Migrants from the Southern African Development Community (SADC) have been sending billions back to their countries of origin.
The South African Reserve Bank (Sarb) confirmed over R100 billion had been transferred out of South Africa using authorised remittance providers since 2016, but is currently taking public comment on legislation to regulate alternative remittance providers.
The facilitation of remittances – cross-border payments made by foreign nationals – is a G20 goal championed by the United Nations’ Sustainable Development Goal (SDG) 10 aimed at reducing global inequality.
R112.6 billion since 2016
Supported by the Sarb, the FinMark Trust (FMT) recently released a report on remittances to and from SADC countries.
Outflowing remittances from South Africa have increased from R6 billion in 2016 to R19.3 billion in 2024, with Lesotho, Zimbabwe, Mozambique and Malawi accounting for 90% of all payments.
Between 2016 and 2024, R112.6 billion was remitted from South Africa to SADC countries, with Zimbabwe receiving R47.2 billion between 2020 and 2024 alone.
An earlier study showed that 56% of SADC migrants in South Africa had sent money to their home countries in the prior 24 months.
Most outflowing SADC payments are made up of small transfers, with R14.2 billion in 2014 being sent in individual payments of less than R1 900.
However, there were inflows of remittances from SADC countries totalling R25.6 billion between 2016 and 2024, reflecting a R87 billion discrepancy.
Estimated R3.5 billion in informal transfers
The number of authorised remittance providers in South Africa increased from 48 in 2021 to 55 in 2024, and figures include mobile wallets, airtime purchases and bill payments.
Cash was the preferred payment method, making up 80% to 90% of transactions from South Africa to Zimbabwe and Malawi.
“Cash dependency remains embedded in high-volume corridors, with associated costs implicitly factored into first-mile pricing structures,” stated FMT’s report.
Attempts by FMT to quantify the informal market placed the value of informal transfers at roughly R3.5 billion, or 17% of the registered transfers.
South Africa has tightened its money laundering compliance in recent years, as shown by its removal from the FATF grey list.
The draft legislation under consideration aims to expand the definition of remittance providers to include informal money or value transfer services.
“The draft ARP regulatory framework introduces a risk-based and proportionate oversight approach, balancing financial inclusion with the imperative to safeguard against money laundering and terrorist financing,” the Sarb stated.
‘Critical mechanism for economic development’
The G20 stated that in 2014, global remittance payments were expected to reach US$436 billion and that remittances to and from G20 countries account for almost 80% of the global flow.
“For the poorest and most vulnerable, access to remittance flows provides a sustainable path out of poverty, as more than half the world’s adult population have limited access to finance,” the G20 plan states.
FMT concurred, reiterating the importance of allowing foreign nationals to send money earned in one country to recipients in other countries.
“By setting explicit targets of reducing transaction costs to less than 3% globally by 2030 and eliminating high-cost remittance corridors, the SDG framework recognises remittances as a critical mechanism for economic development and financial inclusion,” the FMT report states.
“Cross-border remittances serve as a critical financial lifeline for millions of households
across SADC, with South Africa functioning as the region’s primary economic hub and remittance origin point,” states the report.
Continental research consultants explained that remittances went beyond support payments and were being counted in recipient national statistics.
“No longer just the generous remembrances by African migrants to their families in their home communities, remittance revenues are now instrumental to their sender’s national GDP growth, poverty reduction and national development,” stated market research firm In On Africa.
Motivations
Data was compiled from Sars’ balance of payment analysis, focus group discussions with remittance senders and stakeholder interviews.
The FMT report compiled responses from interviewees from Zimbabwe, Mozambique and Malawi.
Respondents reported extreme poverty in their home countries and that these payments helped with essentials for their immediate family.
“Basically, I’m a breadwinner. So, I have my parents there at home. I take care of them, my sisters and everyone. So, I work here, and I do send them money,” stated a Zimbabwean focus group participant.
“How do I balance my needs? I already know that, if I get paid [R]5 000, I know that in this [R]5 000, every month I have to see to it that [R]2 000 goes home. Whether I like it or not,” stated another Zimbabwean.
The report showed that the families of some Malawians and Mozambicans would not survive without the money sent.
“You can’t eat when you know that the children have not had food,” FMT quoted a Mozambican focus group participant.
“I send money because my mother is sick. It’s a must, and I have to do it,” relayed a Malawian respondent.
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