Remittances in Nigeria

Nigeria is Africa's largest recipient of remittances, with 2018 inflows reaching USD 24.2 billion, yet the market is characterized by high informality and significant barriers to formal service expansion. While the country possesses a sophisticated national payment system and high internet penetration, formal remittance growth is hindered by tight foreign exchange controls, high licensing requirements, and a lack of financial access points in rural areas. The report highlights a stark contrast in costs between corridors, with USA and UK transfers being competitive while the Cameroon corridor remains exorbitant. Key recommendations include incentivizing mobile network operator participation through Payment Service Bank licenses, revising capital outflow limits, and harmonizing biometric identity systems to reduce onboarding friction.

• Nigeria is the largest recipient of remittances in Africa, with inflows reaching USD 24.2 billion in 2018, representing 5.9% of its 2017 GDP.
• Informality is pervasive in the Nigerian remittance market, with estimates suggesting up to 50% of flows enter through informal channels not captured in official data.
• Remittance costs vary significantly by corridor; while USA and UK transfers average between 5% and 6%, the Cameroon-Nigeria corridor is far more expensive, averaging over 11%.
• Tight foreign exchange management and capital controls by the Central Bank of Nigeria (CBN) drive consumers toward informal markets, including a limit of USD 1,000 per person per quarter for outbound transfers.
• High licensing requirements for Money Transfer Operators (MTOs), including a minimum capital of ₦2 billion and a requirement to be present in at least seven countries, limit market competition.
• Nigeria's financial access point density is very low compared to other sub-Saharan African nations, with approximately 17 active points per 100,000 adults, compared to 181 in Kenya.
• The Bank Verification Number (BVN) system facilitates onboarding for 33.3 million customers, but the requirement for proof of address remains a significant barrier to financial inclusion.
• Despite high mobile network coverage (99%) and internet penetration (48%), mobile money account ownership remains stagnant at around 6% of adults due to a bank-led market structure.
• The Nigerian National Payment System (NPS) is highly advanced, featuring the NIBSS instant payment (NIP) system which provides real-time, bank-account-based inter-bank credit transfers.
• Operational costs for formal providers are increased by frequent power cuts, network downtime, and the high cost of BVN onboarding equipment, which is approximately ₦1.6 million per point.

APA

Cooper, B., & Esser, A. (2019). Remittances in Nigeria. FSD Africa. https://fsdafrica.org/wp-content/uploads/2025/05/Barriers-to-remittances-in-SSA-vol-6-Nigeria.pdf

Chicago

Cooper, Barry, and Antonia Esser. Remittances in Nigeria. FSD Africa, 2019. https://fsdafrica.org/wp-content/uploads/2025/05/Barriers-to-remittances-in-SSA-vol-6-Nigeria.pdf.

Wikipedia

{{cite report |last1=Cooper |first1=Barry |last2=Esser |first2=Antonia |title=Remittances in Nigeria |publisher=FSD Africa |date=June 2019 |url=https://fsdafrica.org/wp-content/uploads/2025/05/Barriers-to-remittances-in-SSA-vol-6-Nigeria.pdf |access-date=17 August 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{cooper2019remittances, author = {Cooper, Barry and Esser, Antonia}, title = {{Remittances in Nigeria}}, institution = {FSD Africa}, year = {2019}, month = jun, url = {https://fsdafrica.org/wp-content/uploads/2025/05/Barriers-to-remittances-in-SSA-vol-6-Nigeria.pdf}, urldate = {2026-08-17}, note = {Indexed by Climate Insights Directory} }