• Wednesday, June 19, 2024
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BusinessDay

Nigeria, SSA peers record highest remittance costs for 15th straight year

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The cost of sending money to Nigeria and other sub-Saharan countries from the diaspora rose again in 2023, remaining the most expensive region to send money to for the 15th consecutive year, according to data from the World Bank.

The multilateral lender said in a new report that sub-Saharan Africa remains the region with the highest remittance costs for another year, with fees rising to as high as 36 percent for every $200 sent from abroad.

In a year-on-year comparison, the report reveals a slight uptick in the average cost of sending $200 to sub-Saharan Africa. Specifically, the costs increased to 7.9 percent in the second quarter of 2023, marking a rise from the 7.8 percent reported in the same period of 2022.

According to the World Bank, the global average cost of remittances is still high, at above 6.9 percent. The Sustainable Development Goals target is 3 percent by 2030.

Nigeria has enjoyed a greater slice of the remittance cake, accounting for 38 percent of all remittance flows to the sub-Saharan African region. The country is expected to receive more than $20 billion in official remittances by the end of 2023, $15.6 billion more than the second-largest recipient, Ghana, and $16.3 million over Kenya, countries with estimated gains of 5.6 percent and 3.8 percent, respectively.

The World Bank report identified traditional banks as major players in the trajectory of remittance fees. “Banks charge the highest costs,” it said, highlighting the importance of cross-border mobile money transactions to ease costs.

However, in certain countries like Kenya, Rwanda, Tanzania, and Uganda, such transactions are constrained by limited interoperability among telecom operators and money transfer operators.

A response to this setback was the creation of the Pan-African Payment and Settlement System, an initiative developed by the African Union in collaboration with central banks and the African Export-Import Bank to “complement trading under the African Continental Free Trade Area.”

The initiative has seen participation from African countries including Nigeria, Ghana, Kenya, Liberia, Guinea, Sierra Leone, The Gambia, Djibouti, Zimbabwe, and Zambia.