Remittances Vs Philanthropy – a Development Practitioner’s Perspective
Remittances offer something philanthropy cannot: autonomy. Families receiving remittances decide how best to allocate those funds, based on their most pressing needs. Credit: Shutterstock
By Tafadzwa Munyaka
HARARE, Jan 14 2025 (IPS)
Across Africa, economic transformation and development are being fuelled by two significant streams of funding: remittances and philanthropy. Both play vital roles, but as the situations evolve in many African countries, one truth becomes increasingly clear – remittances are emerging as a more sustainable, dignifying force compared to traditional philanthropy.
While philanthropy, often driven by well-meaning donors, tends to create short-term interventions, remittances empower households with the freedom to define their own future.
While philanthropic efforts can provide essential support, a more collaborative approach that prioritizes community engagement and empowerment is crucial in strengthening resilience and enabling communities to chart their own paths toward sustainable development
Remittances are interwoven into the identity of Africans as they support their families and communities, often on the premise and thinking that if one of us makes it, they pull everyone up with them.
With this knowledge, it begs the question, is it not time to reimagine our approach to African development and embrace the profound potential of remittances? A stark distinction of remittances and philanthropy is that the latter is often a result of and comes from excess while the former is derived form a culture and expectation of selflessness.
The Scale of Impact
According to the World Bank, remittances to sub-Saharan Africa exceeded $50 billion in 2023, in a year they were considered to have slowed down, dwarfing the funds allocated by philanthropic organizations and official development aid.
Countries like Egypt, Nigeria, Morrocco, Ghana, and Kenya top the charts, with families using these funds to pay for education, healthcare, and small businesses.
Unlike many charitable initiatives, remittances go directly to the intended recipients – often without the burden of administrative costs or external agendas.
It must be noted that although remittances can be powerful, they often stem from obligation rather than abundance, which can lead to exploitation when the giver is always expected to give, despite the strong bonds that exist.
This dynamic can create a cycle where recipients may feel pressured to rely on these funds, potentially stifling local entrepreneurship and self-sufficiency.
Furthermore, while remittances provide immediate financial relief, they do not always address the underlying socio-economic issues that cause migration in the first place. Ultimately, balancing the benefits of remittances with the need for sustainable development strategies cannot be overstated.
Philanthropic interventions, no matter how generous, often hinge on specific projects determined by donors, who decide which issues take precedence be it education or health.
This top-down approach, while beneficial in the short term, frequently overlooks the unique needs of individual communities, leading to a dependency on cycles of aid rather than embedding empowerment.
When local populations are not engaged in the decision-making process, interventions may miss the mark, failing to resonate with cultural contexts or actual needs.
As a result, communities can become reliant on external resources, which stifles local initiative and innovation, ultimately perpetuating cycles of poverty. Moreover, the focus on immediate results often overshadows the systemic issues that hinder long-term development, creating a dynamic where local leaders feel compelled to align with donor priorities instead of advocating for their community’s true needs.
Therefore, while philanthropic efforts can provide essential support, a more collaborative approach that prioritizes community engagement and empowerment is crucial in strengthening resilience and enabling communities to chart their own paths toward sustainable development.
Empowerment Through Choice
Remittances offer something philanthropy cannot: autonomy. Families receiving remittances decide how best to allocate those funds, based on their most pressing needs.
This flexibility builds and strengthens agency while preserving and promoting dignity, allowing recipients to meet challenges in real time, without waiting for outside interventions.
A woman in rural Zimbabwe, for example, may receive monthly remittances from a relative working in the UK. With these funds, she might choose to send her daughter to school while investing in a poultry business to generate additional income. She is no longer just a passive beneficiary of aid; she is now an active agent in her community’s economy.
This contrasts sharply with philanthropic programs, which may prioritize education or health but overlook opportunities for long-term economic empowerment.
However, we should not overlook that many in the diaspora sacrifice their own financial growth to help their families back home. The impact is real, but the invisible cost to the diaspora is often overlooked.
A Sustainable Alternative
Philanthropy’s Achilles’ heel is often its short-term nature. Donor fatigue, shifting political interests, and economic downturns can abruptly end well-intentioned programs, leaving communities without the support they have come to rely on.
Research highlights how philanthropic underfunding and unrealistic expectations can lead to the failure of nonprofit organizations to sustain their initiatives over the long term, arguably, precisely because of these short-lived commitments.
To contrast this, remittances are a more resilient source of income. Diaspora communities tend to continue supporting their families even in tough times, ensuring a stable flow of funds.
Moreover, remittances are often reinvested locally, creating ripple effects that stimulate small businesses and local markets. This bottom-up economic activity nurtures homegrown solutions to poverty.
In the long term it is expected to contribute to reducing reliance on external aid more so as remittances ensure a stable flow of funds that are often unaffected by political or economic changes in recipient countries.
A 2023 World Bank report highlights that remittances grew by 5% in sub-Saharan Africa, even during global economic slowdowns, underscoring the resilience of these flows.
A New Development Model
To be clear, philanthropy still has an essential role to play, particularly in areas where immediate humanitarian assistance is required, such as in disaster relief or during health crises.
However, as Africa’s economic aspirations grow, there is an urgent need to rethink how development is financed and implemented.
Rather than relying solely on donor-driven models, governments, NGOs, and international institutions should focus on creating enabling environments that leverage remittances.
This means and includes reducing transaction fees, actively supporting diaspora engagement, and building financial infrastructure that allows families to maximize these funds.
If philanthropy is to shake off many of its negative connotations to remain relevant, it must evolve beyond charity. Strategic partnerships with diaspora communities can amplify the impact of both streams of funding, aligning donor goals with grassroots solutions already being tried and tested through remittances.
To sum it up, “philanthropy comes from excess, allowing for strategic, long-term change – building schools, hospitals, and infrastructure that break cycles of poverty.”
Parting shot
Africa’s future lies in empowerment, not dependence. Remittances, with their direct, flexible, and sustainable nature, represent a dignifying form of support available.
As Africans increasingly take charge of their own destinies, it is essential to complement philanthropic efforts with policies that amplify the impact of remittances. The lesson is clear: development is most successful when it flows from the hands of those it is meant to serve.