The Africa Development Bank (AfDB) plans to promote remittances into Africa from its diaspora community in order to boost the region’s economic growth, an official said on Monday.
AfDB Director General of the East Africa Regional Center Gabriel Negatu told Xinhua in Nairobi that it is working with national governments to reforms their financial systems in order to attract more remittances.
“We want Africa to fully exploit the potential of its remittances in order to mobilize funds for development,” Negatu said during the AfDB Business Opportunity Seminar.
The three-day event aims to highlight procurement opportunities that exist in the pan-African bank’s projects.
Negatu noted that remittances are playing a bigger role in Africa’s development than in the past.
“In fact, remittances from Africans living abroad have exceeded value of Overseas Development Aid from donors,” he added.
The AfDB official said that remittances can also help the continent shield itself from externals shocks such as lower commodity prices.
The pan-African bank is currently providing technical assistance to a number of African governments to put in place appropriate policies and regulations that will attract Africans living overseas to invest at home.
Negatu noted that returns of investments in Africa are typically higher than in the developed countries. He noted that one of the key challenges facing diaspora remittance is the high cost of sending money.
“We are encouraging governments and private sector to come with innovative solutions to lower cost of remittances,” he added.
According to AfDB, most of the diaspora remittances are used for meeting households needs such as food and rent.
He said that in order for remittances to have maximum impact, the funds need to be directed towards national infrastructure projects.
The pan-African bank suggested special purpose vehicles such as infrastructure bonds in order to attract remittances.