Reducing remittance costs to 5% from the current 12.4% average would put $4-billion more in the pockets of Africa's migrants and their families who rely on remittances for survival, a World Bank study showed.

Africa's overseas workers, who sent nearly $60-billion in remittances in 2012, paid more to send money home than any other migrant group, the World Bank's Send Money Africa database revealed.

Sub-Saharan Africa was the most expensive region to send money to, with average remittance costs reaching 12.4% in 2012.

The average cost of sending money to Africa was almost 12% higher than the global average of 8.96%. This was also nearly double the cost of sending money to South Asia, which had the world's lowest prices at about 6.54%.

Further, the World Bank noted that remittance prices were even higher between African nations.

South Africa, Tanzania and Ghana were the most expensive sending countries in Africa, with prices averaging 20.7%, 19.7%, and 19% respectively, owing to several factors, including limited competition in the market for cross-border payments.

The G8 and the G20 established 5% as the target average remittance price to reach by 2014.

“High transaction costs are cutting into remittances, which are a lifeline for millions of Africans,” said World Bank director for the financial inclusion and infrastructure global practice, Gaiv Tata.

“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.”

Lower-cost remittances also advanced financial inclusion, since these were often the first financial service used by recipients, who were then more likely to use other financial services such as bank accounts.

“Governments should implement policies to open the remittances market up to competition,” said World Bank financial infrastructure and remittance service line manager Massimo Cirasino.

“Increased competition, as well as better-informed consumers, can help bring down remittance prices,” he added.

Send Money Africa also found that banks, which were the most expensive remittance service providers, were often the only channel available to African migrants.

A regulatory environment that did not discourage competition among remittance service providers could help bring down remittance prices. Migrant workers could also benefit from more transparent information on remittance services, the World Bank stated.