On average, the remittance market in Africa is the most expensive in the world. The latest data from the World Bank indicates that the average cost of remittances to sub-Saharan Africa (SSA) is 9.4% of the value of the transaction, compared to the global average of 7.1%.

Sending and receiving funds in the region is costly in terms of price for the consumer and in terms of the cost to access remittance service points. The rural population often needs to travel long distances or spend an entire day in a queue to pick up over-the-counter remittances.

This has left a gap in the market for remittances for an increasingly sophisticated informal market.

Current market impediments that prevent formal costs from decreasing need to be understood. The cost of the transaction value should be reduced to between 3% and 5% as agreed by the G20 and Sustainable Development Goals, without compromising the access of consumers in hard-to-reach areas.

This note is the second in a series of seven notes that explore supply-side barriers to remittances in SSA. It draws from existing literature and in-depth stakeholder interviews to outline and rank the market barriers to the efficient flow of remittances in SSA. This includes:

• The preference for consumers to store value digitally
• Disproportionate know-your-customer (KYC) requirements
• Limited competition
• Lack of regulatory coordination across borders
• Outdated legacy systems that are unable to reap the rewards of new technology

The note will form part of the basis for Cenfri and FSD Africa’s panel session on “Market barriers to domestic and cross-border payments” presentation at the 25^th edition of the SWIFT African Regional Conference, which will take place in Kigali, Rwanda, from 20 to 22 June 2018.