IDEAS home Printed from https://ideas.repec.org/p/gii/cfdwpa/cfdwp10-2015.html
   My bibliography  Save this paper

The Quest to Lower High Remittance Costs to Africa: A Brief Review of the Use of Mobile Banking and Bitcoins

Author

Listed:

Abstract

The paper reviews the last technological tools that arguably can contribute to reducing the excessively high costs of remittance transactions in Africa. Indeed, despite huge remittance inflows to and within the continent, Africa is the most expensive destination to send money to. As remittances have become more important than Overseas Development Assistance and Foreign Direct Investment inflows in some countries, it has become crucial to explore technological advances that can contribute to reducing their transaction costs. Such reduction would enable the end beneficiaries to capture a larger share of these external resources, which in turn could have an even bigger impact on development in Africa. In addition to revisiting the role of mobile banking in lowering remittance transaction prices, the paper takes a closer look at the newest available technology, the Bitcoin blockchain technology that underpins digital currencies. At this early stage, very few social science researchers have addressed the role that such digital currency could play in the reduction of the remittance transaction prices, except for a few innovative Bitcoin operators. The paper proceeds as follows. It first looks at the causes of the high remittance transaction costs. Then, it reviews, presents and analyses the official remittances data downloaded from the World Bank's Remittances Prices Worldwide database. It also briefly reviews a few remittance transfer technological instruments. Given the novelty of the topic, the review of the most recent existing "literature" on Bitcoin is mainly retrieved from either on - line news sources or information from a few leading Bitcoin operators. In the light of the UN Global Working Group Post-2015 Development Agenda and Sustainable Development Goals proposal to reduce by 2030 the remittance transaction costs to even less than 3%, the effectiveness of these new technological instruments to reach such objective are discussed. Finally, a number of appropriate policy actions to foster the economic impact of remittances are proposed.

Suggested Citation

  • Ralph C. Maloumby-Baka & Christian Kingombe, 2015. "The Quest to Lower High Remittance Costs to Africa: A Brief Review of the Use of Mobile Banking and Bitcoins," CFD Working Papers 10-2015, Centre for Finance and Development, The Graduate Institute.
    • Handle: RePEc:gii:cfdwpa:cfdwp10-2015
    as

    Download full text from publisher

    File URL: http://repec.graduateinstitute.ch/pdfs/cfdwpa/CFDWP10-2015.pdf
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Dilip Ratha & Sanket Mohapatra & Caglar Ozden & Sonia Plaza & William Shaw & Abebe Shimeles, 2011. "Leveraging Migration for Africa : Remittances, Skills, and Investments [Optimisation du phénomène migratoire pour l’Afrique : Envois de fonds, compétences et investissements]," World Bank Publications - Books, The World Bank Group, number 2300, December.
    2. Adrian Blundell-Wignall, 2014. "The Bitcoin Question: Currency versus Trust-less Transfer Technology," OECD Working Papers on Finance, Insurance and Private Pensions 37, OECD Publishing.
    3. Freund, Caroline & Spatafora, Nikola, 2005. "Remittances : transaction costs, determinants, and informal flows," Policy Research Working Paper Series 3704, The World Bank.
    Full references (including those not matched with items on IDEAS)

    Citations

    Citations are extracted by the CitEc Project, subscribe to its RSS feed for this item.
    as


    Cited by:

    1. Saralees Nadarajah & Emmanuel Afuecheta & Stephen Chan, 2021. "Dependence between bitcoin and African currencies," Quality & Quantity: International Journal of Methodology, Springer, vol. 55(4), pages 1203-1218, August.
    2. Heping Ge & Lianzhen Tang & Xiaojun Zhou & Decai Tang & Valentina Boamah, 2022. "Research on the Effect of Rural Inclusive Financial Ecological Environment on Rural Household Income in China," IJERPH, MDPI, vol. 19(4), pages 1-16, February.

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Hajer Habib, 2023. "Remittances and Labor Supply: Evidence from Tunisia," Journal of the Knowledge Economy, Springer;Portland International Center for Management of Engineering and Technology (PICMET), vol. 14(2), pages 1870-1899, June.
    2. Ziesemer, Thomas H.W., 2010. "The impact of the credit crisis on poor developing countries: Growth, worker remittances, accumulation and migration," Economic Modelling, Elsevier, vol. 27(5), pages 1230-1245, September.
    3. Michael E. Cummings & Alan Gamlen, 2019. "Diaspora engagement institutions and venture investment activity in developing countries," Journal of International Business Policy, Palgrave Macmillan, vol. 2(4), pages 289-313, December.
    4. Parthajit Kayal & Purnima Rohilla, 2021. "Bitcoin in the economics and finance literature: a survey," SN Business & Economics, Springer, vol. 1(7), pages 1-21, July.
    5. Léger Félix Ntienjom Mbohou, 2023. "Understanding the role of institutions in the multiple streams approach through the recognition of the diaspora as a development agent in Cameroon," Policy Sciences, Springer;Society of Policy Sciences, vol. 56(2), pages 355-376, June.
    6. Thomas H.W. ZIESEMER, 2012. "Worker remittances and government behaviour in the receiving countries," Eastern Journal of European Studies, Centre for European Studies, Alexandru Ioan Cuza University, vol. 3, pages 37-59, December.
    7. Deodat E. Adenutsi & Meshach J. Aziakpono & Matthew K. Ocran, 2011. "The Changing Impact Of Macroeconomic Environment On Remittance Inflows In Sub-Saharan Africa," Journal of Academic Research in Economics, Spiru Haret University, Faculty of Accounting and Financial Management Constanta, vol. 3(2 (July)), pages 136-167.
    8. Freund, Caroline & Spatafora, Nikola, 2008. "Remittances, transaction costs, and informality," Journal of Development Economics, Elsevier, vol. 86(2), pages 356-366, June.
    9. Roland Kangni KPODAR & Maëlan LE GOFF, 2012. "Do Remittances Reduce Aid Dependency?," Working Papers P34, FERDI.
    10. Ritha Sukadi Mata, 2009. "Microfinance Institutions (MFIs) on the Remittances Market: Money Transfer Activity and Savings Mobilisation," Working Papers CEB 09-022.RS, ULB -- Universite Libre de Bruxelles.
    11. Aniruddha Dutta & Saket Kumar & Meheli Basu, 2020. "A Gated Recurrent Unit Approach to Bitcoin Price Prediction," JRFM, MDPI, vol. 13(2), pages 1-16, February.
    12. Mr. Sanjeev Gupta & Ms. Catherine A Pattillo & Ms. Smita Wagh, 2007. "Impact of Remittances on Poverty and Financial Development in Sub-Saharan Africa," IMF Working Papers 2007/038, International Monetary Fund.
    13. Julia Bersch & Jean François Clevy & Naseem Muhammad & Mrs. Esther Perez Ruiz & Mr. Yorbol Yakhshilikov, 2021. "Fintech Potential for Remittance Transfers: A Central America Perspective," IMF Working Papers 2021/175, International Monetary Fund.
    14. Naudé, Wim & Siegel, Melissa & Marchand, Katrin, 2015. "Migration, Entrepreneurship and Development: A Critical Review," IZA Discussion Papers 9284, Institute of Labor Economics (IZA).
    15. Farai Jena, 2015. "Do Migrant Remittances Affect Household Purchases of Physical Investments and Durable Goods? Evidence for Kenya," Working Paper Series 7915, Department of Economics, University of Sussex Business School.
    16. Schellenberg, Grant & Houle, Rene, 2008. "Remittance Behaviours Among Recent Immigrants in Canada," Analytical Studies Branch Research Paper Series 2008312e, Statistics Canada, Analytical Studies Branch.
    17. Nerys Fuller-Love & Mofoluke Akiode, 2020. "Transnational Entrepreneurs Dynamics in Entrepreneurial Ecosystems: A Critical Review," Journal of Entrepreneurship and Innovation in Emerging Economies, Entrepreneurship Development Institute of India, vol. 6(1), pages 41-66, January.
    18. Korzenevica, Marina & Fallon Grasham, Catherine & Johnson, Zoé & Gebreegzabher, Amleset & Mebrahtu, Samrawit & Zerihun, Zenawi & Ferdous Hoque, Sonia & Charles, Katrina Jane, 2022. "Negotiating spaces of marginality and independence: On women entrepreneurs within Ethiopian urbanization and water precarity," World Development, Elsevier, vol. 158(C).
    19. Ziesemer, Thomas H.W., 2012. "Worker remittances, migration, accumulation and growth in poor developing countries: Survey and analysis of direct and indirect effects," Economic Modelling, Elsevier, vol. 29(2), pages 103-118.
    20. Fatima, Kiran & Qayyum, Abdul, 2016. "Remittances and Asset Accumulation of Household in Pakistan," MPRA Paper 72945, University Library of Munich, Germany.

    More about this item

    Keywords

    Remittances; Mobile Banking; Bitcoins; Africa;
    All these keywords.

    JEL classification:

    • F20 - International Economics - - International Factor Movements and International Business - - - General
    • F24 - International Economics - - International Factor Movements and International Business - - - Remittances
    • F30 - International Economics - - International Finance - - - General
    • G21 - Financial Economics - - Financial Institutions and Services - - - Banks; Other Depository Institutions; Micro Finance Institutions; Mortgages
    • G28 - Financial Economics - - Financial Institutions and Services - - - Government Policy and Regulation
    • O15 - Economic Development, Innovation, Technological Change, and Growth - - Economic Development - - - Economic Development: Human Resources; Human Development; Income Distribution; Migration
    • O33 - Economic Development, Innovation, Technological Change, and Growth - - Innovation; Research and Development; Technological Change; Intellectual Property Rights - - - Technological Change: Choices and Consequences; Diffusion Processes

    NEP fields

    This paper has been announced in the following NEP Reports:

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:gii:cfdwpa:cfdwp10-2015. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Laura Cyron (email available below). General contact details of provider: https://edirc.repec.org/data/cfheich.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.