East Africans are still struggling to find cheap options to send money from one country to another within the region, making it one of the greatest barriers to trade and slowing the implementation of the Common Market Protocol, Latest data from the World Bank shows that some money remittance corridors in the region are among the most expensive in the world, and much higher than the global average, despite efforts to bring down transaction costs to ease trade…
Scholars and business leaders say this has remained one of the biggest impediments to the full realisation of the common market pillar of East Africa Community (EAC) integration, in turn, delaying other pillars of the union, According to the data collected between August and September 2023, Tanzania remains the most expensive country to send money from, with some payment options charging as high as 65 percent of value sent as transaction cost.
On average, one will have to pay 35 percent to send $200 from Tanzania to Kenya, 30 percent to Uganda, and 20 percent to Rwanda — much higher than the 12.5 percent global average, according to the International Monetary Fund (IMF), but while it is generally cheaper to send money from the other countries to Tanzania, it is still more expensive than the cost of sending money from distant countries like the US, United Kingdom or Belgium.
For example, while the cheapest remittance corridor in the region is Kenya-Rwanda, which costs about 7.5 percent, sending money from the US to South Sudan, for instance, costs just 3.98 percent, An analysis by the IMF reveals that many factors are behind the high cost of cross-border payments in emerging markets and developing economies, mostly in the origin countries.
The results, published last month in a report dubbed IMF and World Bank Approach to Cross-Border Payments Technical Assistance, show that sending money from the US to South Sudan, for instance, costs just 3.98 percent, “There is a negative relationship between the availability of services offered by digital money transfer operators (MTOs) and the average cost of sending $200 at the corridor level and its component associated with transfer fees,” the IMF said.
