The stabilisation of the naira is encouraging fintechs to re-enter the country’s $20 billion remittance market after years of being limited by currency’s volatility.
From Kuda to Moniepoint, Palmpay, LemFi, and then Flutterwave, Nigerian fintechs are renewing efforts to tap into diaspora remittances. Nigeria’s remittance inflows rose by nine percent to $20.98 billion in 2024, the highest since 2019, according to the World Bank.
Personal remittances increased by 8.9 percent to $20.93 billion, while inflows through International Money Transfer Operators (IMTOs) surged by 43.5 percent to $4.73 billion from $3.30 billion in 2023.
Olayemi Cardoso, governor of the CBN, credited the growth of remittances to reforms that have made formal channels more appealing. Since 2023, the CBN has introduced a willing buyer-willing seller exchange rate model, licensed new IMTOs, and enhanced access to naira liquidity for remittance operators.
Diaspora remittances are a vital source of foreign exchange (FX) for Nigeria, supplementing FX from crude sales, foreign direct investment, and portfolio investments.
However, most of these inflows have been routed through the informal market due to arbitrage opportunities between official and parallel exchange rates. But with both markets now aligned, the incentive to bypass official channels has decreased.
“Remittances persistently improved since June 2023 and during 2024 due to a higher offered FX conversion rate, i.e., the official FX market exchange rate,” the International Monetary Fund (IMF) wrote in its recent Article IV submission on Nigeria.
“The increase in remittances is a strong testament to the success of the CBN’s ongoing efforts to bolster public confidence in the foreign exchange market, strengthen a robust and inclusive banking system, and promote price stability, which is essential for sustained economic growth,” Hakama Sidi Ali, CBN acting director, corporate communications noted recently, while highlighting the apex bank’s effort to double formal remittance receipts within a year.
Analysts at FBNQuest Research said the CBN’s reforms, including relaxed exchange rate rules for IMTOs, have fostered a more favourable environment for players in the remittance space.
“One such initiative was the removal of limits on exchange rates quoted by IMTOs, allowing for more market-reflective rates,” they said.
This move has restored confidence in the market, with global players like Wise and TapTap returning, and Kuda, Palmpay, and Moniepoint getting wings to fly.
Read also: Moniepoint eyes Nigeria’s $20bn remittance market
Re-launch into remittance market
Three years after shelving its cross-border remittance ambitions, Kuda is relaunching its multi-currency wallet. The product allows users in the United Kingdom (UK) and the European Union (EU) to send money in British pounds and euros to Nigerian bank accounts.
“Many of our customers have relocated from Nigeria in recent years, but still maintain strong financial ties back home,” said Nosakhare Oyegun, Kuda’s vice president of Product Innovation and Strategy. “They continue to send money to their Kuda accounts to cover personal expenses or support their family.”
The new product is currently unavailable to Nigerian users due to regulatory restrictions on microfinance banks from processing foreign transactions.
After dominating the payment scene, especially for businesses, Moniepoint launched MonieWorld in June, a remittance solution for Nigerians and other Africans in the UK, home to many Nigerian diasporans.
“It is a natural addition to our existing suite of solutions and will be hugely valuable for customers,” said Tosin Eniolorunda, founder and group chief executive officer of Moniepoint. “It makes it easy, quick and reliable to send remittances – a critical source of funds for Nigeria’s economy.”
Flutterwave has also relaunched its Send App in Europe, one year after suspending the service due to what it described as ‘maintenance.’ The app now enables users in France, Germany, Ireland, and Italy to send money across borders, including to African countries like Nigeria, Egypt, Côte d’Ivoire, and Cameroon.
PalmPay recently introduced a cross-border payment option for merchants. The service, already live in Nigeria, Kenya, and Tanzania, is expanding to South Africa and currently processes “hundreds of millions of dollars monthly,” according to TechCrunch.
Muda Yusuf, CEO of the Centre for the Promotion of Private Enterprise, emphasised that the removal of regulatory and market barriers will continue to attract more players to the space.
As the CBN’s reforms continue to take root, analysts expect startups to offer stiffer competition for legacy remittance operators such as Western Union and WorldRemit.
“Remittance is a highly competitive space, but we are focused on convenience. It is frustrating to have to jump between three or four apps just to make one transaction,” Oyegun of Kuda added. “Putting everything into a single app that people already use – that’s the real value.”
