Speech by the UPU Director General, Mr. Bishar A. Hussein, at the UNCTAD high-level panel on migration and structural transformation in Africa, New York, USA, 25 September 2018
Excellences,
Ladies and gentlemen,
Allow me first to congratulate the Governments of Morocco, Rwanda, and UNCTAD for the organization of this high-level panel on a vital issue for the African continent.
I would like to commend UNCTAD and its Secretary general, Mukhisa Kituyi, for the excellent 2018 Report on “Economic Development for Africa: Migration for Structural Transformation”. This report underlines the key gaps and challenges that need to be addressed to leverage the inputs of migration in the economic and social development of Africa. Allow me to focus on two specific and critical points highlighted in this report: first, the importance of migrants’ remittances and second, the nexus between migration and trade. Those two elements are key drivers on which my organization, the Universal Postal Union, and the postal networks of its 192 members countries, are offering concrete and effective solutions.
Migrant’s remittances are, we know, a crucial financial flow and source of external finance for Africa. Remittance flows to Africa are larger than Foreign Direct Investment (FDI) or Official Development Assistance (ODA) flows. And this is without taking into account the informal flows. To maximize those flows and gear them towards impactful and effective development investments, Africa is facing two main challenges: affordability and accessibility.
Under the umbrella of the UPU, the postal community has a payment network, which is well placed to provide migrants with access to secure, effective and affordable money transfer services. 91% of Posts worldwide (183 out of 201) provide financial services, either directly or in partnership with other financial institutions We are supporting our member countries especially in Africa to build and develop that unique network.
With an average transactional cost of almost 10%, sending remittances to Africa costs twice as much as sending money to Asia. And it is even worse when we consider the intra-regional situation where costs can go up to 27% between Angola and Namibia or 21% between South Africa and Botswana. We are very far from achieving the SDG target of 3% worldwide! There are several reasons for this situation but a key factor is the over-concentration of suppliers within banks and money transfer operators, the lack of competition and very often the exclusive nature of agreements between those operators. Post offices in Africa are an important provider of remittance services and are indeed the more affordable ones with an average of 6% transactional cost and even below 5% in many intra-regional corridors. By developing and increasing the market shares of Posts, we would be in a better position to meet the international costs reduction targets!
The second challenge is the access to those remittances services, especially in the receiving countries in Africa where rural populations represent on average 63% of the total population and where more than 70% of the population does not have access to formal financial services. Here again, we support our member countries to use their national postal network to deepen financial inclusion. In Africa, there are three times more post offices per habitant than bank branches. Today more than 1 billion people worldwide are banked by a Post, which makes the postal network the second contributor to financial inclusion after banks.
High costs and lack of access are two main hurdles, which hinder the development benefits of remittances in Africa. With the postal network, we have a unique opportunity to help alleviate those hurdles!
Excellences,
As rightly pointed out in the UNCTAD report, migration boosts trade. Migrants are not only using the postal network to export in-kind remittances to their country of origins such as medicine or educational supply but also to engage in home country products trade known as “nostalgic goods”. Here again, the postal networks provide a unique chance to maximize the benefits of migration. To support those trade flows and especially in the context of the growth of E-commerce, the UPU has initiated programmes to facilitate e-commerce and trade using the postal network. Through its Ecom@Africa initiative, the UPU strives to position the postal network as a key enabler and facilitator of e-commerce in the African continent, and through the Easy Export programme, the UPU aims to alleviate trade barriers that hinder the internationalization of small and medium-sized enterprises (SMEs).
To realize the greater impact, the UPU is partnering with a number of regional e-commerce associations such as E-commerce Europe to directly offer the necessary product placement, look-and-feel, and marketing, so that products and services by African SMEs can be offered to online shoppers and migrants abroad. This would also help mitigate migration flows as a result of increased employment creation generated by the SMEs in Africa, since the value addition - manufacturing, warehousing, fulfillment and shipping via the national postal operator – would occur in Africa.
Excellences,
Maximizing the social and economic impacts of migration for Africa requires strategic and concrete partnerships. We cannot afford to work in silos. The UPU has built strong and effective partnerships with other UN agencies such as the International Organization for Migration, IFAD and others to deliver concrete solutions on the ground in Africa, between African countries in the region and in the migrant’s countries of origins. Our projects with our partners have tangible and concrete results on the cost of remittances, on expanding the access to payment services and on developing trade and e-commerce. We are also building public-private partnerships, for example with VISA and with the Gates Foundation, to support Posts in Africa to build cash-less digital payment infrastructures and services to better serve the financially excluded population and built business partnerships with African Fintechs and start-ups.
The vast postal network spread in over 660,000 physical locations worldwide, therefore, supports migrants to engage in cash and in-kind remittances.
As you can see, we have, in the UN system, concrete solutions to bring. To fulfill those promises, I call on governments, the private sector, and development partners to team up and collaborate with the UPU and the postal community to maximize the development impact of migration in Africa.
Thank you for your kind attention.