How South africa is earning over R200 per person by doing nothing

Due to the growing diaspora population, South Africa’s GDP benefits from South Africans sending money back home, essentially earning R230 per person by ‘doing nothing’.

According to data presented by The Outlier, on average, each South African citizen benefits from around $13 (R230) in remittances annually, creating an economic impact with little domestic effort required.

This trend, though modest in per capita terms, highlights the increasing role of remittances in supporting both individuals and the broader economy.

Historically, remittances—funds sent by nationals working abroad to family members back home—have been seen as small, intermittent cash inflows.

Yet in 2023, African countries collectively received over $90 billion (R1.57 trillion) through remittances, showing that these funds are much more than “a couple hundred rand a month.”

Globally, countries like India, Mexico, and the Philippines are among the top recipients, with Egypt and Nigeria ranking seventh and ninth, respectively.

Egypt and Nigeria, Africa’s largest economies and most populous nations benefit considerably from these remittances.

Nigeria’s diaspora, for instance, contributes around 5% to its GDP through remittances, while in Egypt, these funds made up about 6% of the GDP in 2023, a reduction from 10% in 2017 due to economic shifts and policy changes.

Diaspora is the dispersion or spread of a people from their original homeland.

South Africa, while receiving a more modest per capita remittance, mirrors the broader African trend, with remittances growing as a key economic support channel.

Although South Africa’s remittance contributions are smaller than those of Nigeria or Egypt, these inflows still provide crucial support to rural areas and lower-income households, directly benefiting families who might otherwise have few economic resources.

Some smaller African economies, such as Lesotho and The Gambia, rely heavily on these funds; remittances contributed to 24% of Lesotho’s GDP and over 26% of The Gambia’s in 2023.

Mobile money has also revolutionised remittance channels across Africa.

The rise of mobile and internet banking allows diaspora members to remit smaller amounts more frequently without the traditional high transaction costs.

As a result, remittances are more accessible for rural families who may lack conventional banking options.

This financial accessibility has encouraged more consistent and reliable remittance flows, increasingly enabling households to meet daily needs such as food, healthcare, and education.

Interestingly, in several African countries, remittances now rival or surpass the earnings from major exports.

Kenya, for example, receives more in remittances than from its largest exports—tea and coffee.

This growing trend suggests that diaspora contributions are not merely a small-scale supplement to GDP but rather a substantial component of it.

Additionally, remittances have now overtaken foreign aid in many parts of Africa, with the 2022 remittance totals for Africa surpassing international development aid by $37 billion.

This shift highlights a lesser-known reality: Africans working abroad are contributing more to their home countries’ development than international donors are, reshaping traditional views on how economic support reaches the continent.

South Africa, alongside other African nations like Ghana, Zimbabwe, and Egypt, sees these remittance inflows directly reaching individuals, especially those in rural areas who may have limited access to economic opportunities.

As aid to the continent shrinks, families abroad are increasingly bearing the cost of essential services and everyday necessities for their relatives back home.

While Egypt and Nigeria attract the highest dollar volumes, smaller African nations also benefit greatly on a per-capita basis.

For instance, Morocco receives around $320 per capita in remittances, while countries like Ghana, Senegal, and Lesotho each see remittances exceeding $100 per person.

This high level of remittance dependency underscores the importance of these funds in ensuring financial stability and supporting the standard of living across much of Africa.

Additionally, a large share of remittances flows through informal channels, suggesting the actual value of remittances may be even higher than recorded data indicates.

Although remittances do not yet dominate GDP in most African countries compared to exports, they are increasingly seen as a vital part of national economies.

African governments are beginning to take remittance flows seriously by improving data collection, expanding financial access for remitters, and reforming policies to facilitate these contributions.

Though modest, the South African diaspora’s role in GDP growth is part of a larger trend that showcases the significant economic power of African diasporas worldwide.

For many families, these remittances go beyond financial assistance; they represent hope, security, and an investment in a more stable and prosperous future for South Africa and the continent at large.

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