Remittances are a crucial lifeline for many families in Africa, supporting their basic needs, education, and overall economic well-being. However, the high transaction costs associated with sending money to Africa continue to hamper the full potential of these inflows.
Recent data from the World Bank reveals that the average cost of sending $200 to Africa stands at 7.9%, well above the global average and far from the United Nations’ Sustainable Development Goal target of reducing remittance fees to 3% by 2030. In the third quarter of 2024, the global average cost of sending remittances decreased slightly to 6.62%, marking a downward trend from previous years.
Digital remittance services offer a more cost-effective alternative, with an average cost of 4.95% compared to 7.29% for non-digital services. Digital channels accounted for 29% of all remittance services tracked in the same quarter, indicating a shift towards more efficient and affordable transfer methods.
Despite the overall decrease in remittance costs globally, certain countries, particularly in Africa, continue to face disproportionately high fees. Tanzania tops the list with a staggering $115 cost to send $200, reflecting a remittance fee of over 57%. This is followed by Türkiye, Senegal, Rwanda, and Angola, with fees ranging from $29 to $53.
African countries dominate the list of top 10 countries with the highest remittance costs, highlighting the continent’s ongoing struggle with expensive money transfers. Limited competition among money transfer operators, inadequate digital payment infrastructure, regulatory challenges, and currency conversion costs contribute to the high fees in these regions.
Addressing these barriers to affordable remittance services is crucial for maximizing the impact of remittances on African economies and the well-being of recipient families. By fostering competition, improving digital infrastructure, and streamlining regulatory processes, the cost of sending money to Africa can be reduced, ultimately benefiting both senders and recipients.
