Nigeria is at the forefront of all remittance transactions done to sub-Saharan African countries since 2009.
The trend continued, with a total of $25.08 billion remitted by Nigerian Diaspora according to the 2018 reports. This represents a 14% increase from the year 2017. It is almost $3 billion more than the World Bank’s estimate of $22 billion.
Even though Nigeria is behind the likes of India, China, Philippines, and Mexico, it has the highest remittance inflow in Africa and fifth-highest globally. The remittance amount to Nigeria from the USA alone is $4.5 billion.
Remittance prices have seen a reduction to 3% from 10.36% in 2009 according to the IMTO index. This number has dropped further down to just 2% due to online services like FAZRemit. This is a reason for the exponential increase in remitted funds.
Another Obstacle in Wiring Money to Nigeria
Even with the high expenses, the main obstacle staring in the face of thousands of Nigerian immigrants is De-Risking.
The recognized banking institutions in the country are terminating or restricting business with remittance companies and regional banks . This is a practice called “de-risking” which cites Anti-Money Laundering/Countering the Finance of Terrorism.
De-risking puts legitimate bank customers and licensed International Money Transfer Operators (IMTOs) at risk. This also shines banking reforms that need to be undergone for the development of the country in a bad light.
The use of AML/CFT laws is to help the economy become stable and accountable. Yet the notion is very different from stark reality. Banks make use of AML/CFT laws to ban multiple IMTOs’ accounts. This forces the Diaspora to opt for less secure or even illegitimate transactions across the border.
To rub salt in the wounds, the remittance fee levied by banks is much higher than Online Money Transfer Operators. This puts the Diaspora in a position of losing their hard-earned money to processing fees. Furthermore, only 40% of Nigerians are banked. The rest get their remittance through cash or shady operations. This hinders the economy of the country and their future as a whole.
So, how can the Nigerian Diaspora Wire money to Nigeria?
Initially, banks were the only source of sending remittances. However, with the emergence of International Money Transfer Operators in the online market, the trend has changed.
New technologies encourage transparency and information-sharing, facilitating better communication between institutions of finance. It also improves banks’ ability to accurately identify illegal activity.
Sending money to Nigeria online makes remittances quicker, cheaper and with lower error rates than ever before. IMTOs generally have AML/CFT checks and KYC background checks. This means migrant Nigerians can wire money from anywhere without fear of security.
But what could we offer in 2019 that far surpasses these dated remittance methods?
The Future Is Here – Online Transactions!
There has been an increase in the use of smartphones and the internet in Nigeria during the past 5 years. Reports state that 33% of Nigerians use smartphones and 42% of Nigerians have access to the internet.
Sending money to Nigeria online through mobile is the most cost-effective option for remittances when compared to any other form.
While many people are skeptical about online security, AML/CFT laws and mandatory KYC Documents‘ submission has changed the situation drastically. There has been a significant difference in the number of illegitimate transactions globally in the right direction.
Furthermore, IMTOs has developed better risk management and bank connectivity. This lowers vulnerability to cyber threats and reduces the number of errors while sending money online or by using a Smartphone.
In 2019 it is easy and fast to wire money to Nigeria with the help of blockchain/bitcoin services. They dramatically optimize online remittance by sharing data in an efficient, secure, and transparent manner.
FAZRemit’s Mobile Money Service makes sure to provide a faster, affordable, and most importantly, safer transactions by facilitating strict KYC verification and AML/CFT guideline integration checks. This ensures that every single transaction goes from one verified customer in the United States to another verified individual in Nigeria.
The Role of the Government
The remittances to Nigeria made up 83% of the federal government’s 2018 budget in value. Hence it is only paramount that the government gives importance to transparent and efficient control of money being sent into the country by the diaspora.
Nigeria is implementing rapid development in its physical and industrial infrastructure, transforming from a mono-product economy to a diversified, industrialized economy. The increase in government support to add more of Nigeria’s population into the banking circle is truly astounding.
By sending money to Nigeria online, the government gets to create a studied evaluation about future trends and can diminish illicit or shady cash dealings which bleed the economy.
The economy of Nigeria is stabilizing and growing by making use of the technology. The shining light of the sub-Saharan continent gets a helping hand from its large diaspora who wire money back to Nigeria for the upliftment of their family and country. FAZRemit provides a secure payment gateway for Nigerians in the USA to wire money to Nigeria easier, faster and without security fears.