Sopuruchi Onwuka

Nigeria stands to gain significantly as the continent’s remittance market is projected to reach $500 billion by 2035, driven by rapid fintech innovation and expanding digital payment systems.

Oracle Intelligence reports that Nigeria is one of Africa’s top recipients of diaspora remittances, related to high rate of youth emigration as inflation and high unemployment plague the domestic economy.

According to data from the World Bank and IMF, Africa received nearly $100 billion in remittances in 2022, with Nigeria accounting for $21 billion, or about 21% of the total. And alongside Egypt and Morocco, Nigeria ranked among the top three destinations for remittance inflows, jointly representing about 65% of Africa’s total remittances that year.

The data show that Nigeria’s share of Africa’s remittance market is expected to grow as digital channels expand and the informal market estimated to be up to 75% of total flows shifts to regulated platforms. If current growth trends continue, Nigeria could be a key driver of the projected Africa’s $500 billion remittance market by 2035.

Oracle Intelligence learnt that remittances have become a vital component of Nigeria’s economy, serving as one of the country’s largest sources of foreign exchange, alongside oil revenues.

With oil revenues fluctuating and foreign exchange shortages constraining imports and business activity, experts say remittance inflows have consolidated to a stabilizing force for Nigeria’s economy.

According to the World Bank, remittances now surpass direct foreign investment inflows into Nigeria and play an increasingly vital role in supporting household consumption and macroeconomic stability.

Rising remittance inflow is also a marker of trends mass emigration now termed the ‘japa fever’ as citizens seek jobs in developed economies with strong currencies in order to provide support to families, friends and relations at home.

Inflows from citizens working abroad help families overcome critical household financial challenges including funding education, healthcare, and small-scale businesses.

However, high remittance costs still burden Nigerian senders and recipients, with the average cost of remitting $200 to Sub-Saharan Africa stood at 7.39% in Q3 2023. The rate represents nearly two and a half times the UN Sustainable Development Goal (SDG) target of 3% by 2030.

World Bank reports attribute these costs to limited competition in remittance corridors, regulatory bottlenecks, and infrastructural constraints.

The Central Bank of Nigeria (CBN) has in recent years introduced measures to attract remittances through formal channels, including offering Naira incentives for dollar inflows and licensing more International Money Transfer Operators (IMTOs).

While these policies have boosted transparency, challenges remain in expanding access to low-cost, digital remittance options, particularly in rural and underserved areas.

Interestingly, the Nigeria’s rapidly evolving fintech ecosystem is responding to the challenge as new generation of digital payment companies begins offering Nigerians abroad faster and more affordable ways to send money.

The Central Bank of Nigeria, in partnership with the Nigerian Inter-Bank Settlement System (NIBSS) and fintech innovators, has been pushing interoperability between bank accounts and mobile wallets to make remittances more accessible and traceable.

Some Nigerian fintech startups, including Moniepoint are currently working to enable users in the UK, US, and Canada to send money directly to mobile wallets and bank accounts in Nigeria and other African countries.

Using mobile wallets and bank accounts in Nigeria’s remittance inflows, analysts say, presents a major opportunity to deepen financial inclusion.

They argue that linking remittance recipients to savings accounts, insurance, and credit products, financial institutions can help households move from dependence on remittances to financial resilience.

“Remittances have the potential to transcend payment of bills to serve as an entry point into the formal financial system,” a financial analyst stated, adding that account owners can now turn inflows into long-term investments when the right regulatory framework is in place.

To fully harness the rising remittance opportunity in mitigating the prevailing foreign exchange squeeze in the domestic economy, experts have made it clear that Nigeria lower remittance costs through more competition and transparent foreign exchange frameworks and promote digital literacy to boost trust in mobile and fintech platforms.

They also urged the government to expand access to broadband and mobile networks to reach rural areas, and encourage partnerships between banks, IMTOs, and fintechs to design remittance-linked savings and investment products.

Oracle Intelligence reports that remittances will continue to remain Nigeria’s powerful economic lever for strengthening foreign reserves, deepening financial inclusion, and accelerating post-oil economic diversification.