News / National
Africa set to attract $100 billion in remittance inflows
29 May 2025 at 10:20hrs | Views
The African Development Bank (AfDB) has projected that Africa will receive approximately US$100 billion in remittance inflows in 2025, as the continent positions itself to harness the full potential of diaspora contributions to drive inclusive growth and development.
The projection was revealed in the AfDB's 2025 African Economic Outlook (AEO) launched this week during its Annual Meetings in Abidjan. The report emphasizes that remittances and business formalisation are key pillars for accelerating Africa's economic transformation.
According to the AEO, the formal remittance market could expand significantly, reaching US$283 billion by 2035, more than triple the levels recorded in 2023. However, the AfDB cautioned that high transfer costs remain a serious obstacle to achieving this potential.
"The high cost of remittances promotes transfer through informal channels, which range from 35 to 75 percent of resource transfers through formal channels, with Africa on the higher side," the Bank stated.
The United Nations Sustainable Development Goals (SDGs) target a reduction in global average remittance costs to 3 percent by 2030, down from the current average of 7 percent. Achieving this could significantly shift transfers from informal to formal channels, improving transparency, safety, and impact.
For countries like Zimbabwe, where diaspora remittances reached a record US$2.2 billion in 2024, the AfDB says formalising these flows presents a major opportunity to boost domestic resource mobilisation. The figure reflects a 22 percent increase from the US$1.8 billion recorded in 2023.
The report recommends that Zimbabwe and other African countries issue diaspora bonds and other instruments to leverage remittance inflows for infrastructure development and other national priorities.
"Available estimates indicate that up to 30 percent of formal remittances could be left over and thus leveraged for local investment and developmental purposes," the AfDB noted.
In addition to remittances, the report highlights business formalisation as a critical driver for increased government revenue across the continent. Bringing informal businesses into the formal sector could yield up to US$125.3 billion in additional annual revenues.
The AfDB called for coordinated reforms at both national and regional levels to remove barriers to formalisation and reduce remittance costs, warning that failure to act could see Africa miss out on a potential US$500 billion in annual remittances by 2035.
"Regional and global collaboration to reduce remittance costs to the SDG target could boost annual remittances to about US$500 billion by 2035 by encouraging informal transfers through formal channels," the report concluded.
With remittances now considered a lifeline for millions of households and a strategic development tool, the AfDB's latest outlook signals a call to action for policymakers to unlock the full value of Africa's global diaspora.
The projection was revealed in the AfDB's 2025 African Economic Outlook (AEO) launched this week during its Annual Meetings in Abidjan. The report emphasizes that remittances and business formalisation are key pillars for accelerating Africa's economic transformation.
According to the AEO, the formal remittance market could expand significantly, reaching US$283 billion by 2035, more than triple the levels recorded in 2023. However, the AfDB cautioned that high transfer costs remain a serious obstacle to achieving this potential.
"The high cost of remittances promotes transfer through informal channels, which range from 35 to 75 percent of resource transfers through formal channels, with Africa on the higher side," the Bank stated.
The United Nations Sustainable Development Goals (SDGs) target a reduction in global average remittance costs to 3 percent by 2030, down from the current average of 7 percent. Achieving this could significantly shift transfers from informal to formal channels, improving transparency, safety, and impact.
For countries like Zimbabwe, where diaspora remittances reached a record US$2.2 billion in 2024, the AfDB says formalising these flows presents a major opportunity to boost domestic resource mobilisation. The figure reflects a 22 percent increase from the US$1.8 billion recorded in 2023.
The report recommends that Zimbabwe and other African countries issue diaspora bonds and other instruments to leverage remittance inflows for infrastructure development and other national priorities.
"Available estimates indicate that up to 30 percent of formal remittances could be left over and thus leveraged for local investment and developmental purposes," the AfDB noted.
In addition to remittances, the report highlights business formalisation as a critical driver for increased government revenue across the continent. Bringing informal businesses into the formal sector could yield up to US$125.3 billion in additional annual revenues.
The AfDB called for coordinated reforms at both national and regional levels to remove barriers to formalisation and reduce remittance costs, warning that failure to act could see Africa miss out on a potential US$500 billion in annual remittances by 2035.
"Regional and global collaboration to reduce remittance costs to the SDG target could boost annual remittances to about US$500 billion by 2035 by encouraging informal transfers through formal channels," the report concluded.
With remittances now considered a lifeline for millions of households and a strategic development tool, the AfDB's latest outlook signals a call to action for policymakers to unlock the full value of Africa's global diaspora.
Source - The Chronicle
