This seven-part research series provides a detailed analysis of the market barriers to formal cross-border remittances in sub-Saharan Africa (SSA). 

The research series includes recommendations for different stakeholder groups on how to overcome the current pain points. In-depth remittances case studies from Uganda, Nigeria, Cote d’Ivoire and Ethiopia show how the barriers manifest differently across the region.

Cross-border remittances are a lifeline for many households on the continent and present one of the major capital flows to and within SSA. Yet, sending money from, to and within most markets in SSA is highly expensive compared to other regions, and well above the recommended goal of a maximum of 3-5% cost of the transfer value outlined in the Sustainable Development Goals. An exorbitant share of cross-border remittances in SSA is informal given systemic problems that are interlinked and hard to solve in isolation. Formal remittance providers struggle to cost-effectively serve remitters in many corridors, leading to higher use of informal providers.

This series is aimed at providing an in-depth understanding of the complicated remittance value chain, the most pressing barriers from a remittance service provider perspective as well as actionable recommendations that are urgently needed to address the underlying, systemic cost drivers. We call on all stakeholders to collaborate in addressing the barriers in order to enable the efficient flow of vital support.

Understanding remittances and migration

This report identifies the most prominent corridors within and into SSA in terms of volume, cost and importance for the economy. It also investigates the relationship between remittance flows and migration patterns, used as a proxy to identify pain points in specific corridors.

An overview of the market barriers to remittances

This report describes the market barriers to remittances and the highly complex value chain, based on extensive remittance provider and expert interviews in the region. It focuses on shortcomings from a business case, regulatory, infrastructure and consumer behaviour perspective based on a simple framework along the first, middle and last mile of remittance provision.

Recommendations for remittance value chain actors

The recommendations are split into actions for regulators and policy makers, remittance service providers and development partners and include an overview of the market barriers and a selection of case studies. This report summarises the required reforms needed to transform cross-border remittances in SSA in the long term, from these perspectives.

Case studies which highlight how market barriers manifest in Uganda, Ethiopia, Côte d’Ivoire and Nigeria

Uganda was chosen due to its high use of mobile money as well as the large number of refugees.

Ethiopia, with its nascent financial market, provides an interesting overview of a system that is very different to the rest of the region. It has one of the largest diasporas outside of Ethiopia and is currently a high-growth economy.

Côte d’Ivoire is the only remittance net sender market in our series and hosts one of the most diverse migrant population on the continent. It is part of a monetary union with high adoption of cross-border mobile money remittances.

Nigeria receives the highest value of cross-border remittances in SSA, and by a large margin. Its economy relies heavily on foreign exchange from remittances and is a bank-led model, offering an interesting contrast to mobile money-led countries.

View the infographic on the cost of sending remittances from the UK to African Commonwealth countries.

The current Covid-19 crisis and its devastating effects have hit cross-border remittances hard. Now is the time to focus on systemic changes that can transform the industry for the better in the long run and pay special attention to the most pressing inefficiencies outlined in the reports. We have also shared our initial thinking on actions needed. In order to learn more about how we work together with different actors in the value chain and to get involved, contact Antonia Esser.