Market barriers to remittances in sub-Saharan Africa (SSA)

The report analyzes the remittance value chain in sub-Saharan Africa (SSA), dividing it into the first, middle, and last miles. It identifies a high average remittance cost of 9.4%, driven by supply-side barriers including restrictive licensing for non-bank providers, stringent KYC/AML requirements, and outdated IT infrastructure. The study highlights a persistent consumer preference for cash and a significant shift toward informal remittance channels due to the high costs and documentation burdens of the formal sector. Key recommendations emphasize the need for regulatory harmonization, the adoption of a risk-based approach to KYC, and investment in interoperable national payment systems to reduce costs and increase financial inclusion.

• Sub-Saharan Africa is the most expensive region globally for sending remittances, with an average cost of 9.4% of the transaction value, while some specific corridors can reach 22%.
• Strict Know Your Customer (KYC) and Anti-Money Laundering/Combating the Financing of Terrorism (AML/CFT) requirements are the most frequently cited barriers at the first and last mile, often excluding consumers who lack official identification.
• A strong consumer preference for cash persists despite the availability of digital solutions, which increases costs for providers who must manage physical cash logistics and agent networks.
• Regulatory restrictions often limit remittance licenses to banks, forcing non-bank Remittance Service Providers (RSPs) into costly partnerships and reducing market competition.
• The 'middle mile' of the remittance chain is hampered by regulatory inconsistency across countries and underdeveloped national payment systems, which leads to high integration costs and institutional de-risking.
• Informal money transfer services (IMTSs) are often preferred over formal channels because they are more trusted, offer better foreign exchange rates, and do not require official documentation.
• Outdated legacy IT systems, particularly within banks, create significant barriers to the integration of more efficient technologies and cause delays in transaction processing.
• Infrastructure deficits, specifically unreliable electricity and mobile network connectivity in rural areas, erode trust in digital remittance services and limit the reach of formal providers.

APA

Cooper, B., Esser, A., Tuyeni, R., & Peter (2018). Market barriers to remittances in sub-Saharan Africa (SSA). FSD Africa. https://fsdafrica.org/wp-content/uploads/2025/05/2018.08.03_Volume-2_Market-barriers-to-remittances-in-sub-Saharan-Africa-scoping-study_Cenfri-FSDA.pdf

Chicago

Cooper, Barry, Antonia Esser, Rose Tuyeni, and Peter. Market barriers to remittances in sub-Saharan Africa (SSA). FSD Africa, 2018. https://fsdafrica.org/wp-content/uploads/2025/05/2018.08.03_Volume-2_Market-barriers-to-remittances-in-sub-Saharan-Africa-scoping-study_Cenfri-FSDA.pdf.

Wikipedia

{{cite report |last1=Cooper |first1=Barry |last2=Esser |first2=Antonia |last3=Tuyeni |first3=Rose |last4=Peter |title=Market barriers to remittances in sub-Saharan Africa (SSA) |publisher=FSD Africa |date=June 2018 |url=https://fsdafrica.org/wp-content/uploads/2025/05/2018.08.03_Volume-2_Market-barriers-to-remittances-in-sub-Saharan-Africa-scoping-study_Cenfri-FSDA.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cooper2018market, author = {Cooper, Barry and Esser, Antonia and Tuyeni, Rose and Peter}, title = {{Market barriers to remittances in sub-Saharan Africa (SSA)}}, institution = {FSD Africa}, year = {2018}, month = jun, url = {https://fsdafrica.org/wp-content/uploads/2025/05/2018.08.03_Volume-2_Market-barriers-to-remittances-in-sub-Saharan-Africa-scoping-study_Cenfri-FSDA.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }