The Key to Attaining the UN Goal to Reduce Remittance Costs to Less Than 3% by 2030 – Op-Ed Bitcoin News

The cost incurred by African migrants or expatriates when sending funds via the so-called formal corridors remains way above the UN target of less than three percent, the latest data from the World Bank has shown. On the other hand, the cost is much lower than the target when cryptocurrencies are used.

Global Average Higher Than SDG Target

According to the latest World Bank (WB) remittance data, Sub-Saharan Africa has once again emerged as the most expensive region to send funds to. With an average cost of 7.8% for every $200 sent, the region, which received $49 billion in remittances in 2021, only bettered the 2020 figure by 0.4%.

Nigeria, which accounts for the largest chunk of the region’s remittances, saw its inflows go up by 11.2 percent. According to the WB, the growth in the value of remittances sent to Nigeria via formal channels can be attributed to the country’s policies which encourage recipients to cash out at regulated platforms. Other countries from the region that saw significant growth in their inflows include Cabo Verde, whose incoming remittances rose by 23.3%, Gambia (31%), and Kenya (20.1%).

Globally, the average cost of remitting funds across borders stood at 6% during the same period. According to the World Bank, both Sub-Saharan Africa and the global average transacting costs are still much higher than the Sustainable Development Goal (SDG) 10.3 target of under 3%.

Yet, despite the ongoing efforts to lower this figure, the cost of moving funds across borders simply remains high and has been for years. This implies that the goal to attain the United Nations SDG 10.3 target of reducing the transaction costs of migrant remittances to less than 3% by 2030 is unlikely to be achieved. Similarly, the UN’s mission of eliminating remittance corridors with costs higher than 5 percent appears unattainable.

Why Migrants Are Turning to Crypto

Meanwhile, the high cost of sending remittances via formal channels and the accompanying rigorous KYC standards that are applied often force migrants to look for more convenient and less cumbersome channels. Couriers, cross-border trucks, or bus drivers are some of the informal ways migrants use to send funds to their loved ones. However, such informal methods have their own challenges with the main one being the security of the funds.

So while cryptocurrencies were not initially created to solve this dilemma, their growing use by migrants remitting money to their loved ones shows that they…