Should you ever need a haircut in South London, you would have the option to choose from a wide array of African hair stylists. There you can get your hair colored, cut, or braided, while chatting up the latest gossip in town, and... you can send money back to Nigeria.
Many stores in South London allow you to send money abroad. It looks just like a fruit market, where the sellers have to compete among each other. Aside from trying to lure customers in with the best looking apples and pears, they also keep their prices exposed.
But the world is not... ("...enough" you are thinking, if you are a James Bond fan) ...the world is not South London and remittance services are not crispy apples nor they are juicy pears. The price for sending money might include a fee, taxes, a margin on the exchange rate applied, and a commission to the receiver. And each service is different in terms of speed and extensiveness of the network where money can be picked up by the receiver. In other words, it is not as easy to compare as the price of apples.
This is why in the last few years the World Bank has been promoting remittance price databases, as an important tool to make price comparison easier for migrants who send money back to their home countries.
Since 2008, Remittance Prices Worldwide has monitored the cost of sending small amounts of money. The latest iteration of the database was published in September and covers 219 "country corridors" from 32 remittance sending countries, to 89 receiving countries.
Just a few days ago, we released our new Policy Note on remittance pricing trends. The Policy Note contains a full set of data on remittance prices across all the regions of the world and for a wide range of different product and service providers. Our data show Sub-Saharan Africa remains the most expensive region of the world to send money to, with an average cost of 12.40 percent in 3Q 2012. Meanwhile, remittance costs in East Asia and the Pacific fell from 9.80% to 8.88%, the biggest registered decline over the last year.
Among the many figures we produce, one is very important to us and to remittance senders: globally, sending remittances costs an average of 8.96 percent of the amount sent. This figure is used to monitor the progress towards the "5x5 objective" for reduction of remittance prices. Both the G8 (L’Aquila, 2009) and the G20 (Cannes, 2011) have committed to this important goal. In 2009 the global average was close to 10 percent, and several international organizations and fora committed to reducing it to 5 percent in 5 years.
The 2014 deadline is getting closer now and a lot of work has still to be done to meet the “5x5 objective”. Reducing remittance prices from 10 to 5 percent would result in leaving up to $16 billion a year into the pockets of the migrants and their families: this is really all we need to motivate us in our daily work towards the achievement of this target.
Visit RPW to browse the latest data and read more on remittance pricing trends.