Remittances to Africa

This research paper by the Institute for Security Studies analyzes the scale, impact, and future projections of remittance flows to Africa. It examines how these funds support households and macroeconomic stability, while also warning of potential 'remittance traps' and 'Dutch disease' that can hinder long-term economic growth and government accountability.

• In 2023, gross remittance inflows into Africa totaled approximately US$90 billion in current US dollars, with intra-Africa flows accounting for about US$20 billion. North Africa received the largest share of these remittances, followed by West Africa.
• Remittances are critical for many African nations, with about 20 countries receiving inflows amounting to at least 3% of their GDP. The countries where remittances exceed 15% of GDP include Gambia, Lesotho, Comoros, Liberia, and Somalia. Conversely, several nations act as net remittance senders, including South Africa, Botswana, Gabon, Equatorial Guinea, Côte d’Ivoire, Libya, Seychelles, and Mauritius.
• African governments have utilized diaspora bonds to fund infrastructure and manage debt. Examples include Ethiopia's 2011 bond for the Grand Ethiopian Renaissance Dam, Nigeria's 2017 US$300 million bond for infrastructure, and Kenya's use of diaspora bonds to address a debt crisis where government debt rose from 34% of GDP in 2007 to 70% in 2024.
• While remittances provide macroeconomic stability and support household needs—with 75% used for food, medical expenses, school fees, or housing—they can lead to a 'remittance trap' or 'Dutch disease.' This occurs when high inflows increase domestic prices and make exports less competitive, shifting the labor market toward low-skill jobs and encouraging further emigration of high-skilled workers.
• High remittance inflows may reduce government accountability. Because receiving families are partially insulated from economic shocks, they may be less motivated to demand change, allowing politicians to avoid public scrutiny and maintain power through popular spending.
• Projections indicate that while net remittances to Africa will likely increase—potentially reaching US$94 billion by 2043—remittances as a share of GDP are expected to decline from 2.3% to approximately 1.5% by 2043. If informal transactions are 75% of formal ones, the total market could reach US$500 billion by 2035.

APA

Yeboua, K., & Cilliers, J. (2026). Remittances to Africa. Institute for Security Studies. https://futures.issafrica.org/thematic/guide.pdf?thematic=10-financial-flows&topic=02-remittances-to-africa

Chicago

Yeboua, Kouassi, and Jakkie Cilliers. Remittances to Africa. Institute for Security Studies, 2026. https://futures.issafrica.org/thematic/guide.pdf?thematic=10-financial-flows&topic=02-remittances-to-africa.

Wikipedia

{{cite report |last1=Yeboua |first1=Kouassi |last2=Cilliers |first2=Jakkie |title=Remittances to Africa |publisher=Institute for Security Studies |date=28 May 2026 |url=https://futures.issafrica.org/thematic/guide.pdf?thematic=10-financial-flows&topic=02-remittances-to-africa |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{yeboua2026remittances, author = {Yeboua, Kouassi and Cilliers, Jakkie}, title = {{Remittances to Africa}}, institution = {Institute for Security Studies}, year = {2026}, month = may, url = {https://futures.issafrica.org/thematic/guide.pdf?thematic=10-financial-flows&topic=02-remittances-to-africa}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }