Migrants sending money home to loved ones face high fees

 

Migrants sending money home to loved ones face high fees, with the global average reaching 6.2%. Sub-Saharan Africa is particularly affected, with fees averaging 7.4%. The UN aims to reduce remittance fees to less than 3% by 2030, but the target seems far off.

Jerry Lukendo Mbokani, a refugee living in Uganda, knows the struggle firsthand. He sends money to his mother in the Democratic Republic of Congo through mobile money, but fees eat up 10% of the amount. He has to buy US dollars, pay a withdrawal fee, and cover additional costs.

The International Monetary Fund estimates that reaching the 3% target could generate $32 billion in savings. However, inconsistent regulation and limited competition among money transfer companies contribute to high fees.

Nika Naghavi, group head of growth at Onafriq, a digital payment network, notes that even between neighboring countries, money can't flow freely due to regulatory hurdles. Ravenna Sohst, a policy analyst at the Migration Policy Institute Europe, adds that stifling regulations and limited competition hinder new companies from entering the market.

Uloma Ogba, a gender and learning specialist at the UN Capital Development Fund, emphasizes the importance of transparency and flexible pricing structures, especially for female migrants who send smaller, more frequent remittances.

Digital innovation offers hope, with fintech companies and mobile money transfers providing more affordable options. Cryptocurrency enthusiasts believe it could revolutionize remittances, but volatility and patchy regulation remain barriers.

However, even basic technologies can be out of reach for the poorest people, and cash remittances dominate in low-and middle-income countries. Refugee ID cards and other documentation issues also create obstacles.

The high fees and challenges faced by migrants sending money home highlight the need for reform and innovation to make remittances more accessible and affordable. As Naghavi notes, "Our North Star should be to ensure that these customer fees are as close as possible to zero."