Disrupting Nigeria’s $21B Remittance market



The opportunity now exist to disrupt the remittance business in Nigeria as the Central Bank of Nigeria intends to license non-bank remittance providers in Nigeria and also enable out-bound remittances in a market that is known for in-bound remittances and high cost of transfer.

Nigeria is currently one of the top six global remittance recipient countries with formal in-flows projected to reach $21B  by end of 2016 according to the World Bank data.  Putting $21B remittance value into context: the Nigerian government proposed a national budget  of $31B for 2016 national budget. In Egypt, remittance inflow is higher than revenue from Suez Canal and in India, it is more than IT export income.

In more than 100 years of banking in Nigeria, formal senders of funds had to endure extremely long processes, open domiciliary accounts, fund it with foreign currencies and  pay huge fees, above the global average to send funds out of Nigeria. Nigeria is one of the most challenging places to send funds from, in the global remittance market however this is set to change in 2016.

Just as Nigerians have need to send money back home, foreigners living in the country are increasingly needing products and technology that would enable them send part of their earnings back home to help maintain family relationships and other needs. 

Out-flows from Nigeria to other nations is also growing as economic migrants in Nigeria increases and Nigerians migrants in other Africa nations that are dependents on families back home, receive support from home Country. Remittances from Nigeria to Ghana for educational payments had crossed $1B  in 2014  according to the regulator while recent migration data shows that Nigerians living in Sudan are  now officially over 6m and Nigerians are everywhere on the African continent. In some countries, they are reaching a significant percent of entire population.

Requirements for interested players

Understanding the regulatory provisions: The Central Bank of  Nigeria had developed a framework to guide the operations of international remittance in Nigeria which forms the basis for operating such services in Nigeria. It covers the corporate governance, processes, risk management, compliance and controls required for cross border remittances.

From an operational point, requirements for a successful cross border remittance service will require functional agency network from the sending and receiving corridors. This is a key component of the deployment since most of the African migrant labor that might the early adopters for reasons of lower cost, exclusion from formal banking systems due to documentation, literacy, limited availability of banking services, may have mobile devices and can access the services from their local domains without travelling too far. The agency network in Nigeria currently eludes the traditional banks and for the mobile money operators, it is highly fragmented and concentrated in the urban areas.

Nigeria is one of the toughest places on earth for out-bound remittances. It is being held on by the banks in the history of banking in Nigeria with all high cost and excessive stringent conditions that does not favor the low senders, non-account holders and informal migrant workers.

What opportunities exist?

Nigeria is majorly a recipient nation and for the first time, sending out will be enabled. This is significant for Nigerian intra-Africa traders, international students, migrant workers needing to support their families back home that can now send money easily and cheaply, using formal channels rather the informal that is expensive and insecure.

New technologies and channels which will be deployed such as agency networks, mobile phones, online and in-branch sending, will change the model of remittances in Nigeria forever. Currently, Nigerians do not have the benefit of sending remittances from the comfort of their homes or offices like many other nations do.

Directed remittances  value added service can remove the hurdles of paying for some service such as electricity payments or school fees payments by integrating incoming remittances directly into the such services in the recipient’s country.

New non-bank players will take the lead according to the Central Bank regulations, commercial banks cannot apply for the international remittance license which paves the way for non-bank actors to a stake in the Nigeria remittance market. 2016 will be an interesting year as the licensing unfolds in the Nigeria remittance space which will pitch the financial technology providers, start-ups against traditional international remittance providers and commercial banks in Nigeria.

It will be interesting to see how they will all apply local knowledge, business relationships, technologies, and migration data to position and get a slice in Africa’s biggest economy.


Emmanuel Okoegwale, Principal Associate, MobileMoneyAfrica

He will be organizing the 6th Remittance & MobileMoneyExpo in Lagos- Nigeria, 2016