Africa set to attract $100 billion in remittance inflows

Nqobile Bhebhe, Zimpapers Business Hub

THE African Development Bank (AfDB) has projected that Africa will attract US$100 billion in remittance inflows this year.

This comes as the formal remittance market is expected to surge to US$283 billion by 2035, three times the 2023 figure, offering countries such as Zimbabwe a massive opportunity to deepen domestic resource mobilisation and stimulate inclusive growth.

In its 2025 African Economic Outlook (AEO), launched during the Bank’s annual meetings in Abidjan, Côte d’Ivoire, this week, the AfDB noted that remittances and business formalisation are key pillars for unlocking Africa’s development potential.

“Africa is expected to attract about US$100 billion in remittance inflows in 2025, and the formal remittance market could reach a lower bound of US$283 billion by 2035, a threefold increase from 2023,” reads part of the report.
The AfDB warned, however, that exorbitant transfer costs are undermining this potential, with a substantial portion of funds diverted through informal means.

“However, the high cost of remittances promotes transfer through informal channels, which range from 35 to 75 percent of resource transfers through formal channels, with Africa on the higher side,” the AfDB observed.
The United Nations estimates that reducing remittance costs from the current 7 percent to 3 percent by 2030 could trigger a major shift in volumes processed through formal systems.

“According to the United Nations, reducing the cost of remittances from about 7 percent in 2023 to 3 percent by 2030—a target set by the United Nations Agenda on SDGs—could crowd-in informal transfers to the formal remittance market,” the report said.

Last year, Zimbabwe witnessed a significant surge in diaspora remittances, with inflows reaching a record US$2,2 billion, representing a 22 percent increase from the US$1,8 billion recorded in 2023.

The diaspora represents a huge growth opportunity for the country, including bridging the huge gap in infrastructure financing, while the inflows can be tapped to fundraise for other development obligations through issuing diaspora bonds.

The AfDB noted that formalisation of these flows could also unlock local investment potential.
“Available estimates indicate that up to 30 percent of formal remittances could be left over and thus leveraged for local investment and developmental purposes.”

Alongside remittances, formalising informal business activity across the continent could yield an additional US$125.3 billion annually in government revenues, the AfDB report says.

“Transitioning from informal to formal activity for Africa’s businesses could generate $125.3 billion annually in additional revenue.”

The AfDB stressed that coordinated reforms at national and regional levels are crucial for African countries, including Zimbabwe to tap into this revenue goldmine while enhancing development outcomes.

“Regional and global collaboration to reduce remittance costs to the SDG target could boost annual remittances to about $500 billion by 2035 by encouraging informal transfers through formal channels. Available estimates indicate that up to 30 percent of formal remittances could be left over and thus leveraged for local investment and developmental purposes.”