A World Bank study released this week suggests that the estimated US$58 million Batswana living outside the country sent home last year, could have been higher were it not for the constrictive pricing of money transfers. South Africa accounts for the lion's share of Batswana living outside the country.
The World Bank's study of money transfer pricing in Africa indicates that sending money from South Africa to Botswana costs an average of 22.7 percent of the amount sent.
At that level, the pricing is only exceeded by South Africa to Malawi at 25.1 percent and South Africa to Mozambique at 22.8 percent. World Bank researchers described South Africa as "an expensive, bank-dominated market," with transfer corridors originating in South Africa being the five most expensive in Africa.
According to the data, the cheapest cost of sending US$500 (P4,025) from South Africa to Botswana by September last year was US$21 (P169) including exchange rates at that time. The process, offered by the two money transfer operators active between South Africa and Botswana, took less than an hour.
In contrast, the most expensive method was via an account-to-account transfer offered by one South African bank. This route cost US$59 (P475) and took six days or more.
By 2010, 63,000 Batswana were estimated to be living and working outside the country, with the top destinations being South Africa, Zimbabwe, Namibia, the UK and the US.
Meanwhile, World Bank researchers also found that in general the costs of sending money from one African country to another were higher than
sending from outside the continent into the continent.
A sample of 15 countries, including four African states, found that it was considerably cheaper to send money to Africa from the United Arab Emirates, United States, the United Kingdom and all other non-African countries in the sample.
Money transfer systems in the four African states, South Africa, Kenya, Ghana and Tanzania, all charged higher than the other countries in the sample.
"High transaction costs are cutting into remittances, which are a lifeline for millions of Africans," Gaiv Tata, a World Bank Africa Region director said in a statement.
"Remittances play a critical role in helping households address immediate needs and also invest in the future, so bringing down remittance prices will have a significant impact on poverty."
World Bank experts also discovered that money transfer via banks is generally the most expensive method in Africa, followed by post offices that offer a specific money transfer operator service.
The cheapest way to send money in Africa, according to the World Bank's study, is via a post office own system or through a stand-alone money transfer operator such as Western Union and Moneygram. World Bank researchers noted that the high costs of money transfer in Africa were generally linked to the lack of competition among service providers.
"Governments should implement policies to open the remittances market up to competition," said Massimo Cirasino, World Bank manager of the Financial Infrastructure and Remittances Service Line. "Increased competition, as well as better informed consumers, can help bring down remittance prices."