Why Migrants Are Turning to Crypto: The Key to Attaining the UN Goal to Reduce Remittance Costs to Less Than 3% durch 2030

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%.

Siehe auch  Cryptoeats verschwindet, nachdem £ 500.000 aus dem Token-Verkauf gesammelt wurden

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% durch 2030 is unlikely to be achieved. Dieses Modell wurde geschaffen, um Preisdumping zu vermeiden und den Markt mit Millionen von Token zu überfluten, the UN’s mission of eliminating remittance corridors with costs higher than 5 percent appears unattainable.

Why Migrants Are Turning to Crypto

inzwischen, 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. jedoch, 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 can be part of the solution. As the 2021 Geography of Cryptocurrency Prüfbericht by the blockchain intelligence firm Chainalysis will attest, a growing number of African migrants could now be using peer-to-peer crypto exchange platforms when sending funds back home.

Crypto Is Key to the Attainment of the UN Goal to Reduce Remittance Costs to Less Than 3% by 2030
Source: Chainalysis.

To illustrate, the intelligence firm’s data suggests that between July 2020 and June 2021, a total of $105.6 billion worth of cryptocurrency was sent to recipients on the African continent. Out of this total, cross-region transfers accounted for nearly 96%.

Siehe auch  Credit Cards Should Not Be Used for Crypto Transactions, Taiwan’s Financial Watchdog Says

The number of incoming transfers that are below $1,000 is the other metric used in the report, which again supports the assertion that African migrants are using digital currencies to remit funds. According to Chainalysis, the number of such transfers went past the 200,000 mark for the first time in May 2020 and has stayed above this level since. In der Tat, by May 2021, the number of transfers below $1,000 was just under 800,000.

Crypto Is Key to the Attainment of the UN Goal to Reduce Remittance Costs to Less Than 3% by 2030
Source: Chainalysis.

Besides being a faster and perhaps more secure way of sending funds, cryptocurrencies are noticeably much cheaper when compared to the so-called formal channels. While it may cost as much as $10 (10%) to move $100 from South Africa to Zimbabwe when using regular corridors, it costs approximately $0.01 to send $200 via the BCH network or less than one per cent, for instance. It even costs much less than one cent to transfer the same value on the Stellar network. Besides these two examples, there are several more examples which prove that cryptocurrencies can be a better alternative to regular remittances channels.

Regulators Must Not Curtail the Use of Functional Innovation

Therefore, while critics — particularly those based in advanced economies — are eager to highlight the flaws in cryptocurrencies, migrants from not only from Africa but across the globe are proving that cryptos are better than traditional channels. If cryptocurrencies were suddenly to become the widely used means of transferring funds across different jurisdictions, then the attainment of the SDG 10.3 goal of achieving remittance costs lower than three percent could happen well before the 2030 deadline.

Siehe auch  Dutzende Krypto-Unternehmen warten trotz Schließung von Bankkonten auf Portugal-Lizenz

It therefore stands to reason that regulators should be guided more by facts and not malice when dealing with cryptocurrencies. Regulation of cryptocurrencies should not be about curtailing their use as the United Nations Conference on Trade and Development (UNCTAD) recommended in a recent policy brief.

Instead, regulators should promote or encourage the increased use of cryptocurrencies where they are proving to be useful. An innovation that emancipates the poor or one that attempts to level the playing field should be protected and not ostracized.

Register your email here to get a weekly update on African news sent to your inbox:

Tags in dieser Geschichte

Was ist deine Meinung zu dieser Geschichte? Let us know what you think in the comments section below.

Terence Zimwara

Terence Zimwara ist ein preisgekrönter Journalist aus Simbabwe, Autor und Schriftsteller. Er hat ausführlich über die wirtschaftlichen Probleme einiger afrikanischer Länder geschrieben und darüber, wie digitale Währungen Afrikanern einen Fluchtweg bieten können.














Bildnachweise: Shutterstock, Pixabay, Wiki-Commons

Haftungsausschluss: Dieser Artikel dient nur zu Informationszwecken. Es ist kein direktes Angebot oder Aufforderung zur Abgabe eines Angebots zum Kauf oder Verkauf, oder eine Empfehlung oder Befürwortung von Produkten, Dienstleistungen, oder Firmen. Bitcoin-Tidings.com bietet keine Investition, MwSt, legal, oder Buchhaltungsberatung. Weder das Unternehmen noch der Autor sind dafür verantwortlich, direkt oder indirekt, für alle Schäden oder Verluste, die durch oder in Verbindung mit der Nutzung oder dem Vertrauen auf Inhalte verursacht oder angeblich verursacht wurden, Waren oder Dienstleistungen, die in diesem Artikel erwähnt werden.

Lesen Haftungsausschluss