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

This report identifies and ranks the supply-side market barriers that increase the cost and limit the access of formal remittance services in sub-Saharan Africa (SSA). It analyzes the remittance value chain across the first, middle, and last miles, categorizing impediments into business case, regulatory, infrastructure, and consumer-related barriers. The study finds that SSA is the most expensive region globally for remittances, with an average cost of 9.4%, driven by a combination of rigid KYC requirements, a persistent preference for cash, and underdeveloped payment infrastructure.

• Sub-Saharan Africa is the most expensive region globally for sending remittances, with an average cost of 9.4% of the transaction value, compared to a global average of 7.1%. In certain corridors, such as transfers from Nigeria to Benin, Mali, or Togo, fees can reach 22% of the transfer value.
• 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. Rigid enforcement and a lack of a risk-based approach lead to the exclusion of consumers who lack official documentation and increase compliance costs for providers.
• A persistent consumer preference for cash creates significant operational costs for Remittance Service Providers (RSPs). This reliance necessitates expensive agent management and cash logistics, particularly in rural areas where cash reticulation is difficult due to poor infrastructure.
• The formal remittance market in SSA suffers from a lack of competition, often because licenses are restricted to banks. This forces non-bank RSPs into costly partnerships with banks, who may de-prioritize remittance business or engage in anti-competitive behavior to protect their own service lines.
• Middle-mile operations are hampered by regulatory inconsistency and uncertainty across different jurisdictions. The lack of harmonized AML/CFT standards and gaps in legislation lead to institutional de-risking, where banks terminate relationships with partners to avoid potential fines.
• Underdeveloped national payment systems and a lack of interoperability increase costs in the middle mile. Many countries lack national or regional switches, forcing RSPs to switch abroad, and the use of outdated legacy IT systems causes transaction delays and integration difficulties.
• Informal money transfer services (IMTSs) compete effectively with formal providers by offering lower costs, better foreign exchange rates, and more flexible documentation requirements. This is particularly prevalent in corridors where formal providers have exited due to de-risking.
• Infrastructure deficits, specifically unstable electricity and unreliable mobile networks in rural areas, undermine trust in digital remittance services and increase the cost of doing business for RSPs who must invest in backup power.
• There is a significant gap in the availability of remittance data. Balance-of-payments reporting is not standardized across SSA countries, and the high volume of informal flows masks the true size of the market, hindering the ability of RSPs to build business cases for underserved corridors.

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} }