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Friday, 1 June 2018

COST OF SENDING MONEY TO TZ STILL WAY TOO HIGH

In Summary

In a report released yesterday, the United Nations Conference on Trade and Development (Unctad) cited the Tanzania-Uganda corridor as one of the costliest in Africa.
Dar es Salaam. Tanzania remains one of the most expensive countries to send money to, a situation that could be discouraging remittances from the Diaspora, a new report warns.
In a report released yesterday, the United Nations Conference on Trade and Development (Unctad) cited the Tanzania-Uganda corridor as one of the costliest in Africa.
Quoting the African Institute for Remittances, it also noted the South Africa to Botswana, Angola, Lesotho and Swaziland, among the costliest corridors in the continent.
The costs of sending remittances exceeded 15 per cent of the amount sent.
At four per cent of the amount sent, the Senegal to Mali was one of the least expensive corridors.
Though the report lacked enough data, it seems to concur with findings of a 2017 Financial Sector Deepening Africa Report - Financial Sector Deepening Africa (FSD Africa), which was written by Developing Markets Associates (DMA) – in June last year.
The report said sending some £120 from UK to Tanzania would cost 14 per cent of the amount.
The same costs 13 per cent, nine and seven per cent in Rwanda, Uganda and Kenya, respectively.
With the high costs of sending remittances to Tanzania, Tanzanians in the diaspora have been sending home an average of $456.5 million (about Sh1.05 trillion), relatively lower than its peers within the region. Kenya, for instance, last year alone received a total of $1.95 billion (Sh4.4 trillion)
According to the Bank of Uganda, the Ugandan diaspora remitted $1.2 billion (Sh2.7 trillion) in 2016.
“It is high time the government of Tanzania found out the ways to encourage more Tanzanians in diaspora to use formal channels,” noted the Chief of the Africa section at Unctad Junior Davis.
To realise that, he suggested, the government should do all in its power to enhance the cut in the costs for money transfers.
This, according to him, would come true by embracing partnership with the countries where most of Tanzanians are living, by pursuing them to reduce taxes on transfers.
Dr Junior noted the need to increase competition in remittances service providers industry in the country and abroad, to cut transferring and withdrawing charges.
“If you want to deepen your financial inclusion and market, you have no option than encouraging more to use formal channels, or, more will opt for informal channels, of which cannot be taxed as financial flow,” he said.
International Organisation for Migration in Tanzania head of programmes Ida Fernandez said Tanzanians in the diaspora could act as a catalyst for economic growth by investing in various sectors like agriculture, construction, mining, services, information technology and manufacturing.
“Tanzanians migrating to other countries is a blessing and not a threat to the country’s economy. If properly managed, it can act as mechanism for fostering economic growth and promoting structural transformation,” Ms Fernandez said.
The Citizen

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