Reducing Costs and Scaling Up UK to Africa Remittances Through Technology

The report finds that the UK-to-Africa remittance market is heavily cash-based, with cash-to-cash transfers accounting for approximately 90% of flows. While digital MTOs and payment hubs offer more competitive pricing, their impact is limited by a 'stickiness of cash' among UK migrants and a lack of digital payment infrastructure and formal identification in African receive markets. The authors argue that digitising the entire value chain is the only way to significantly drive down costs. Key recommendations for donors include researching consumer behavior in the UK, promoting non-cash transfers, piloting access for UK providers to the SADC Integrated Regional Settlement System (SIRESS), and supporting the expansion of remittance hubs in FCAS.

• The UK-to-Africa remittance market is dominated by cash-to-cash payments, which represent approximately 90% of all transfers.
• Remittances from the UK to Africa are more expensive than to any other global region, with an average cost of 9.8% of the send amount in Q1 2017, compared to a global average of 7.45%.
• Digital remittance services are more cost-effective than cash-based ones, with average costs of 7.8% in Q1 2017 compared to 10.7% for cash-to-cash services.
• The authors estimate that formal remittance flows from the UK to Africa totaled approximately USD 6.4 billion (£4.1 billion) in 2015, with Nigeria being the largest corridor, receiving an estimated £2.4 billion.
• A significant 'stickiness of cash' exists among UK migrant communities; despite 90% having bank accounts and 95% having mobile phones, less than 5% of the UK-to-Africa market uses digital MTOs.
• In sub-Saharan Africa, the lack of official identification is a major barrier to financial inclusion and formal remittances, with as many as 55% of individuals lacking an official ID record in 2014.
• Fragile and conflict-affected states (FCAS) face exacerbated challenges, including poor infrastructure, weak financial systems, and higher risks of money laundering and terrorist financing, which lead international banks to 'de-risk' by closing correspondent accounts.
• Remittance processing hubs (e.g., Mastercard Send, MFS Africa, TerraPay) improve efficiency by interconnecting various payment providers and channels through a single API connection.
• Regional Automated Clearing Houses (RACHs), such as the SADC Integrated Regional Settlement System (SIRESS), can reduce costs by bypassing the expensive correspondent banking model.
• Cryptocurrencies and distributed ledger technology (DLT) are currently considered non-priority for immediate donor investment due to their infancy, regulatory uncertainty, and low financial inclusion in Africa.
• The report recommends a pilot to connect UK Remittance Service Providers (RSPs) to the SADC SIRESS system, potentially using the UK-to-Zimbabwe corridor as a case study.
• The report suggests influencing African regulators to allow non-bank financial institutions (NBFIs), such as post offices and retail networks, to pay out international remittances to increase competition and reach.

APA

FSD Africa (2017). Reducing Costs and Scaling Up UK to Africa Remittances Through Technology. https://fsdafrica.org/wp-content/uploads/2025/05/Scaling-up-Remittances-15.06.2017_Final-1.pdf

Chicago

FSD Africa. Reducing Costs and Scaling Up UK to Africa Remittances Through Technology. 2017. https://fsdafrica.org/wp-content/uploads/2025/05/Scaling-up-Remittances-15.06.2017_Final-1.pdf.

Wikipedia

{{cite report |author=FSD Africa |title=Reducing Costs and Scaling Up UK to Africa Remittances Through Technology |date=June 2017 |url=https://fsdafrica.org/wp-content/uploads/2025/05/Scaling-up-Remittances-15.06.2017_Final-1.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{fsdafrica2017reducing, author = {{FSD Africa}}, title = {{Reducing Costs and Scaling Up UK to Africa Remittances Through Technology}}, institution = {FSD Africa}, year = {2017}, month = jun, url = {https://fsdafrica.org/wp-content/uploads/2025/05/Scaling-up-Remittances-15.06.2017_Final-1.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }