COVID-19 exposes opportunities as well as vulnerabilities for migrants’ remittances to Senegal

  • June 15, 2020

  • Dakar, Senegal

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Serge Moungnanou
Digital Finance Specialist – Senegal, United Nations Capital Development Fund

Amil Aneja
Lead Specialist, Migration and Remittances, United Nations Capital Development Fund


The coronavirus pandemic has caused remittances back into Senegal to dry up as COVID-19 has taken grip and lockdown measures have affected the migrant workers who normally send the money from mostly European countries such as France, Italy and Spain.

Before Europe became the epicentre of the pandemic, the flow of remittances to Senegal had been rising steadily over the past decade. The total in 2019 was just over US$ 2.5 billion, according to the World Bank – up by 79% on the US$ 1.4 billion remitted in 2009 and equivalent to 10.5% of the country’s GDP. These figures put Senegal in the top five of countries in sub-Saharan Africa for the value of remittances, and in the top 10 out of 42 countries for remittances as a percentage of GDP.

The sub-Saharan region as a whole is expected to experience a 23% fall in remittances in 2020 because of this crisis. This regional decline projected by the World Bank is greater than being projected for remittances globally, which are likely to see a slump of 20%. And one report suggests that the ministry of finance fears a 30% reduction in remittances to Senegal in 2020.

The distribution of remittances in the country is dominated by international money transfer operators (MTOs) such as MoneyGram, Ria, Small World and Western Union, plus the leading national MTO, Wari. Most remittance services operate over-the-counter collections, necessitating a trip to the agent’s location to receive cash, which in normal times is a financial and opportunity cost, but in present times is highly restricted. The lockdowns are also restricting the agents in the sending countries, where remittances from the diaspora also remain largely cash-based. From the United Kingdom, for example, one study in 2015 and 2016 showed that cash sent via agents was the preference for nearly all remittances back to Africa – for 90% of them.

The dependence on cash to send and collect remittances is in spite of a high level of mobile phone penetration in Senegal – 70% of adults had a mobile phone in 2017. The proportion of the population with a mobile broadband subscription is also rising – 39% were connected in 2018 (in a population then of 16.29 million), up from 27% in 2017. There were more than 2 million active mobile money accounts, too, in 2017.

Operators in mobile money, fintech and remittances are actively working towards further inclusion (among others, Ecobank, InTouch, Orange Money, Ria and Wizall Money). These companies are part of the digital financial services working group organized by the United Nations Capital Development Fund (UNCDF) and co-chaired by the ministry of finance and the central bank (Banque Centrale des Etats de l’Afrique de l’Ouest, or BCEAO). The group is catalysing investment in digital finance, and recent progress in Senegal includes a number of banks bringing in mobile banking solutions, and money transfer operators delivering e-wallet services.

This progress highlights the opportunity for remittances in Senegal amid the COVID-19 crisis – yet the dependence on cash has exposed vulnerabilities.
Immediate action during this pandemic has been taken by the government for the benefit of Senegal’s diaspora, allocating 12.5 billion CFA francs of support (around US$ 20.4 million). Domestically, BCEAO has announced measures to promote the use of electronic payments, in addition to providing support for businesses and offering repayment holidays to personal borrowers.

More action is now needed to digitize remittances, overcoming the preference for cash among migrants and their families and friends. Public-sector institutions could partner with remittance service providers (RSPs) to help make the transition from over-the-counter services to fully digital means, such as e-wallets and online-accessible bank accounts. People in Senegal need better awareness of the available digital platforms, and should be engaged by initiatives to improve their levels of trust to use them. Partnerships with RSPs should at the same time address gaps in financial literacy for migrant workers and their families.

RSPs also need to multiply their fintech partnerships with the private sector so that remittances are linked to e-wallets and bank accounts. They must increase their agent and merchant networks for digital financial services. The BCEAO needs to accelerate its African Development Bank-supported project on interoperability to allow customers seamless use of remittance linkages. All types of financial account were to be interoperable by mid-2020 across the eight countries in the West African Economic and Monetary Union, bringing mobile network operators, microfinance institutions and fintech companies into the payments ecosystem, and supporting digital financial services to reduce financial transaction costs and processing times.

Help to keep the remittances flowing through the COVID-19 crisis can continue to be delivered globally by measures such as declaring RSPs as essential financial services and giving economic support to migrants and RSPs. Support to develop and scale up digital remittance channels is also crucial against this crisis. Added to this, though, the journey of digitization for Senegalese migrants abroad and their remittance beneficiaries at home must continue apace for the further reason that it will also deepen longer-term resilience against shocks such as this coronavirus pandemic.

The views expressed in this article are those of the authors alone and are not necessarily the views of UNCDF.