How does the diaspora finance Togo’s economy ?

Economic governance

Thursday, 30 August 2018 09:01

How does the diaspora finance Togo’s economy ?

(Togo First) - In July, Togo’s ministry in charge of development planning, and the United Nations Development Programme (UNDP) released a report on official development assistance (ODA) in 2017. The document provides precise statistics on official development assistance and remittances in 2017. Here, we provide a brief analysis of remittances sent by the Togolese diaspora in 2017.

In 2017, the diaspora sent $483 million home

In 2017, combining both ODA and remittances, Togo captured more than $856 million. Remittances’ portion in the amount was 56.45% or $483 million.

Remittances exceed both ODA and FDIs

Remittances exceed ODA by $110 million. This amount is almost twice the contribution of Togo’s bilateral partners in the official development the country received over the period reviewed. The transfers also exceed FDIs. Indeed, according to recent data from UNCTAD, the latter stood at $145 million last year.

African diaspora gets lion’s share

It appears that in terms of remittances, the diaspora living in Africa wired the largest portion of the transfers to their home-country in 2017: $176 million or 36% of overall remittances volume. Togolese living in Europe come next with $159.17 million (33%) sent, according to official figures. Then follows diaspora in America (26% or $127.95 million), Asia (4% or $21.19mln) and finally those living in Oceania (1%).

Social sector captures most remittances

Most of the monies sent by Togolese living outside the country were invested in social sectors (food, health and education). 53.67% (CFA1.19 billion) of overall remittances was sent to support family members at home. The second use of the remittances is educational assistance with about CFA240 million spent on school support. Hundred and thirty million was invested in construction projects.

The many investments made in the food, health and education sectors show how significant remittances are for the country’s human development.

Remittances are “in truth” underestimated

According to the World Bank, Togolese remittances in 2017 represented about 8.4% of the country’s GDP. This, the institution says, is one of the highest level in Africa, and should actually be higher if informal traffic was accounted for. In this regard, the UNDP’s report states: “Informal money transfers remain a challenge which should be tackled”.

Building a mechanism to direct the funds to promising sectors

Due to the importance of remittances compared to ODA and FDIs, the ministry of foreign affairs, cooperation and African integration established a department in charge of the Togolese diaspora. This department is currently working to develop an appropriate mechanism to coordinate the remittances and direct them towards promising sectors.

Fiacre E. Kakpo

REFORMS OVERVIEW

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