Africa presents a minefield of opportunity for fintech companies due to the lack of legacy infrastructure. The formal market for money transfers in Africa is still relatively young and faces challenges typical of emerging markets including uncertainty regarding the volume of remittances, limited competition, higher transfer costs and a lack of technological innovations, with Kenya and South Africa being largely immune from these. Fintech companies operating in the money remittance space who have an appetite for Africa will find limited competition.
South Africa is the largest sender of remittance in Africa and also the most expensive of the G20 countries to send remittances from. Nigeria is the biggest remittances receiver in Africa – attracting diaspora remittance of over $21 billion per annum a dramatic increase from $2.3 billion in 2004 to $17.9 billion in 2007. In Tanzania 38 million individuals have mobile money accounts and 8.9 million are active users, with an average transaction value of $19. Kenya has 26 million users and 14.2 million active users. In terms of total volume of remittance received, in 2015 – Morocco topped the chart at over $6 billion, followed by Algeria with $5.4 billion and Egypt with $3.6 billion.
According to a World Bank Report the following countries we also top recipients: Sudan ($3.2 billion), Kenya ($1.8 Billion), Senegal ($1.2 billion), South Africa ($1.0 billion) and Uganda ($0.8 billion). Sub Saharan Africa is the most expensive region to remit to and as a result the majority of remittances are still sent via informal channels such as busses and taxis.