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Nigerians need immigrants more than ever to wire money to Nigeria!

The Nigerians Living all over the world wire money to Nigeria. The Nigerians receive the highest rate of remittance when compared to other nations in Africa. Their oil export and…

The Nigerians Living all over the world wire money to Nigeria. The Nigerians receive the highest rate of remittance when compared to other nations in Africa. Their oil export and multiple immigrants living in other countries are the reasons for this high level of incomes. Immigrants living in other countries have developed their position as businessmen and other important positions in the country allowing them to transfer money to their country for internal development in the infrastructure of the country.

The development of the country

The economic condition of the country remains poor until now. Immigrants from the USA and every other country in the world transfer their hard earned money to Nigeria to improve their poverty. These remittances are mainly used for the following operations. They include,

Developing Education system

Nigeria houses nearly 10 million young people and most of them are uneducated due to the lack of a proper education system. Food and education are important requirements for a developing country. Most of the remittance money sent to Nigeria are used for building and developing their education system allowing the youngsters to structure their future properly. Education for women is given more importance in the country.

Proper health care

The Health care system is extremely poor in the countries and the rate of hospitals, when compared to the sick patients, is also considerably lower. So the next best investment of the remittance money is on these health care methods. Nigeria is having a major reduction in population due to diseases like Tuberculosis and maternal mortality.

Develop the Economy

The next step required in the development of the remittance money is to develop the economic condition of the country by introducing technology and increase the job opportunities within the country. This will increase the economic condition of the country along with the people in it.

These developments using remittance money received a huge backlash during 2016 when the government suspended the MTO’s to prevent the illegal transfers happening in the country. But considering the economic condition of the country the Central Bank reversed the decision and returned the permission to many MTO’s.

By 2017 The remittance rate grew up to 11. 4 % in the Subsaharan African countries. Among them, Nigeria received a remittance of nearly 21. 9 billion, which is the highest among the other countries in Africa. People use many money transfer services to send money to Nigeria online which is the recent method that has provided a pathway for the rise in remittance money.

What are the most effective choices to wire money to Nigeria from the USA?

To exchange to a ledger in Nigeria, the least expensive supplier right now is WorldRemit, with zero exchange charges and an aggressive USD-NGN transformation rate (current rate: 1 USD = 355 NGN).

When considering the conversion standard and the charges, the complete expense of your exchange with WorldRemit is 6.05 USD, in correlation, you would pay an all-out expense of 13.71 USD (generally 2x increasingly costly) if you somehow managed to utilize Xoom for the extremely same exchange.

The least expensive alternative at present is Xoom, with 4.99 USD for the exchange charges and a focused USD-NGN conversion scale (their present rate is 1 USD = 350.0142 NGN).

How is FAZRemit better than all of them

Along with these services FAZRemit allows people to wire money to Nigeria from the USA with the cheapest rate in the market. The transfer rate is also higher which is 60 seconds to 2 minutes when compared with other forms of transactions. This 24/7 online transaction service is completely transparent and they allow people to transfer money in a secure way possible.

These methods have reduced the power of banks and MTO’s over the department of money transfer and they allow people to transfer money easily. The rate of remittance income has considerably increased in the past few years because of these websites that allow people to wire money to Nigeria.

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Why native Nigerians need immigrants to wire money to Nigeria?

The Nigerians living in the country depend a lot upon their relatives living as immigrants in other countries. The economic loss along with their poverty has hosted them to depend…

The Nigerians living in the country depend a lot upon their relatives living as immigrants in other countries. The economic loss along with their poverty has hosted them to depend upon the immigrants who wire money to Nigeria for their relatives. These wired money transfers form a thin line between complete poverty and their way of living now. This money is also used as investments and fundings for other welfare and educational activities.

Value of Remittance in the Nigerian Economy

To comprehend the significance of settlement, we can investigate the inflow of settlement in Nigeria that has a 9% share in the in general worldwide International settlement market and over 6% of its own Gross Domestic Product depends on it. Also, all out cash exchange to Nigeria from everywhere throughout the world is assessed to cross $42 billion by 2022. Further, this sub-Saharan nation has a 75% offer in the absolute settlement inflows inside the African sub-mainland. Nigerian immigrants from all over the world send money to Nigeria online to meet the requirements of their countries economic condition.

The success of Nigerian immigrants

Nigerian-Americans have more post-advanced educations than some other racial or ethnic gatherings. But, they speak to a minutia part of the U.S. populace, 37 percent of them hold a four-year certification and 17 percent a master’s. 29 percent of Nigerian-Americans matured 25 and also, have an advanced education, contrasted with 11 percent of the US populace. Nigerian records for under 1 percent of the dark populace in the United States, yet, they make up about 25 percent of every single Black understudy at Harvard Business School. It goes to nothing unexpected that Nigerian-Americans’ accomplishments in the realm of instruction top some other U.S. foreigner gatherings, including Asian-Americans. Today, a developing number of Nigerian-Americans are business visionaries, CEOs and organizers of tech organizations over the U.S. who wire money to Nigeria.

The need for the immigrants to wire money to Nigeria

Around 90 million individuals – generally a large portion of Nigeria’s populace – live in outrageous neediness, as per gauges from the World Data Lab’s Poverty Clock. Around June 2018, Nigeria overwhelmed India, a nation with multiple times its populace, at the base of the table. Put in another specific situation, if poor Nigerians were a nation it would be more crowded than Germany. Very nearly six individuals in Nigeria fall into this device consistently. So most of the people depend upon their immigrants living in other countries to wire money to Nigeria to increase their condition.

As worldwide consideration turns towards the nation, Nigeria, here are three different ways that concerned partners and policymakers can aid the endeavours to accomplish the first of the Sustainable Development Goals (SDGs) – to end neediness.

Invest in girls’ education

Nigeria is home to more than 10 million out-of-younger students, around half of whom are young ladies – and it is not really unintentional that the nation with the world’s most astounding number of out-of-younger students is home to the most noteworthy number of individuals living in extraordinary destitution. 66% of this populace are amassed in Nigeria’s profoundly populated north-west and north-eastern areas, the two of which have been assaulted by the dread gathering, Boko Haram, bringing about an instructive crisis influencing about 2.8 million kids.

Invest in health and wellbeing

Expanded interest in human services is connected to financial development, and thusly to lessening neediness. Nigeria is doing combating with various squashing wellbeing pointers including intestinal sickness, tuberculosis and baby and maternal mortality, all of which sweepingly affect efficiency.

Expand economic opportunities and embrace technology

Completion destitution in Nigeria will involve improving the nation’s financial profitability and open doors for its natives. This will mean putting resources into human capital potential and making occupations for ladies and youngsters, expanding money related access and openings these gatherings in-country networks and progressing mechanical advancement.

Nigeria positions 152 out of 157 nations on the World Bank’s Human Capital Index. One of the low-hanging organic products is grasped instructive changes that emphasis on growing new abilities through vigorous and well-subsidized specialized and professional training and preparing programs for those a huge number of Nigerians outside the formal educational system, or

who have just an essential instruction.

Along with these reasons, there are other personal reasons that require the immigrants to wire money to Nigeria to keep up their economic condition in the country. The online website like FAZRemit helps people to send money to Nigeria online through faster transfer rate and cheap prices.

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Importance of Fast, Easy and Cheap platform to wire money to Nigeria

Nigeria is a nation with a blended economy and a developing business sector both within and outside nation that wire money to Nigeria. In the course of the most recent…

Nigeria is a nation with a blended economy and a developing business sector both within and outside nation that wire money to Nigeria. In the course of the most recent decade, Nigeria had encountered a powerful development driven not just by its proliferated characteristic assets as oil yet in addition by the way that it turned out to be more administrations arranged, with some well-created areas these days like money related, stock trade, interchanges and transport ones.

It is classified “Mammoth of Africa” on account of its enormous populace as well as in light of the fact that Nigeria is the biggest economy in Africa starting at 2014 and it is anticipated it will have the most elevated development on the planet between 2010 – 2015. There are plans towards financial broadening, the advancement of more grounded open private associations for streets, agribusiness, and power yet in addition improvement of monetary administration.

Nigeria is unmistakably a centre power in global issues. The US is Nigeria’s biggest outside speculator and biggest oil exchanging accomplice and furthermore, an enormous fare/import accomplice for the products advertised.

Overseas remittances

In Nigeria, settlements are really the second wellspring of remote trade profit because of every one of those Nigerians living abroad, with practically 17.5 million inhabitants in outside nations. One of the greatest wellsprings of authority settlements is the US, trailed by the UK, Italy, Canada, Spain and France. Immigrants play an important role in the process to wire money to Nigeria

World remit

WorldRemit is a minimal effort online cash exchange administration that gives you a chance to send cash from to another country to your family and companions utilizing PC, cell phone or tablet. You can send cash from your charge card or ledger direct to the beneficiary’s financial balance. It is one among the most voted method to wire money to Nigeria.

Moneygram

Moneygram allows you to send money on the web or in person clearly to the recipient budgetary equalization or flexible wallet. It’s an overall money trade and portion organizations associated with the proximity of more than 200 countries. Moneygram has an overall arrangement of around 350,000 authority regions, including retailers, worldwide post work environments and banks. It is easy to wire money to Nigeria through this method.

Western Union

The vast majority are as of now most likely mindful of Western Union, the 130+ year organization that is overwhelmed global cash exchanges for a considerable length of time. Western Union isn’t any very different from Money gram regarding their activities. You can send cash face to face from their specialist’s areas or on the web or through an App. The beneficiary can get their cash from western association operator areas face to face or cash can be exchanged legitimately to their ledger. Western Union gives you the choice of sending cash from your charge/Visa or legitimately from your ledger.

What are the most effective choices to wire money to Nigeria from the USA?

The best way is to send the money to Nigeria online FAZRemit Money transfer Online. They allow people to send money online at a faster rate within 60 seconds. They have the cheapest transfer rate in the market. They also provide proper security and open transfer that allow the sender and receiver to check their status while sending money. They also allow people to perform online transaction until $10000 dollars without registration. The further registration requires proof a normally formality required by all the other MTO’s as well.

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Wire Money Nigeria – Millennials Shaping The Economy

The millennials have the responsibility to correct the mistakes of the past to lay a strong foundation for the upcoming generations and it all starts with education!

Summary:

  1. Nigerian diaspora is the most successful ethnic community in the United States of America.
  2. The Nigerian government needs to make policies that encourage formal remittance services that wire money to Nigeria.
  3. The educated young Nigerian immigrants have the responsibility and show a promising ability to drive the wheel of global socio-economic welfare.
  4. Remitters need to understand all the options before availing any online money transfer service offered by banks or IMTOs.

“Migrants are bringing down the economy. They are a threat to the United States. They undermine the All-American lifestyle. Migrants are – very bad!”

You must have heard similar language or context if not exactly the same sentences used for migrants even by “some of the most powerful people in position of authority” but the question arises –

  • Is it true?
  • What are the immigrants doing in a different country?
  • What is their own country doing to stop the migration?
  • How are the millenials contributing to the development of their native country?

To get answers to all the questions one by one, it is strongly recommended that you continue to read this blog. Putting it in the most simple terms, the hypothetical threat imagined from even legal migrants by the general population is a clear indication of lack of knowledge of the perceivers. The ones who claim migration as evil, first of all, need to understand that the most powerful nation, United States, as we know it today, is a land of immigrants. In fact, there is no ‘American culture’ so to speak. The amalgamation of cultures, rituals, celebrations, ideas, opinions, dissent, and the diversity has led the country to acquire its current status and for that, a huge amount of credit goes to the 13.5% population consisting of migrants from across the world. Among them, one of the most successful ethnic group is the Nigerian diaspora – the young community which, as per the World Population Review, has a median national age of just 18.4 years. Apart from providing a highly educated workforce to the migrated country, the Nigerian diaspora currently contributes US$22 billion to their own nation’s GDP by wiring money to Nigeria.

Value of Remittance in Nigerian Economy

To understand the importance of remittance, we can take a look at the inflow of remittance in Nigeria that has a 9% share in the overall global International remittance market and more than 6% of its own Gross Domestic Product relies on it. Moreover, the total money transfer to Nigeria from all over the world is estimated to cross $42 billion by 2022. Further, this sub-Saharan country has a 75% share in the total remittance inflows within the African sub-continent.

The Federal Republic of Nigeria, being a steadily developing country in West Africa, spends almost $1.15 billion annually to overcome poverty through public programmes. In 2006, Nigeria became the first African nation to repay its debts (which is estimated to be $30 billion) owed to the Paris Club in which the international money wire transfer contributed a significant amount as the total transactions went over the roof from $1.063 billion in 2003 to $16.932 billion in 2006.

So, in this article, we will discuss how the remittance market has become a major source of income for the Nigerian population and how it is acting as a gateway for high-end investors. We will shed some light on the steps that the government must take for the upliftment of this sector and the challenges they are likely going to face along the way. Further, we will understand the role that the Nigerian youth has to play and how they can take the first and the most important step in this direction.

Underperforming Nigerian Government

Nigeria has 82 million hectares of arable land out of the 91 million total land area with 30% of its population involved in the agriculture sector. However, lack of tools and infrastructure has led to a highly underperforming agriculture sector, because of which the Ministry of Agriculture and Rural Development claims to spend more than US$23 billion on food imports to feed its 186 million population.

wire-money-online-nigeria-underperforming-agriculture-sector-fazremit
Figure: Underperforming Nigerian agriculture

Furthermore, in 2005, Nigeria had the highest deforestation rate in the entire world. Because of the lack of resources and the exploding population, young Nigerians are moving out of the country seeking better opportunities. Because of this trend, famously known as Brain drain, Nigeria has also become one of the developing nations witnessing a high deficit of experts in medical, engineering, academics and other professional sectors. But that being said, the multinational state comprising 250 ethnic groups with the third-largest youth population after India and China, undoubtedly has an immense potential to spearhead the next agricultural revolution.

Although the country is struggling to keep a hold of their talent and minds, the same migrants are contributing in a different manner. In 2007, the International Organization for Migration announced a fresh data pointing to the dramatic increase in Nigerian remittance inflow from $2.3 billion to a whopping $17.9 billion within just a short span of 3 years. But these numbers do not give a detailed account of the problems that this trend entails which includes the channels being used for sending money internationally.

Why Nigerian Formal Remittance has been on the Back Foot?

Since the last 50 years, as stated in the World Bank’s Excerpts for International Conference on Migrant Remittance, Nigerians have been relying heavily on the money sent by migrants residing in developed countries such as the United States of America and the United Kingdom. Because of the distrust in the Nigerian formal financial institutions that have been unsuccessful in providing the general population with minimal requirements such as competent transportation and communication facilities, both the Nigerian senders as well as receivers prefer the informal international transactions which currently dominate the US-Nigeria and UK-Nigeria remittance corridors.

So what should be done about that?
– Improve public policies especially targeting the millennials’ needs.

Education – The Fundamental Change

After becoming a republic in 1960, lack of stable policies because of 30 years of intermittent governance and military rule crippled multiple sectors of Nigeria including education, health, and economy.

Without a unified set of education policies for the booming population, as per the UNICEF’s Nigerian Education Statistics, 45% of Nigeria’s 171 million population is under 15 years of age. With a concerningly gigantic number – 10.5 million – Nigeria has the world’s largest out-of-school youth population. Only 20.1% education accessibility because of lack of government funding along with social factors like early marriages and low perception of the value of education among the general population has resulted in, as education activist Malala Yousafzai puts it,

“An education state of emergency in Nigeria”

Economic prosperity can only be achieved through proper education and administrative support. Nigeria is in a dire need of government-funded education for which the Ministry of education needs to implement an inclusive and functional education system. With the 3rd largest youth population in the world, the country is not short of any potential but the question arises – how can Nigeria plan for their future while it is heavily dependent on Oil trade that does not seem to have a very bright future.

The Future of Nigerian Oil and Gas Export

Nigeria relies on oil and gas trade as 83% of its export revenue, two-thirds of the public revenue, and 9.4% of its GDP depends on it. Although the myth – “oil is reaching total depletion” – has been critically refuted by several environment scholars but the research and development in ‘clean and renewable energy sources‘ have been showing promising results with a welcoming global response which could affect the oil trade. This implies that it is high time for the Nigerian government to prepare for an oil-less future even if not because of the lack of gas then because of the undergoing paradigm shift which was noticed in the third quarter of 2018 with a 4% contraction of oil sector as compared to the previous year.

Meanwhile, it may seem from the outside that the Nigerian economy is highly dependent on oil exports, which it currently is, however, it would be wrong to underestimate the diversity of a country that, as per McKinsey Global Institute’s ‘study of the country’ report, can become the 26th largest global economy within the next 12 years. The steady improvement of 1.5% in the non-oil sector in the second quarter of 2018 followed by 2.3% in the third quarter indicates remarkable efforts by the Nigerian government to achieve economic and fiscal stability by constructively using their abundant resources and a strategic geographic location.

wire-money-Nigeria-government-emphasis-economy
Figure: Nigerian Government Emphasis Shifting towards Economy

The constantly growing consumer class paired with an energetic youth fueled by a high entrepreneurial spirit are also attracting investments from across the globe. The developing trend in Nigeria is being viewed as an emerging business opportunity for the investors who are envisioning to tap the largest African economy estimated to provide a $1.4 trillion market by 2030 for food and non-food consumer goods. Even in this sector, however, the government needs to facilitate the ease of doing business.


How can they do that?
– By NOT de-regulating MTOs and other businesses.

Instead of hindering the success of the emerging industries, if the Nigerian government provides adequate support for the taxpayers and public beneficiaries, and formulates modern trade policies, it can pave the way and could significantly accelerate the process of leading multinational corporations contributing to the Nigerian economy and social welfare. Apart from foreign endeavors, a long-term and stable federal budget allocation for education, healthcare, infrastructure, and security can also check brain-drain. Moreover, positive steps could also be a boon for Nigeria reversing the brain drain to return-migration, thereby brain-gain.

Now that we know the extent of the impact that good governance can have, especially for the Migrant nation, let us take a look at some of the numbers showing how despite facing multiple challenges, the Nigerians have made their mark in the world.

Contributing More than the Natives

Immigration has always been a debatable topic but for a nation’s economy, especially when we consider the United States of America, migration has brought a fortune. Simulations by ProPublica show how immigrants can further escalate the American economy by supplementing approximately US$54.5 trillion.

Figure: Simulated contribution to US economy by immigrants

You be the Judge…

Further, let us have a look at some of the statistics about the performance of Nigerian migrants who are doing pretty well in the United States,

  • The average household income of a Nigerian-American is $62,351 as compared to the overall average of $57,617.
  • 37% of all the Nigerian-Americans hold a bachelor’s degree and 17% have master’s.
  • With just 1% of the total black population in the US, 25% of Black Harvard students are Nigerian natives.
  • Other than holding reputable positions in medicine, law, and engineering professions, non-conventional career choices including NFL and Hollywood have also welcomed and embraced Nigerian-Americans.

This trend is similar in European nations such as the United Kingdom, Italy, Spain, Germany, Ireland and all other destinations across the globe where 33% of the total Nigerian migrants move to and send remittances from. Consequently, overcoming discrimination and racism, the Nigerian diaspora has excelled and contributed to both the migrated country as well as Nigeria, directly or indirectly. In line with that, the eventual beneficiaries, i.e. the general population, especially the youngsters, are responsible for the development of the country and as mentioned earlier, education has been and will continue playing a pivotal role in uplifting Nigerian socio-economics while repaying what they owe to the migrated country better than their own natives.

Being part of an unstable and war-stricken nation, Nigerians and especially the millennial generation has come a long way as compared to other nations like Syria, Iraq, and Afghanistan. Also, migrants, in general, are able to sustain themselves on their own, however, for some people living in their home country (Nigeria, Mexico, India, China et cetera), remittance could be the only source to survive and/or to overcome personal problems, financial setbacks, political instability, terrorist attacks or even natural disasters.

Although currently there is no authentic data classifying the remit senders on the basis of age, education profile or financial status, the purpose itself makes a compelling case why all the migrants who send money to Nigeria should understand how they can take the full benefit of international online money transfer services.

How to Select the ‘Best Money Transfer Nigeria’ Service?

Online research and analysis of the remittance market by FAZRemit provided a list of the top 5 search queries used by the customers on different search platforms so as to wire money online, namely,

  1. Money transfer to Nigeria
  2. Wire money Nigeria
  3. Send money to Nigeria online
  4. How to send money to Nigeria
  5. How to wire money online

To address all the aforementioned search queries, let us discuss how one can select the best money transfer service to send remittances to Nigeria. The US$689 billion worth global remittance market has been prompting IMTOs from across the globe to dive into this huge financial pool that carries unparalleled opportunities for small to large scale businesses. To increase their clientele comprising of individual remittance senders and even MNCs conducting online money transfers, banks and IMTOs have been constantly upgrading their services to provide a wide range of international money transfer services. With so many choices, the customers thus have the advantage to select the best option on the basis of 4 major factors:

1. Is it affordable?

This is the reason why most of the remittance senders are turning towards IMTOs instead of banks as the average transaction fee levied by banks to send money to Nigeria from the United States has always been much higher. As per the last survey conducted by the World Bank in June 2017, international money wiring via banks is currently 1.47% higher than the global average whereas most of the IMTOs charge 3.06% lesser than the banks.

The cheapest wire transfer includes the international Automated Clearing House (ACH) payments, also known as a direct debit or electronic transfer, in which the transaction fee is the lowest, and the service provider, most of the time, provides additional discounts to the recurring customers. At the same time, however, there have been instances where operators charge an additional fee without giving any further notice to the customers which could result in overdrawing money from your account making this a huge downside of the ACH payment.

2. How fast is the money transfer?

While ACH is the cheapest, it can take anywhere from a few hours to seven business days to complete the transaction. Overcoming this problem is wire transfer which is the fastest in the ‘international money transfer’ section.

ach-payment-vs-wire-transfer-money-transfer-fazremit
Figure: ACH Payments VS Wire Transfer

Although this digital money transfer is more expensive, one may find it comparatively much more difficult to deal with the bank for this service because of the stringent documentation and tedious verification. Moreover, some overseas banks and credit unions could also charge an additional fee to receive such transactions. This is where IMTOs can help one to avoid such problems.

In case of emergency, when one requires his or her money to be transferred instantly, just like wire transfer, there are several other options available for everyone. All one needs to do is – look at the right place.

3. Is it a safe money transfer?

Wire transfer is fast but possibly the only disadvantage with this type of transaction is the inability to reverse it. Even if some agencies including banks and IMTOs could provide such a facility but this could result in you paying a hefty fee for the same. Meanwhile, it is crucial for a customer to conduct a background check of service providers before availing their service. Due to strict AML laws, the Nigerian government has licensed only certain IMTOs. So, even if you are getting alluring discounts, you must either choose the certified institutions or their subsidiaries. It is important to notice the documentation and verification that is being done by the service provider. In case the MTO does not ask for mandatory documents or gives you an offer that seems ‘too good to be true’, it becomes even more important that you get your query resolved.

This is one of the main reasons why individuals prefer banks for large money transfers. However, even if you are using a certified Money Transfer Operator, you are more likely to get similar reliability if not better but without any doubt, considering the lack of investment in infrastructure and outdated mechanism in the public sectors in Nigeria, you can be guaranteed a better service right from the first point of contact to the final transaction and even beyond.

4. Are there any hidden charges?

To put it in a simple manner, no business can be conducted without any benefit. So, if you see any free international money transfer option, you must know that the concerned operator, in advance, has combined the exchange rate and transaction fee in the total charges. So, it is important for the customer to search and then verify the service provider claiming to provide you with the most affordable service. In simple terms – Save yourself from the ‘hidden fee’ trap.

Referring to all the aforementioned factors before actually transferring money can assist anyone to make a safe, secure and fast international money transfer at the most affordable price.


The baton of ‘economic change’ has already been handed over to the next generation – the millennials – and it is their responsibility to make analytically sound decisions by gaining impartial knowledge while minimizing the risks and avoiding the mistakes committed by the previous generations in order to avail the full benefits of each and every opportunity.
And this is how millennials can revolutionise the future by actively taking part in one of the most beneficial trades that has a promising future for the Republic of Nigeria.

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Online Money Transfer to Nigeria – Evolving Remittance Trend

Sending money to Nigeria through reliable IMTOs is fast and easy but such businesses struggle to operate without the cooperation of the authorities.

Summary:

  • Migrants using international remit services contribute to 9% of the overall global GDP.
  • Online money transfer to Nigeria, Ghana, Kenya, and several other developing nations is the backbone of their economy.
  • Instead of introducing de-risking laws, banks and International Money Transfer Operators (IMTOs) need to work together to develop the global economy.
  • The blockchain is on its way to bring the next financial revolution.

In the annual year 2018, as per the Prospectus – Migration and Remittances Data, the global market has witnessed a remittance flow of up to US$689 billion which is already an increment of 10% from 2017. Moreover, it is estimated that this flow would at least increase by 3.7% by the end of 2019. To genuinely assess the large scale of global participation in international money transfer, we can see that the list of countries receiving the highest remittances in the world includes the world’s fastest-growing economy – India, and the most populous nation – China. Followed by the Philippines and Mexico, comes the democratic secular country of Nigeria around which, in this article, we will be discussing the recent trends in International remittances, along with the problems that this industry is facing, and lastly our data-driven predictions.

The Nigerian Diaspora

Almost 67% of the total remittances sent from across the world to Africa are targeted to just one country – Nigeria. World Bank studies show that international money transfers make a total of 6% of the total Gross Domestic Product (GDP) of Nigeria.

FAZRemit-Online-Money-Transfer-to-Nigeria-Remittance-Contribution
Figure: Contribution of remittances in total GDP for Nigeria, Algeria, China and Venezuela from 1981 to 2015.  

This money is sent by thousands of Nigerians among the 17.5 million migrants who have migrated to a different country for a better opportunity to secure a decent income source and a better lifestyle. With those numbers, it can be implied that the Nigerian population is spreading across the globe and while there are hundreds of extremists opposing the migration, it is imperative to understand the ground reality and basically an answer to the question –

Why do they have to migrate? How the remittances sent by migrants or in fact, any third-party can affect an entire diaspora?

The need for International Remittances

International Organization for Migration records shows that Nigerian migrants living in the United States make the largest portion of the remittance money, followed by the United Kingdom, Italy and Canada. A whopping total of $22 billion, as per the 2017 study, was part of international money transfer to Nigeria from all across the globe.

FAZRemit-Online-Money-Transfer-to-Nigeria-Remittance-Corridor
Figure: International remittance corridor

Remittance Prices Worldwide Database has identified multiple authorized corridors for 32 countries to send remittances to 89 developing countries that require monetary help to develop themselves. But there is a general misconception about remittance.

A majority of the population, who either have not availed the remittance service or are trying to understand the concept, considers international money transfer just as a process to help their friends and relatives to get economic assistance by draining another society instead of working in their own country.

“But there is more to it!”

Money transfer to Nigeria, Ghana, Kenya or any other developing nation across the globe enables the remittance senders to:

  1. Buy international property
  2. Support their family members by:
    • Paying for their children’s or even grandchildren’s education
    • Compensate for the daily expenses of their family
  3. Invest in an international venture
  4. Pay off the debts of their close ones
  5. Submit the insurance installments
  6. Help international population in need of help because of:
    • Poverty
    • Political instability
    • Civil war
    • Terror attacks
    • Natural disasters

Basically, this process supports the aspiring population to lead a better life. Out of a big pool of 153 developing nations, in 36 countries, including Nigeria, remittance makes up a bigger portion of the economy than the combined capital flow generated by public and private sources.

Remittances, apart from helping the natives to develop economically, allows them to connect themselves to the banking system. Once they are connected to the economy, even the government can get multiple data from their transactions and take better actions for their upliftment. Where there is a demand, there is an opportunity, and opportunity attracts business. So, private institutions have also jumped in this sector.

Enter – International Money Transfer Operators (IMTO)

The competition among money wiring platforms is based on their ability to provide a faster, affordable, and most importantly, safer transactions. In recent years, the remittance industry has seen a boom, both in terms of users (as discussed above) as well as the number of private companies who want to play an active role in an industry with $4.8 trillion transactions every day.

International Money Transfer Operators either use an internal system or use cross-border banking network to conduct the transfers. In the initial stages, such operators faced a few setbacks because of the trust issues, however, with the time, they have improved their services. Moreover, referring to the World Bank’s Remittance Prices Worldwide June 2017, a World Bank survey of 23 banks showed that the transaction fee charged by banks is much higher than that of the international money transfer operators. Although in 2017, the banks decreased their processing charges from 9.36% in 2016 to 8.8%, the IMTOs were not far behind in following this suit and dropped their fees as well.

FAZRemit-Online-Money-Transfer-to-Nigeria-Banks-vs-International-Money-Transfer-Operators-usa

Figure: International money transfer fees of banks and MTOs in the United States

Apparently, businesses follow the Metcalfe’s law which states that:

The ‘Value of a network’ is directly proportional to the square of the number of connected users.

Since the latter number (customers) is exponentially increasing, these organizations compete with one another to provide competitive offers to the users so as to claim a bigger share of this large industry. On the other hand, while the number of transactions has been on the rise, it is very contrasting to see that the transaction fee levied by the international banks had been constantly increasing from 7.23% in 2013 to up to 9.36% in 2016, and it is still very high as compared to all the other choices that the remit-users have. Since the consumers have a far better choice than that with the IMTOs who have never charged over 6.88% even in 2012 and are charging as low as 5.5% transaction fees, it is quite obvious to understand why the paradigm of bank remit is shifting towards the private organizations.

There is Always a But…

National Banks across the globe, especially the Central Bank of Nigeria, often has been called out for taking ‘Draconian decisions’ to revoke the license of International Money Transfer Operators by using some catchy phrases such as ‘for a greater economic good’ and ‘to avoid undermining of a country’s foreign exchange’. Such policies do not just impact the businesses but also have a drastic effect on the user-base which at present consists of a 20 million strong community in Nigeria itself.

Debunking Myths About Money Transfer to Nigeria…

The Central Bank of Nigeria (CBN) has been clamping down on several money operators which constitute a significant portion of the overall international wire transfer facilitators. However, because of a strong retaliation from the majority of operators, CBN had to allow all the organizations who according to CBN Guidelines on International Money Transfer Services in Nigeria (2014) were provided a renewed license. The ground reality in this problem is not the regulations but the myths that have been circulated about the operators which affect the overall business. So, let us go through some of the myths and understand why it is important to expose them.

De-risking is important for public security

De-risking puts legitimate bank customers and licensed IMTOs at risk, and there have been hundreds of millions of instances in which banks use AML/CFT laws to ban multiple remittance accounts. If a consumer cannot send the money through a legitimate process, it is evident that because of the extreme de-risking laws, he or she would either have to opt for less secure or even illegitimate channels for the same. Pushing remit customers, who are in genuine need of decent service, to such platforms which do not have an adequate AML/CFT clearance could result in far worse results for the vigilance authorities, putting the entire process in a jeopardy.

Verifying the IMTO records is not worth the investment

In the digital era where consumers are already looking out for better service in terms of cost, transaction speed, and overall experience, banks do not promise all of those. Therefore, IMTOs are preferred. The basic point behind their argument is that:

  1. IMTOs are used by some individuals for a limited number of transactions which could be very challenging.
  2. They have a ‘high-risk’ factor because the transaction tracking by finance regulatory bodies becomes an even more challenging task when there is an intermediary.
  3. They may not have adequate regulations to keep a check on their transactions and services.

In such a case, instead of revoking the license or putting a complete ban on their operating bank accounts through de-risking or de-banking rules, it is a wiser choice to explore a better solution by framing a clear set of guidelines as per the norms of state and federal regulators instead of avoiding the question completely.

This must include the implementation of strict KYC record-keeping rules to ensure security for both the transactions and the intent of the user. Furthermore, the Financial Institutions Examinations Council and similar inter-agency groups must expand their section to include legitimate IMTOs under non-bank financial institutions. Once this regulation is followed, the MTOs can not only improve their AML/CFT monitoring capability but they can also lower their transactional fees as well as average remittance size, further reducing the possibilities of money laundering.

What does the Future Have in Store?

Money is basically a simple concept of credit. There is no physical value to it other than the promise of granting a specific value to the rightful person. Started from the barter system where the exchange was conducted under an agreement between the consulted parties, the same has been evolving. Then came coins which facilitated the ease of transactions. Further, paper money introduced in China was another upgrade for the commerce. In the 19th century, England defined gold as a standard for the transaction which then became a norm that has continued till date. As globalization hit the market, native currencies were obsolete making gold a universally accepted and adapted standard.

FAZRemit-Online-Money-Transfer-to-Nigeria-evolution-trade-barter-to-bitcoin
Figure: Evolution of Trade – From Barter to Bitcoin

Although during World War I, even gold was temporarily abandoned by various governments to finance the war, however, with the emergence of a stable US government backed with a strong economy and effective laws, the United States Dollar (USD) was considered as the world’s reserve currency. In the 1950s, credit cards came into being; followed by ATMs, and then the Society for Worldwide Interbank Financial Telecommunication (SWIFT) provided a reliable platform for all the financial institutions to send and receive information while conducting any international transaction(s). The market evolved further and after a few scuffles at the higher position between Bill Harris, Elon Musk and then Peter Thiel, PayPal – a multilingual worldwide online payment portal was born in July 2015. Therefore, we can conclude that since the time we had known about finance, money has shifted its shape, form to facilitate a simpler and faster system.

In line with that, the crypto and Blockchain market is estimated to become the next big change where mankind can explore another factor – inability to trust! With Blockchain’s distributed ledger, all the previous financial exchanges can simply fade away as it resolves all the concerns regarding speed (which could be drastically cut down from minutes or a few days to just an instant) and security (encrypted transactions and unalterable proof of work (POW)).

Numbers Don’t Lie

Although there are skeptics opposing every new idea, and the emerging industry could face certain hiccups along the way such as a decline in the initial coin offerings (ICOs), no one can ignore the 280% rise in the VC (Venture Capital) investment in the Blockchain technology in 2018 as compared to the previous year.

FAZRemit-Online-Money-Transfer-to-Nigeria-vc-investment-blockchain
Figure: Venture Capital (VC) investment in Blockchain (in black) and Crypto-related firms (in grey)

Leading investors around the world are viewing adequate research and development in this technology to have the potential of inducing another financial revolution. Consequently, they are enrolling themselves in this evolving technology to be a part of the early 21st-century that could just be a vital financial history in the making.

Finance and economics are dynamic entities that influence each other in multiple ways. They would constantly go through multiple upgrades, multiple emerging businesses would fall and other giants will emerge. All in all, during this course, the world would witness drastic changes. Meanwhile, in the current globalized world, where 3% of the total population is generating over 9% of the global GDP, and 800 million people depend on an action called – remittance, it is a challenge, moreover, a responsibility of the regulatory bodies like national banks and governments, and remittance service providers to work together and pave a convenient, safe and affordable gateway for the users to get what they aspire for, moreover, what they actually deserve.

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