The Future of Remittance in Africa

The Future of Remittance in Africa



African countries account for a growing slice of global remittances since over 36.5 million Africans are living outside their home continent. In 2018, African workers living abroad remitted $48 billion to support their families and businesses back home. A bulk of these remittance goes to beneficiaries living in Sub-Saharan Africa where remittance accounts for a large portion of the region’s GDP. 

Funds sent back home more or less finds their way into rural areas, and it contributes to food security of families, education of kids, and even to business investments.

Nigeria leads the chart as the top receiver of international remittance in Africa. In 2017, the country’s got a total of $22 billion in remittance, and this exceeded the $20 billion it made in oil revenues and from other foreign direct investment funds. Other top receivers in Africa include Egypt ($26 billion in 2018), Ghana ($3.5 billion in 2019), and Kenya ($2.8 billion in 2019).

However, the remittance landscape in Africa is slowly taking on an entirely new look. First, there was a 23% drop in remittance to Sub-Saharan Africa in 2020. This follows the prediction of the World Bank due to the effect of COVID-19. 

Then, there are opportunities that would emerge post-COVID as businesses and economies rebuild themselves. Already, World Bank has projected a 2.6% increase in remittance to Sub-Sahara Africa in 2021.

However, the major challenges to remittance in Africa include the cost of sending remittance, limitation of regional reach, and long processing periods. A typical international money transfer via bank can take up to 5 working days before it is cleared. Add that to the processing fees and it becomes a real issue for Africans living overseas to send $200 back home. 

A study by the Overseas Development Institute revealed that it cost over $1.8 billion to remit to Africa every year which is high compared to the cost of remittance to Asia, the Middle East, Europe, North America, and the Caribbean.

Money transmitter companies and bureau-de-change businesses face challenges of their own as they try to fill the gap left by banks in meeting the demand for money transfers. 

The hassle of running a money transfer business is one of such challenges, coupled with the effects of foreign exchange rates, and trying to beat the competition. The traditional system of easy pick-up and delivery is fast dying in the light of online transfers and digital technologies used in remittance today.  

Our recommendation: 8 Reasons Why your Money Business should run on MTA

Fintech: Revolutionalizing the Remittance Landscape in Africa


Technology has transformed a lot of industries in Africa; remittance would not be any different. 

Right from the digitalization of money in African economies, remittance was bound to go digital as well. The COVID-19 pandemic gave further insights into the limitation of cash and the switch to digital forms of moving money within countries and across borders. We do not expect that to change post-COVID and the reasons are clear.

For years, remittance to Africa has been heavily reliant on the network of middlemen and banks who perform cash pick-up and delivery services. But this was before the boom in internet usage across Africa and access to mobile money. 

Statistics show that over 220 million Africans have access to mobile money as of 2017. The number of African countries using the internet for the first time seems to double year by year and this is largely driven by social circles. This then gives them access to all forms of digital payments including the ability to send and receive money across borders online.

Here are key factors that spell that the future of remittance lies with the Fintech revolution:

  • Mobile Wallets and Money

As of 2017, over 220 million people and businesses had access to mobile wallets.  More businesses all over the continent are adopting cashless payment systems even though such infrastructures are not fully standardized. The ease of payment and online banking made available by Fintech payment solutions are major drivers of this boom.

Mobile money users are expected to increase in the coming years. The next generation of shoppers simply wants control over their money from one spot. They also want to be able to buy goods and services from anywhere in the world with a few clicks.

  • Online Remittance and Remittance Software

The rising cost of remittance which the World Bank determined to average 14% per money sent has been a real cause for alarm. To send money to certain African regions, the figure can go even higher. Such high costs are usually a result of the network of money transfer businesses and middlemen linking the remitter to the beneficiary. It can also be a result of the international processings between banks involved in the transfer. Foreign exchange rates also play a part.

All of these make online remittance or the use of remittance software the next outlook of remittance in Africa. The UN predicts that over 25% of total remittance to Africa by 2025 would be done online. Online remittance cuts the cost of remittance several percentages lower. This makes it attractive enough to pull the market off traditional routes and banks.

Speed is yet another factor. It takes about 5 working days for an international wire transfer to be cleared. With online remittance, an expatriate can send money and have it delivered within minutes to his beneficiary anywhere in the world.

  • Remittance Economic Policies

African governments are waking up to the economic importance of remittance and are creating the policies necessary to harness them. 

An example is the Egypt Bill Payment Market which is targeted at driving Fintech deeper into Egypt’s remittance industry. Nigeria’s strategic implementation of NiDCOM (Nigerians in Diaspora Commission) serves as another example. This program is created to incentivize Nigerian emigrants to invest in the microeconomic activities of the country.

Opportunities That Benefits You



The future of remittance in Africa is bursting with opportunities for money transfer businesses. FinCode has already provided the platform to help businesses harness these opportunities. 

Money Transfer Application (MTA) – a FinCode product – is the complete software suite for mobile money and remittance. The software is an all-in-one B2B payment solution for money transfer businesses. It allows businesses to offer mobile service to 250 countries and supports mobile airtime top-ups to 140 countries. Additionally, MTA supports bill payment, and bank transfers to over 70 countries, branchless/borderless banking, payout network services, etc.

MTA eliminates the need for money businesses to work with a lot of service providers or software as it compresses every aspect of a money business into one app. 

The monthly subscription model of MTA, when compared with the product’s offerings, means the cost of remittance is drastically reduced.

With MTA, money transfers, and bureau-de-change businesses can better position themselves for the future; taking advantage of the explosion of mobile money users, the transition of remittance from traditional methods to online as well as economic policies developed by African governments. 

MTA is designed for virtually any money business operating in the B2B payments market; whether you’re a small shop, a low-tech remittance company, or a major player looking to become a powerhouse in Fintech.

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