The recent developments in the Nigerian remittance industry have left us perplexed and disappointed in the way things have panned out. Two days ago a decision was taken in Nigeria to restrict International Money Transfer Operators like us from processing remittance transactions in the country.
This dismay comes from that fact that Nigeria was once a monopolistic country from a remittance perspective that broke away from the shackles of exclusivity to embark on the path of growth and development. This commendable step taken by the authorities saw Nigeria increase its inward remittances by over 12% from around USD 18 billion in 2009 to over USD 20.5 billion in 2015 (World Bank data). Nigeria today enjoys the status of being the 5th largest remittance receiving country in the world that had managed to successfully convert informal channels of remittances to formal channels, owing to the open policy.
Nigeria was a good example of how an open market worked favorably not only for the customers but the economy at large. The cost of remittances to Sub- Saharan Africa today stands at 9.72 %, down from 12% in 2009, a clear indication of a successful implementation of non-exclusive frameworks in various countries. This overnight decision in Nigeria to restrict money transfer services to less than a handful of brands is likely to have significant negative impact. Customers will be deprived of choice as the industry will be limited to just a few money transfer brands. Taking advantage of their position, these brands could soon boost their cost of remittances to suit their palate, neglecting the benefit and convenience of customers. Customers may then have to resort to illegal channels of money transfer to avoid digging a huge hole in their pockets to send money to their families and friends in Nigeria.
This could adversely affect the economy of the country as money entering the country through illegal channels cannot be accounted for. It saddens us to see the current state of events as our customers are the ones who will be deeply impacted by this decision.
As an integral contributor to the global remittance industry, Xpress Money calls for a liberalization of remittance markets towards an open structure to create economic efficiencies and equality in Nigeria.
Written by Sudhesh Giriyan, COO, Xpress Money