Amongst the major
money transfer players in Nigeria, MoneyGram has the lowest transfer
fees. Using the estimation calculator on their websites and a base
amount of $500, making a $500 transfer will attract a fee of $7 dollar
which is 1.4 percent as compared to $20 or 4 percent fee charged by
Western Union and $9.99 or 1.9 percent charged by World remit.
World Bank’s
Migration and Remittances Factbook 2016 revealed that more than 250
million people or 3.4 percent of the world population live outside their
countries of birth. However, Members of the Nigerian diaspora are not
absent in this trajectory as they remain closely attached to their home
country, a fact revealed in the prevalent practice of remitting money to
family still in Nigeria or remitting money from Nigeria to other
countries around the world.
The international
remittance market have grown significantly in Nigeria looking at World
Bank estimates that in 2017 alone Nigeria received over $22 billion in
remittances, making it the largest recipient in Africa and fifth largest
recipient globally.
However, that
transfer costs as indicated by the World Bank to sub-Saharan Africa were
among the most expensive in the world. These costs had spawned the
emergence of digital transfer operators in competition with the
traditional players in the field.
Nigerian money
transfer business was liberalized since 2002; the international money
transfer market in Nigeria before 2008 was largely controlled by Western
Union and MoneyGram, by the use of exclusivity agreements which gave
them an almost monopolistic hold over the market.
However, things
are beginning to change, in the past, Western Union and MoneyGram would
have been the only alternative, nowadays there are a lot of far cheaper
solutions which are getting cheaper year in and year out.
World Remit for
example is beginning to take over. It is already in partnership with
three banks, that is, GTB, First Bank and Fidelity. Its cost is way
below that of western Union and may decrease in subsequent years.
Reducing the costs
of remittances has been a high-level goal for the World Bank, as well
as these payment providers which are commercial entities. They are
obviously aiming for profitability but at the same time, they have to be
able to outperform their competitors by offering lower attractive
rates.
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