Sub-Saharan Africa is still the most expensive region in the world to transfer money to, with an average remittance cost of 8.37% in the second quarter of 2024, according to the World Bank’s most recent remittance report.
- Sub-Saharan Africa remains the most expensive region for money transfers, with an average cost of 8.37% in Q2 2024.
- Remittances play a significant role in the region, with $54 billion received in 2023, boosting the economies of many nations.
- Remittances account for over 20% of GDP in The Gambia, Lesotho, and the Comoros, and over 10% in Liberia, Cape Verde, and Guinea-Bissau.
Despite the rising importance of remittances in the area, sending money home remains expensive due to several middlemen and limited access to digital financial services.
Sub-Saharan Africa is still the most expensive region in the world to transfer money to, with an average remittance cost of 8.37% in the second quarter of 2024, according to the World Bank’s remittance report.
Despite the rising importance of remittances in the area, sending money home remains expensive due to several middlemen and limited access to digital financial services.
In 2023, the area received $54 billion in remittances, which considerably boosted the economy of numerous nations.
Remittances, for example, account for more than 20% of GDP in The Gambia, Lesotho, and the Comoros, as well as more than 10% in Liberia, Cape Verde, and Guinea-Bissau.
Even in larger economies such as Kenya, remittances are more valuable than some of the country’s main exports.
SEE ALSO: 10 African countries with the lowest diaspora remittances
The high cost of remittances to Sub-Saharan Africa is due to a range of factors, including middlemen and foreign exchange fees.
Traditionally, sending money to Africa involves a few middlemen, including third-party financial institutions and foreign currency brokers looking to maximize their own profits.
Each intermediary contributes an extra fee, raising prices and aggravating delays.
Additionally, while digital remittance services are often less expensive than the worldwide average, the majority of transactions to Sub-Saharan Africa still use traditional cash transfers.
These transactions need additional processing and have higher costs. There is also a difficulty with restricted internet connectivity.
Despite these limitations, fintech companies have arisen to disrupt the remittance sector by providing cheaper and quicker alternatives.
Companies like NALA, Flutterwave, LemFi, Chipper Cash, and Leatherback, as reported by CNN are using technology to improve cross-border transactions and reduce reliance on traditional banking systems.
These startups are reducing remittance costs for Africans living overseas by harnessing mobile money, blockchain, and other financial advances.
