Remittance is perceived as “funding that is sent or transferred to another party usually abroad. Remittances can be sent to another country via a wire transfer, mail, draft, or cheque. Remittances can be used for any type of payment such as an invoice, but it’s typically used to pay family members back in a person’s home country.”
Very often remittances create a culture of dependency, where family members who receive remittances are not really interested in working. Their basic needs are covered and they do not need to look for work. This is a phenomenon that is extremely painful for most Africans in the Diaspora.
Another phenomenon that has been observed in some places is that remittances increase local market prices and exchange rates in the receiving country. This is a huge disadvantage for locals that do not benefit from remittances.
In Liberia, and perhaps other African countries, remittances are spent mostly on consumption rather than investment, on ceremonies and luxuries rather than essentials. Fostering agricultural activities are often ignored. Liberia, with her rich farming soil, most often the soil is not fully utilised. It is even sad, family members from the Diaspora go through negative experiences whenever they visit Liberia.
Most often upon their arrival into Monrovia, they will be responsible to buy food items, such as rice, pepper, greens, palm oil, water, etc. How can a “stranger” provide food for the “host relatives”? This is against the practices of our forefathers.
In the interior counties, the situation is even worst. The interior areas in Liberia have rich soil for agricultural purposes.
However, due to some unknown reasons, our people are not pursuing this endeavour. Every weekday there are lines upon lines of people at Western Union or Money Gram centres, waiting for handouts from relatives in the Diaspora.
Those of us in the Diaspora need to encourage our people to go into farming or engaging vocational skills, instead of sitting around doing nothing. This is not in the best interest of our individual economic progress. The Liberian government, irrespective of who is the president, doesn’t have the resources to employ every citizen.
Government, nevertheless, has the responsibility to provide the basic services for its population — meaning, setting up vocational training centres, the building of farms to market roads, connecting towns and villages through assessable road networks, etc.
To improve agricultural activities, villages and towns in the interiors of Liberia need to be connected. Perhaps the superintendents in the various counties need to foster and enhance agricultural activities.
The World Bank’s report of 2012, relevant to global remittances, pointed out that Liberians in the Diaspora out-beat per GDP other Africans living abroad by “remitting $378 million in 2012, an increase of US$18 million from 2011 remittance of US$360 million, a more than 31 percent of global remittances and third of Liberia’s GDP in 2012” (The New dispensation, 6 February, 2013).
The “USD Explorer” also, provided its statistical information relevant to the remittances received by Liberia during the period of 2011 through 2015. Liberia accordingly, received US$360 million in 2011, $516 million in 2012, US$383 million in 2013, $495 million in 2014, and US$693 million in 2015 as remittances from other countries.
These statistics demonstrate and show that Liberia, as a nation, has benefited economically from its nationals in the Diaspora.
In 2015, the United Nations issued a call to action to eradicate global poverty, reduce economic inequality and place the world on a more sustainable pathway: the 2030 Agenda for Sustainable Development.
This comprehensive undertaking affirms the need to reach 17 specific Sustainable Development Goals (SDGs) and proposes several ways to mobilise the additional resources required to realise this ambitious — but achievable — agenda; of these, SDG 10 specifically refers to safe migration.
The United Nations have outlined some of the Sustainable Development Goals (SDGs) and proposes several ways to mobilise the additional resources.
One of the key and most important roles of remittances, in my view, is their significant and powerful contribution to fight positively against poverty. Remittances are essential to the economic development especially, when part of these funds contributes, to support the building of human capital while allowing to pay expenditure for education and training for the young people of family members.
Therefore, in certain countries, remittances can contribute to the accumulation of human capital, and then to the growth of total factor productivity of the local economy.
Moreover, when these funds are deposited in financial institutions whether local or intentional in terms of savings, this will imply a significant increase and raise the financial resources of financial institutions. Hence, it will encourage institutions to expand their performance by granting more credits to companies in their markets for short or long-term loans.
Importantly, when the family members of Diaspora African encountered difficulties of credit rationing, the remittances enable them to get out of these difficulties and can finance their needs for consumption or their capital expenditures.
There is a need for most Liberia and most African analysts to conduct research to help the public, have substantial literature and data indicating that remittances are often spent on essential consumption, investment in physical and human capital, and expenditures that improve welfare and productivity, including health, education, information and technology.
Remittances thus far, according to research, create a culture of dependency in the receiving country, lowering labour force participation, promoting conspicuous consumption, and slowing economic growth.
African countries need to set up programmes that will develop strategies on how to understand the impact of remittances and to be able to formulate specific policy measures that will enable the continent to get the greatest benefit from these monetary inflows.
Remittances in themselves, should serve as a temporary accommodation and not a permanent solution to family members financial problems.
Edmund Zar-Zar Bargblor is an educator and activist of the African Intellectual Forum.