will enable sustainable financial products to be developed to better meet the needs of poor communities.
Abdirashid Duale said: "Financial inclusion is increasingly on the international agenda for policymakers.
"Significant steps are being taken and the new regulatory frameworks currently evolving will ensure even greater efficiency in resource mobilisation for both inward and domestic investment. Microfinance initiatives and institutions are already enabling some of Africa's poorest to plan for the future and to be more resilient to economic, political and climatic shocks."
Agnes Soucat said: "Access to finance is a key component of our new Human Capital Development Strategy. Increasing opportunities for the poor and marginalized - and particularly for the African youth - is crucial in order ensure social inclusion as well as job creating growth. Companies such as Dahabshiil provide a vital service by facilitating the transfer of remittances to often excluded communities."
The economic crisis did not have as heavy an impact on African countries as it did on their global counterparts. Many of Africa's 48 economies are recovering at a faster rate than the rest of the world, with 4.5 per cent growth expected this year, and 4.8 per cent growth projected for 2013 according to a report drawn up by AfDB, the Organisation for Economic Cooperation and Development (OECD), the United Nations' Economic Commission for Africa (ECA) and the UN development agency (UNDP). In addition, Africa is increasingly attracting investment opportunities as a result of improved management of public finances.
Africa's recent surge can be traced to a range of factors including remittances sent back to Africa from migrant workers. Funds remitted to Africa by its global diaspora play an important role in national economies, providing a supplementary source of income which boosts private sector growth. Dahabshiil sends approximately $1bn back to Africa every year, and is the largest of the international payments firms established in Africa.
Globally, money sent home by migrants constitutes the second largest financial inflow to developing countries - a vital source of income that outweighs donor aid. Remittance income is particularly important for communities in more remote regions of Africa, and helps to bolster the funding of humanitarian organisations operating in those locations.
Mr Duale added: "Africa's diaspora sends around $40bn back home annually, and remittances are an essential lifeline for many communities across the continent. There is no doubt that this inflow has been an important factor in Africa's economic development."
Handling international money transfers of under $200 on average, Dahabshiil is in effect a provider of micro-remittances. Remittances are acknowledged to be an indispensable source of income for developing countries around the world, fuelling long term growth through sustained investment. Initiatives to improve access to finance for poor communities are increasingly at the forefront of international policy, and Dahabshiil is now looking to partner with leading international NGOs - to expand its offer to include other microfinance products.