Remittances, Competition, and Fair Financial Access Opportunities in Nigeria

This report presents the findings of a study on remittances to Nigeria and explores policy and development implications. The study examines:

• The volumes flowing to Nigeria, and the landscape within the United States (U.S.)-Nigeria remittances corridor;
• Factors affecting competition;
• Opportunities and obstacles to improving the formalization of domestic and international transfers.

The study findings include:

• Remittance flows are overwhelmingly sent through money transfer agencies;
• Nearly all remittance recipients receive their money in cash at an agency or a bank counter;
• Financial institutions are strategically placed to perform money transfers and provide other financial banking products, but the presence of exclusive agreements reduces financial access;
• The empirical relationship between remittances, access to finance, and asset building needs greater attention on the supply side.
• Constraints to remittances include:
  • The competitive environment: A monopolistic hold on the market by one money transfer operator (MTO);
  • The regulatory environment : Banks are the only entities legally authorized to perform international payments;
• There is willingness among banks and other financial institutions to entertain alternative strategies, including partnerships and innovative technologies for money transfers.

The paper ends with recommendations for the United States Agency for International Developments (USAID) involvement in making it possible to form relevant partnerships and provide technical assistance to improve the flow of remittances to and from Nigeria.