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

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The latest World Bank data shows that the costs incurred by migrants or foreigners sending money through so-called official corridors are still well above the United Nations target of less than 3%. On the other hand, the cost is much lower than the target when the cryptocurrency is used.

Global average above SDG . target

Follow World Bank (WB) latest remittance data, Sub-Saharan Africa has once again emerged as the most expensive region to send money. With an average cost of 7.8% for every $200 sent, the region receives $49 billion in remittances in 2021, just 0.4% higher than the 2020 figure.

Nigeria, which accounts for the largest share of the region’s remittances, saw inflows increase by 11.2%. According to the World Bank, the growth in the value of remittances sent to Nigeria through official channels can be attributed to the country’s policies that encourage recipients to transfer funds at regulated platforms. Other countries in the region with significant growth in their capital flows include Cape Verde, with remittances up 23.3%, Gambia (31%) and Kenya (20.1%).

Globally, the cost of transferring money across borders averaged 6% over the same period. According to the World Bank, both sub-Saharan Africa and global average transaction costs remain well above the Sustainable Development Goal (SDG) 10.3 target of less than 3%.

However, despite ongoing efforts to reduce this number, the cost of transferring money across borders remains high and has persisted for many years. This implies that the goal to achieve UN SDG 10.3 Goal Reducing the transaction costs of remittances to less than 3% by 2030 is unlikely to be achieved. Likewise, the UN’s mission to eliminate remittance corridors that cost more than 5% seems unattainable.

Why Migrants Turn to Cryptocurrency

Meanwhile, the high cost of sending remittances through official channels and the accompanying stringent KYC standards often force migrants to seek more convenient and less cumbersome channels. Transport, cross-border trucks or bus drivers are some of the informal ways migrants use to send money to their loved ones. However, such informal methods have their own set of challenges with the main challenge being the security of funds.

So while cryptocurrencies were not originally created to solve this dilemma, the increasing use of them by migrants to transfer money to their loved ones suggests they can be part of the solution. Is the 2021 geography of cryptocurrencies report As blockchain intelligence firm Chainalysis will attest, an increasing number of African migrants may now be using peer-to-peer cryptocurrency exchange platforms when sending money home.

Cryptocurrencies are key to achieving UN target to reduce remittance costs below 3% by 2030
Source: Chainalysis.

To illustrate, intelligence firm data shows that between July 2020 and June 2021, a total of $105.6 billion worth of cryptocurrencies were sent to recipients on the African continent. Of this total, inter-regional transfers accounted for nearly 96%.

The move-in metric below $1,000 is another metric used in the report, once again supporting the assertion that African migrants are using digital currencies to transfer funds. According to Chainalysis, such transfers crossed the 200,000 mark for the first time in May 2020 and have remained above it ever since. In fact, in May 2021, the number of transfers under $1,000 was just under 800,000.

Cryptocurrencies are key to achieving UN target to reduce remittance costs below 3% by 2030
Source: Chainalysis.

Besides being a faster and perhaps safer way to send money, cryptocurrencies are a lot cheaper than official channels. While it can cost up to $10 (10%) to transfer $100 from South Africa to Zimbabwe using regular corridors, it costs about $0.01 to send $200 via BCH ONLY such as network or less than one percent. It even costs less than a cent to transfer the same value on the Stellar network. Besides these two examples, there are several other examples that demonstrate that cryptocurrencies can be a better alternative to conventional remittance channels.

Regulators must not reduce the use of functional innovation

Thus, while critics – especially those based in advanced economies – are eager to highlight the flaws in cryptocurrencies, migrants from not only Europe Africa that globally is proving that cryptocurrencies are better than traditional channels. If cryptocurrency suddenly becomes a widely used means of remittance across different jurisdictions, achieving the SDG 10.3 goal of achieving 3% lower remittance costs could happen first. deadline in 2030.

Therefore, it is reasonable that regulators should be guided more by facts rather than malice when dealing with cryptocurrencies. Regulation of cryptocurrencies should not be intended to restrict their use as the United Nations Conference on Trade and Development (UNCTAD) recommended in a recent policy brief.

Instead, regulators should promote or encourage increased use of cryptocurrencies as they prove useful. An innovation aimed at emancipating the poor or an attempt to level the playing field should be protected and not ostracized.

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Terence Zimwara

Terence Zimwara is an award-winning Zimbabwean journalist, author and writer. He has written extensively about the economic troubles of several African countries as well as how digital currencies can provide Africans with an outlet.

Image credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This newspaper only gives true information. It is not a direct offer or solicitation to buy or sell, or a recommendation or endorsement for any product, service or company. Bitcoin.com does not provide investment, tax, legal or accounting advice. Neither the Company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods, or materials. goods or services mentioned in this article.

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