Africans are paying almost twice as much as other nationals to transfer money home, equating to an annual $2bn "supertax" on the continent, according to a new report.
The UK's top development thinktank, the Overseas Development Institute (ODI) said Africa is losing $1.8bn annually to excessive charges on remittances from migrant workers across the world and has called on the Financial Conduct Authority to investigate leading money transfer providers Western Union and Moneygram over its findings.
In a report titled 'Lost in Intermediation,' the ODI says that the average charge on money transfers to Africa is 12%, almost twice the global average. They calculated that the overcharge when compared to the G8 target of 5%, amounted to $1.8bn each year.
"Migrants sending $200 home can expect to pay 12% in charges, which is almost double the global average. While the governments of the G8 and the G20 have pledged to reduce charges to 5%, there is no evidence of any decline in the fees incurred by Africa's diaspora. There is no justification for the high charges incurred by African migrants," the report said.
The ODI estimated that Moneygram and Western Union accounted for $586m of the loss associated with the 'super tax' and called for greater transparency over remittance charges.The report also urged an investigation into foreign exchange conversion rates.
A Moneygram spokesman told the Guardian newspaper that the ODI's figures were inaccurate and that the company offers a competitive service.
"We don't recognise those numbers at all. There is no Africa premium," he said.
Western Union said the average global revenue earned by the company was between 5-6% of the amount being sent.
"However, our pricing varies between countries depending on a number of factors such as consumer protection costs, local remittance taxes, market distribution, regulatory structure, volume, currency volatility, and other market efficiencies," a company spokesperson added.