Mchinji’s KACODO resources centre up for youth, women socia-economic empowerment

KAKODO-resource-centre

 

The just launched Kapiri Community Development Organisation’s (KACODO) resource centre at Traditional Authority (T.A) Dambe in the border district of Mchinji has brought joy and happiness to locals.

 

Therefore construction of KACODO resources centre has eased the organisation’s operations as its being centralised.

 

The facility provides Early Childhood Development (ECD) services, vocation training (tailoring and designing), social and economic counseling.

 

With technical  and financial support of MK71 million from ActionAid Malawi, the organisation has been implementing various interventions programs focusing on education, and other themes of women rights, governance, HIV and Aids, Food Security and Resilience building.

 

Chief Gender Officer in the Ministry of Gender and Children Welfare, Fred Simwaka emphasised the new for non-governmental organisations to bring tangible development to communities.

 

Simwaka lauded Action Aid for timely infrastructure development support saying the facility continues to bring joy and happiness to locals.

 

He was speaking during the launch of KACODO resources centre on Monday

 

“Civil Society organisations, NGOs must bring tangible development to locals for social  economic empowerment. This helps complementing government effort hence proudly thanking Action Aid for the timely support,” lauded Simwaka.

 

KACODO Executive Director Linda Kabanda assured the general public of the organisation’s agenda of transforming locals especial youth and women lives.

 

Kabanda proudly said since its inception in 2012 the organisation has managed to build school blocks, teachers houses, training youth on tailoring and among others.

 

She said the organisation is operating in a transparent manner with finances that its agenda reaches the locals perfectly.

 

Takondwa Lino, a tailor trained at KACODO resource centre says her economic life has improved as she is able to meet the social needs independently.

 

Action Aid Malawi’s Head of Fundraising and Communications, Tiwonge Simkonda says its the wish of the organisation to see rural people’s lives transforming for the better hence various interventions.

 

Simkonda said the organisation’s just launched strategy paper for the next five years focuses on action oriented programs to change locals’ lives.

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Rotary Club of Lilongwe seeks MK6 million for charity work; intensifies fundraising

family-fundraising-event-by-Rorary-of-Lilongwe

 

LILONGWE-(MaraviPost)-The country’s charitable-community based, Rotary Club of Lilongwe seeks MK6 million from the public for lined up  projects including tree planting exercise, school blocks building, medical care support projects.

The club says is geared up for the 2018/2019 growing season with over 12,000 seedlings ready for planting.

This is part of its social and volunteer charitable works the grouping does to Lilongwe residents for years now.

The club is expecting to reach out school and catchment areas in the capital with seedlings to be planted towards environmental conservation.

George Mwale, Rotary Club of Lilongwe told The Maravi Post on Saturday during the fundraising activity at Bingu International Convention Centre (BICC) that the growing season will be dressed up with trees.

“We organised the fundraiser to seek public’s financial support to achieve our development projects lined up ahead. The fundraiser targets all the family; food, drinking, kids playing among others.

“We expect to raise about MK6 million that directly go for tree planting in coming growing season that about 12,000 seedlings have been earmarked for the exercise”, assured Mwale.

Dr.Martha Chipanda, Kamuzu Central Hospital (KCH) Dental Surgeon, whose organisation partners with the club expressed gratitude over medical support has been rendered.

Dr. Chipanda cited provision of dental medical support the facility got from the club that increased number of patients seeking treatment.

 

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MCP VP Mia promises bringing back Malawi’s lost paradise..Dresses Balaka West

 

 

 

 

Mia in Balaka West

By Leo Mkhuwala

 

The main opposition Malawi Congress Party (MCP) is geared to restore the lost glory through re- introducing sound economic policies.

 

This will lift up the livelihoods of the currently wailing and down pressed Malawians, once voted into power in the next year’s elections.

 

MCP Vice President Sidik Mia told the party’s area leaders in Balaka West Constituency on Thursday that MCP is the only hope for Malawians beyond May 2019.

 

All this, according to Mia, will be possible through the most trusted corrupt free and God-fearing combination of the MCP President, Dr. Lazarus Chakwera, who is the party’s president with a clerical leadership background and him, Sidik Mia, a staunch Muslim as his vice.

 

“We will revive those  sound policies that Malawians feel so much nalstagia about and in addition, we will introduce the new ones that when bundled together, Malawi will fully translate into a better place to live, once again,” assures MCP VP.

 

Key of them all, Mia mentioned that, the MCP government will revive the almost dysfunctional health services by ensuring that, the right medical drugs were readily available in hospitals and most importantly, ensure that, patients are rushed to hospital through the increased and most effective ambulance service.

 

On Agriculture, Mia said MCP will introduce universal subsidy against the current system that only benefit a few leaving the majority in the cold.

 

He added that, the Agricultural sector will be given a huge priority to ensure that farmers benefit from their sweat and that this will be guaranteed through consistent prediction of prices before harvest.

 

He also promised the people of Balaka that, their water woes will be a thing of the past, as MCP will greatly focus on the people’s access  to clean water throughout the year.

 

During the first meeting at Mtsimuke School ground in Chidzungu village, Traditional Authority Nsamala, Mia led in the distribution of party materials to over 1000 area leaders.

 

In the same manner, at Petulo Village, the political giant distributed party materials to over 500 area leaders.

 

“This is just a small way of strengthing party structures and its an ongoing exercise,” Mia said in an interview.

 

In both venues, Mia unveiled the MCP Shadow candidate for the area, Haroon Mia hence urged the leaders to rally their support behind this servant leader who had the welfare of the people of Balaka West at heart.

 

In his remarks, constituency chairman, Saidi Yasin described the MCP Veep as a “political universal machine” whose political prowess and influence has turned around the polical trend, not only in Balaka but the entire southern region and throughout the country.

 

Said Yasin when referring to Mia amid applause and ululation: “We are proud of you and I feel so humbled to have this ‘matchini opangira matchini anzake’ literally meaning: ‘the master political machine’ here today and my joy is overflowing.”

 

He added: “These people have come here in such large numbers because they have known you even before you joined MCP through your works as a fervent Muslim and a charitable man who gives without partiality or favour.”

 

He therefore acknowledged the support of building materials to churches and mosques that Mia had recently channeled to the area.

 

Through his interaction with media, Mia trashed the recent rumour that he was joining DPP and described such allegations as “sheer nonsense coming from miserable distractors”.

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ILO gives Uganda, Malawi Shs40b to fight child labour

Janat Mukwaya
Uganda Gender minister Janat Mukwaya

By MISAIRI THEMBO KAHUNGU

Kampala. The International Labour Organisation (ILO) has announced a $10.8m (about Shs40.5b) fund for Uganda and Malawi to jointly work to combat child labour on the African continent.

The announcement was made during the ILO governing body’s 334th session that is ends today in Geneva, Switzerland.
Uganda is currently serving as a member of the ILO governing body on a three-year term after being voted to it during the 106th International Conference in June 2017.
“The details about the disbursement, sharing and use of money will come later as the team returns from Geneva. Otherwise, that is an allocation that we as a country need to welcome and put to use,” Mr Frank Mugabi, the ministry’s communications officer, said in a statement issued yesterday by the Ministry of Gender, Labour and Social Development.

The Ugandan delegation in Geneva is led by Gender minister Janat Mukwaya.

The minister is accompanied by the permanent secretary, Mr Pius Bigirimana, and the director labour, employment and occupation safety, Mr Martin Wandera.
As part of their inaugural participation in the ILO governing body session, Ms Mukwaya in a statement on behalf of the Africa group, asked the International Office to come up with a clear exit strategy from tobacco funding.

Under the Public Private Partnership, the tobacco industry has been funding ILO’s programmes on elimination of child labour in the tobacco industry. However, ILO is transiting from the tobacco funding so as it concurs with the Model Policy for Agencies of the United Nations Systems on Preventing Tobacco Industry Interference.

Consideration of interests
Ms Mukwaya guided that when resolutions are made, there should be “due consideration of the principle of the best interest of the child articulated in the United Nations Convention on the rights of the child,”

She said the exit from tobacco funding should ensure no disruption of the ongoing efforts by member states to eliminate child labour in the sector.
Uganda is one of the countries where tobacco is grown as a cash crop and there has always been outcry of child labour in the sector which leads to school drop-outs in the tobacco growing areas.

 

First Posted: monitor.co.ug

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ILO gives Uganda, Malawi Shs40b to fight child labour

Janat Mukwaya
Uganda Gender minister Janat Mukwaya

By MISAIRI THEMBO KAHUNGU

Kampala. The International Labour Organisation (ILO) has announced a $10.8m (about Shs40.5b) fund for Uganda and Malawi to jointly work to combat child labour on the African continent.

The announcement was made during the ILO governing body’s 334th session that is ends today in Geneva, Switzerland.
Uganda is currently serving as a member of the ILO governing body on a three-year term after being voted to it during the 106th International Conference in June 2017.
“The details about the disbursement, sharing and use of money will come later as the team returns from Geneva. Otherwise, that is an allocation that we as a country need to welcome and put to use,” Mr Frank Mugabi, the ministry’s communications officer, said in a statement issued yesterday by the Ministry of Gender, Labour and Social Development.

The Ugandan delegation in Geneva is led by Gender minister Janat Mukwaya.

The minister is accompanied by the permanent secretary, Mr Pius Bigirimana, and the director labour, employment and occupation safety, Mr Martin Wandera.
As part of their inaugural participation in the ILO governing body session, Ms Mukwaya in a statement on behalf of the Africa group, asked the International Office to come up with a clear exit strategy from tobacco funding.

Under the Public Private Partnership, the tobacco industry has been funding ILO’s programmes on elimination of child labour in the tobacco industry. However, ILO is transiting from the tobacco funding so as it concurs with the Model Policy for Agencies of the United Nations Systems on Preventing Tobacco Industry Interference.

Consideration of interests
Ms Mukwaya guided that when resolutions are made, there should be “due consideration of the principle of the best interest of the child articulated in the United Nations Convention on the rights of the child,”

She said the exit from tobacco funding should ensure no disruption of the ongoing efforts by member states to eliminate child labour in the sector.
Uganda is one of the countries where tobacco is grown as a cash crop and there has always been outcry of child labour in the sector which leads to school drop-outs in the tobacco growing areas.

 

First Posted: monitor.co.ug

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FOA up for physically challenged persons training

s
By Alick Junior Sichali
One of the country’s organisations  promoting rights of the physically challenged persons, Focus On Ability (FOA) says will soon embark on trainings of advancing skills and talents of the people.
Managing Director of FOA, MacDonald Nyirenda revealed this in an interview with Maravi Post on Thursday.
Nyirenda was speaking after organising a successful short film festival on Saturday which was held at Grace Bandawe in Blantyre.
He said the initiative will enable people who are disabled to learn on how they can benefit from the talent and skills they posses.
The Managing Director said a lot of the physically challenged people have a lot of talent and skills but they lack motivation and support from the general public.
He said “for long time FOA has focused on advocating the rights of the disabled people but now we want to start also providing trainings to the physically challenged person so that they benefit from their talents and also that they can be independent,”.
This year’s short film festival was second to happen in Malawi and Blantyre.
FOA plans to introduce the initiative in all regions of the country starting from next year.

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US scores Malawi highly on MCC Compact

President Peter Mutharika confers with US Ambassador to Malawi, Virginia Palmer and MCC Vice President, Jeanne Hauch-(c) Abel Ikiloni, mana

LILONGWE-(MaraviPost)-The US Government through the Millennium Challenge Corporation (MCC) has ranked Malawi highly in its latest 2019 Scorecard.

US has been implementing a five-year $350 million energy compact in Malawi under the Millennium Challenge Account-Malawi.
Annually, MCC releases a scorecard that rates beneficiary countries performance in 20 indicators necessary for the continuation of the programme.
The indicators measure a country’s policy performance in areas of Economic Freedom, Ruling Justly and Investing in its people.
And in the latest scorecard released on November 5, Malawi has performed well in more than 50 percent of the indicators.
Among the areas Malawi has impressed include Control of Corruption and Democratic Rights.
Malawi has scored 65% on Control of Corruption, 73% on Government Effectiveness, 86% on Rule of Law and 88% on Freedom of Information.
Malawi has also scored impressively in Trade Policy, Primary Education Expenditure, Health Expenditure, Civil Liberties and Political Rights, among others.
The 2019 Scorecard comes one month before MCC Board meets to consider the next compact.
It also comes a week after an official closeout of the first compact in which the American people invested $350 million in modernizing  Malawi’s power sector.
This impressive performance follows another high rating in the 2018 Scorecard which MCC releases in November last year.
In the 2018 report, MCC said “Malawi continued to pass MCC’s scorecard by meeting the requirement of passing at least half of the 20 indicators overall, including the hard hurdles of Control of Corruption and Democratic Rights.”
Under the Malawi first compact, MCC, a US government programme, and the Government of Malawi worked across the power system to improve infrastructure, strengthen policies, and improve management of natural resources to support power generation.
The programme has seen the rehabilitation and modernization of over 24 substations and transmission stations, more than 420 km of power lines and rehabilitation and modernization of Nkula A Power Station which was commissioned in 1966.
At the ceremony marking the close out of the first compact, President Peter Mutharika was hailed by MCC Vice President Jean Hauch, US Ambassador to Malawi VIrginia Palmer and MCA Malawi Board Chair Simon Itaye for his leadership.
They said Mutharika’s impressive leadership led to the successful completion of the programme.

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Micro-nutrient deficiency hunting Malawi-Study

 

 

By Chikondi Manjawira

 

Malawi still faces malnutrition which is affecting citizenry well-being impacting the country’s social economic development, the study has revealed.

 

The findings of the 2015-2016 Malawi Micronutrient Survey indicates that more than fifth of the population.

 

Malawi is said to be anaemic and zinc deficiency continues to be a challenge with zinc high deficiency levels at 60-66% among all population groups.

 

However, Vitamin A deficiency is considered to be well managed by current interventions including sugar, oil and flour fortification.

 

The same applies to Iodine deficiency which is managed but still need to continue maintaining high compliance level of Iodine in salt. Currently compliance is at 80% compared to optimal >90% at household level.

 

Recently, Ministry of Trade and Industry, National Fortification Alliance and Consumers Association of Malawi (CAMA) briefed the media orientation on mandatory food fortification in Malawi

 

Government selected five vehicles for mandatory fortification which include, Maize Flour-MS 34, Wheat Flour-MS 30, Refined Sugar-MS 202, Raw Sugar-MS 209, Edible Oils-MS 52 and Edible Salt-MS 188.

 

As such producers and traders are obliged to fortify, package and clearly label ingredients on  their products so that the consumer make informed decision on what to pick whenever visits both the local and super markets.

 

Ministry of Industry, Trade and Tourism Industrial Development Officer, Mayeso Msokera said government is currently implementing a comprehensive program on food fortification as part of the various intervention strategies to solve the micronutrient deficiency problem.

 

Msokera added that it is  a clear signal that government intends to make fortified foods widely available to the citizens.

 

“The Ministry decided to organise this awareness workshop with the media as key stakeholders in the fortification program to share with the media more information of about fortification, discuss existing monitoring activities that are being carried out to ensure safety and adequacy of the fortification program among identified food vehicles and to discuss on ways in which the media houses can contribute towards creating awareness and enhancing compliance of the products under the fortification legislation,” said Msokera

 

Consumer Association of Malawi Executive Director John Kapito therefore urged media to regularly visit the markets and report more on the sub standards products that continue to appear on the markets if they find any for the well-being of the consumers.

 

“We have a lot of substandard products that are not supposed to be sold at the market which dangerous and which is in conflict with some of the laws in Malawi.

 

‘We are trying to make sure that those products are completely removed from these markets and that also the city councils are playing a part to make sure that we clean up our markets so that people only demand for fortified products and only able to pick such products,” said Kapito.

 

There is laxity because most non fortified products are still entering into the country

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Women Are Powering Change in Malawi

The Sub-Saharan nation of Malawi has made progress in human development over the past decade, but it remains one of the poorest countries in the world. Over half the nation’s population lives in poverty, and some 25 percent live in extreme poverty.

When the Millennium Challenge Corporation (MCC) and the Government of Malawi began looking at the primary constraints to the country’s economic growth in 2009, one thing stood out — the availability and quality of the nation’s power supply. Just 10 percent of Malawians had access to grid electricity and even for those connected to the grid, power was often unreliable and cut for eight to 12 hours per day.

But inadequate power doesn’t tell the whole story of life in Malawi. The country is also hindered by gender inequality. Women in the agricultural sector tend to have smaller lots of land, and those in other sectors suffer from a lack of access to credit and capital. So, when we partnered with the Malawian government to revamp the nation’s power sector, we didn’t limit our efforts to producing more electricity. We also sought opportunities to help women in the country advance in the context of the power-focused compact.

I traveled to Malawi ahead of our compact closeout and met with some of the inspiring women who have been empowered by projects implemented under MCC’s compact. Not only are those women compact beneficiaries, they are working to reshape the country’s future.

At MCC, we believe that one of the best ways to accomplish our mission to reduce poverty through economic growth is by investing in women’s economic empowerment. The reason is simple — research shows that empowering women leads to stronger economies, increases in household incomes, and higher profits for businesses. So, no matter what sector we invest in — power, land, transportation, water — we look for ways to ensure that women are provided opportunities to play a key role in driving progress that will positively impact them and their communities. In Malawi, women helped to realize the potential of efforts across the power-focused investment, making key contributions to each of the three compact projects: infrastructure, power sector reform, and environmental management.

Powering Change: Environmental and Natural Resource Management Project

Hydropower generation plays a big role in Malawi’s power sector, but chronic weed infestations and excessive sediment buildup in the Shire River Basin as a result of poor land and environmental management, have led to hydropower disruptions and inefficiencies.

The compact’s $32 million Environmental and Natural Resource Management Project was designed to implement modern environmental and natural resource management techniques in areas upstream from the hydropower plants. The project also included a Social and Gender Enhancement Activity that focused on engaging women to improve how land along the riverbanks is used and reduce the negative impact on natural resources while increasing economic opportunities and decreasing outages at downstream hydropower plants.

Emily Hussein used to spend her days collecting firewood and charcoal, which she would sell as her only source of income, leading to deforestation and soil erosion. But with the help of MCC’s Environmental and Natural Resource Management Project, she secured a loan that allowed her to become a beekeeper — decreasing her impact on the landscape and increasing her family’s household income.

“The project has changed the lives of women here,” said Emily. “I can now borrow money from the village bank and repay after I have sold honey. When I get the money, I use it to buy fertilizer in order to ensure that we have a good harvest.”

Emily Hussein
Emily Hussein transitioned from cutting trees to beekeeping and selling honey. (MCC photo)

Powering Change: Infrastructure Development Project

Upgrades to the power infrastructure formed a major piece of our compact with Malawi. A new high-voltage 400kV electricity transmission line — a significant upgrade from the old 132kV line — was built and is now connected by a host of newly constructed and upgraded substations. The line will provide a stronger and more efficient, higher voltage backbone for the transfer of electricity across Malawi.

Women working at the Nkhoma substation outside of Lilongwe
Women working at the Nkhoma substation outside of Lilongwe, one of the end points of the new 400kv line that has greatly increased the capacity of Malawi’s power sector. (MCC photo)

Women worked on sites across the country as new lines and substations were constructed and rehabilitated. Women working at the Ntonda substation in Blantyre had the opportunity to work on site in the morning, and attend training sessions in the afternoon to build specialized skills in bricklaying and carpentry, skills that will help them to earn more in future work.

Powering Change: Power Sector Reform Project

Infrastructure alone cannot solve the systemic, long-term challenges of energy access in Malawi. Effective institutions and strong policy frameworks are also needed to support continued expansion, encourage private sector investment and boost economic growth. As MCC worked with the Electricity Supply Corporation of Malawi (ESCOM), the national electricity utility, to improve processes and operations, the role of women was front and center.  The utility successfully recruited a Gender and Social Inclusion Manager and established a unit to lead the development and implementation of ESCOM’s Social and Gender Inclusion and Anti-Sexual Harassment Policy. Now, ESCOM will provide gender training and technical support to their entire staff.

“Research has shown that organizations which have included women in their decision making forums and even in all the operations of those organizations are able to perform much better than organizations which don’t have women in their committees or teams,” Gender and Social Inclusion Manager Elube Chienda told me.

ESCOM is also planning for their future workforce with a partnership with the University of Malawi. The scholarship and internship program aims to support the next generation of female engineers as students build their skills both in the classroom and in real world. “The idea is to ensure that we motivate them, and we inspire them so that when we have vacancies they will be the first ones to apply,” said Ms. Chienda.

When I spoke with ESCOM scholarship recipients about how the program had changed their lives and aspirations, they were full of hope and confidence. “I’m graduating not only with theory and knowledge. I’m also graduating as an experienced engineer,” said scholarship recipient Mary Mnewa.

With the completion of our five-year compact, MCC and the Government of Malawi have set the stage for more reliable power to be delivered across the country. At the same time, infrastructure upgrades and institutional reforms have secured the foundation for private sector investment while optimizing the potential benefits to women and local communities by promoting women’s economic empowerment through new job opportunities and reforms that incentivize women’s participation within the power sector.

Empowering women in Malawi is helping to power the country, and MCC is proud to have played a role in cementing new opportunities for women in the future. This compact shows that investments don’t have to choose between policy and institutional reform, infrastructure improvements, and economically empowering women. As we move forward in our pursuit of poverty reduction, MCC will continue to make the economic empowerment of women a priority, regardless of which countries and sectors we are investing in.

About the Author: Kate Pritchard is an International Communications Specialist at the Millennium Challenge Corporation.

Editor’s Note: This entry originally appeared on the MCC’s blog.

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Diaspora Corner: Tapping migration wealth to fund development

Diaspora Remittance

African immigrants passing by a poster advertising international money transfer services in Brussels, Belgium. Photo: Panos/Mark Henley

African diaspora remittances can reduce poverty
By: Jocelyne Sambira

In a small and stuffy room in midtown Manhattan, some people are filling in forms while others wait patiently in line to submit them. It is spring in New York City but the sweltering heat and the poor ventilation is reminiscent of summer. The teller shielded by a glass window barks orders through a round hole. With one hand on his suitcase, Omar tugs at his collar to loosen the red and blue striped tie around his neck. Pearls of sweat are visible on his forehead. “I am sending money to a person,” he speaks deliberately. Seemingly satisfied with his answer, the teller continues to punch her keyboard and shouts the next question, “How much?” He knows the drill. And like most migrant workers in the city, the trek to this hole in the wall is part of his routine on pay days.

Billion dollar industry

It’s hard to believe that this grimy cubicle is the face of a billion dollar industry. The global money-transfer industry, having escaped the financial crisis unscathed, is making huge profits. Not only do the companies charge a fee to transfer money to another country, they also make profits off the exchange rates. Like when Omar sends his monthly $200 contribution to his family in Ghana, he pays up to 8% in remittance or transfer fees. Remittance is money sent to someone as an allowance.

Egypt and Nigeria are among the top recipients of migrant remittances, says the African Development Bank’s latest report, the African Economic Outlook 2013. According to the report, the two countries received 64% of total remittances to Africa in 2012 – US$18 billion transferred to Egypt and US$21 billion to Nigeria.

The World Bank estimates that there are 140 million Africans living outside the continent. Scores of young Africans, like Omar, move to the West in search of better jobs every year. Omar settled on driving a yellow cab in New York City after holding various odd jobs, he told Africa Renewal. He bragged about how he made US$1,000 some days after pulling an all-nighter. A portion of his money goes to pay for his parents’ rent and school fees for his siblings in Ghana.

As a green card holder, which gives him permanent residency in the United States, Omar can use walk-in payment facilities like the one in midtown Manhattan without fuss. Wire transfer companies have recently been under greater scrutiny and tighter regulations put in place requiring them to “know their customers.” To send money abroad, the sender’s identity and that of the receiver must be disclosed. Often tellers will ask for proper identification. But for illegal migrants, this is not an option. They often work and get paid under the table and therefore prefer to use informal channels. These unrecorded flows are believed to be at least 50% larger than recorded flows, says Dilip Ratha, a World Bank senior economist in charge of migration and remittances. Globalisation has created a demand for a cheap and mobile labour force, notes Rob McCusker in his article on underground banking written for the Australian Institute of Criminology. There is often the cultural expectation, he says, that migrant workers will send a proportion of their earnings to families back home.

Hawala

 

Remittances
A lot of the moneysent informally is hard to track. For example, money carried by visiting friends or acquaintances.

A lot of the moneysent informally is hard to track. For example, money carried by visiting friends or acquaintances. But there are informal banking systems like the hawala (which means “trust” in Arabic) networks that serve people who want to remain anonymous because they require no identification. The fees are much lower, between 3% and 5%. The term hawala is now often used to mean “transfer,” explains Ibrahim Farah, a Somali-American who operates a money transfer business in Nashville, Tennessee. Speaking to Nashville Public Television’s series, Next Door Neighbours, Farah says it’s an age-old practice that was used by Arabic traders in the past to protect themselves against highway robbers. Hawala was later used in the Middle East, Asia and Africa to move money quickly and safely.

With the collapse of the banking system in Somalia following civil war in the 1990s, hawalas were used by refugees and internally by businesses and non-governmental agencies to pay employees. Backed by the World Bank and the UN and fuelled by the Somali diaspora community, the Somalia remittance network channels about US$1.5 billion a year. The money has helped keep Somali families afloat over the years, especially during the 2011 famine. However, because of fears that these alternative banking systems could become vessels for money launderers and terrorists, many countries have introduced new legislation and tighter controls, which has forced some hawalas to close.

Redefining remittances

Somalia is not the only African country where migrant remittances have become an important source of external funding. Officially recorded remittance flows to Africa by the World Bank are estimated to have increased from US$ 9.1 billion in 1990 to nearly US$40 billion in 2010. These remittances equalled 2.6% of sub-Saharan Africa’s gross domestic product in 2009, or almost 60% of official aid flows to the region. 

African countries rely heavily on external funding for development. But foreign direct investments and official development aid have declined over the years, notes the African Development Bank (AfDB). Development experts believe remittance flows can help reduce poverty and grow economies. However, a big chunk of the remittances go to pay hefty bank fees. “High transaction fees are cutting into remittances, which are a lifeline for millions of Africans,” states Gaiv Tata, the World Bank’s director for finance and private sector for Africa. 

Ghana, South Africa and Tanzania are the most expensive countries in Africa to send money, with fees averaging 20%, according to the Send Money Africa database funded by the African Institute for Remittances. One reason is the limited market competition for cross-border payments. The database shows Africans pay higher fees to send money home than any other migrant group. Opening up the remittance market to competition and better information to consumers could bring remittance prices down, says Massimo Cirasino, another senior World Bank economist.

The world’s eight most industrialized countries known as the G8, and the group of finance ministers and central bank governors from the G20, plan to bring remittance fees down to 5% by 2014 from the current average of 12.4%. This would put US$4 billion back in the pockets of Africa’s migrants and their families. The plan will involve increasing competition and banning exclusivity agreements, providing consumers with more information on prices and conditions through innovation and improved efficiency. For example, an overhaul of the Rwandan payment system has helped reduce the cost of sending money to that country from 19% to 15% over the past two years.

Remittances are an important share of foreign reserves for countries, but their impact on development and economic growth are minimal if they are only spent on consumption. Cash-strapped African governments are trying to get migrants to invest part of their wealth in their homeland in the form of diaspora bonds. The capital raised could be earmarked for big development projects. The initiative is not new. The governments of India and Israel have raised about US$40 billion since the 1950s using these bonds, noted Suhas L. Ketkar and Dilip Ratha in a 2007 World Bank research paper on diaspora bonds. 

MoneyGram Dollar To Naira Exchange Rate Today.
Sub-Saharan Africa is the most expensive region to send money to with an average of 12.4% compared to the global average cost which is around 9%. Photo: Africa Renewal/Bo Li

In Africa, Ethiopia was the first country to issue diaspora bonds to finance a hydroelectric power dam. The so-called Millennium Corporate Bonds, issued in 2009, failed to sell. Analysts cited lack of trust in the government as a guarantor and political risks as some of the reasons for the flop. In 2011, the government re-advertised the bonds as the Renaissance Dam Bonds, lowering the minimum denomination to an affordable US$50 and offering to pay yields or interest to the buyers every six months. Waiving remittance fees associated with the purchase of the bonds was another new feature added. 

Meanwhile, Rwanda had a more successful outcome. When Rwanda’s major donors suspended aid after the UN accused its government of backing rebels in the Democratic Republic of the Congo – a charge it denied, Rwandans living internally and abroad, as well as “friends” of Rwanda, were called upon to donate to a “solidarity fund” named Agaciro Development Fund, which means “dignity” in Kinyarwanda. By August 2012, the fund had attracted pledges of about US$31 million, according to The Guardian, a UK newspaper. 

Issuing Diaspora bonds and turning remittance flows into bonds or instruments that can be sold to investors are good alternatives to borrowing from the international capital market, says the AfDB. According the bank’s research, Africa could potentially raise $17 billion annually using future flows of exports or remittances as collateral. The arguments in favour of enlisting migrants as investors are that migrants are often interested in housing, infrastructure, health and education projects and they are thought to be more loyal than financial investors in times of stress. 

Selling the bonds in small denominations is also a plus for low-wage earners. However, as Ethiopia learned, patriotism alone cannot drive investment – people have to make a financial return. Trust is another important factor in marketing bonds to the diaspora. Transparency in the use of funds could ease concerns. If done right, experts believe these bonds could be a promising financial vehicle for African countries to attract resources, and for the diaspora t

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