Feb 8, 2013 KV Kiva HQ
By Emily Wakefield
Week in Review: Bringing down the costs of sending money home
In 2012 alone, migrant workers around the world sent over $400 billion back home.

Unfortunately, sending money isn’t as cheap and clear-cut as you might think. On average, remittance services cost 8.96% of the amount being sent -- which is a lot given that most migrant workers don't make a lot to begin with.

Notably, costs of remittances have traditionally been highest in Africa -- undoubtedly, one of the places where the money is needed most. In 2012, about $60 billion was sent to Africa in remittances at an average transaction cost of 11.89%. This means that Africa “lost” about $7 billion in transaction fees in just one year.

While there isn't much Kiva lenders can do to lower these costs, we can strive to find and support alternative ways to send money -- and reduce the need for remittances in the first place by growing economic opportunities at home.

Take Tajikistan, for example. The poorest country in Central Asia, nearly half of the population lives on less than $2 per day. Because there are so few major employers in the country, over one-third of the labor force works abroad -- mostly in Russia. The funds that these people send to their families account for 40% of Tajikistan’s GDP. The economy literally depends on it.

When Kiva provides loans to people in countries like Tajikistan, entrepreneurs get the capital they need to start and grow their own businesses where they live, decreasing the need to find work elsewhere. The less one needs to work abroad, the less money is lost in transaction fees.

Kiva is also on the lookout for partners devising new ways to streamline and lower costs of remittances.

Kiva Field Partner Zoona is a mobile money transactions company based in Zambia that allows customers to send money via agents in their local communities. Zoona makes the process of sending money over long distances cheaper and more accessible with mobile phone technology. Not only is Zoona helping to create jobs, it also provides an alternative way to send money without huge fees, tons of paperwork, or the need to travel long distances. 



$1,000 helped Zoona agent Victor increase his working capital so he can serve more customers who want to send or receive money through his kiosk.

Check out Remittance Prices Worldwide on the World Bank’s website for the average cost of sending money from one country to another.

Have questions about Kiva and remittances? Send them our way at blog@kiva.org.


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Emily Wakefield A native of southern California, Emily is a recent graduate from Santa Clara University where she studied Economics and Spanish Studies. The highlight of her college experience was the semester she spent abroad in Granada, Spain. She knew she wanted to pursue a career in economic development after reading Half the Sky. Emily will be joining the Marketing and Communications team as a Blog and Social Media Intern and is especially excited to find new and creative ways to spread Kiva’s work to more people. In her spare time, she enjoys reading, listening to country music, and re-watching Friends episodes for the millionth time. 

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