How misconceptions and pipe dreams are ruining intra-African money transfer
On two separate occasions that were identical in frustration they served in 2020, multi-award winning Nigerian journalist and fearless and relentless detective, David Hundeyin endured what could be described as the equivalent of financial services from: “water everywhere, but no one to drink.”
With all the loud noise and feverish buzz about how African new-age fintech companies have become fundamentally omnipotent while beating inflexible incumbents at their own game, Hundeyin didn’t expect the “little business” of sending money to Kenya is so cumbersome. torture.
“I myself went through the hullabaloo when I needed to send the equivalent of USD 1,000 from Nigeria to Kenya and found after downloading and testing about 8 of these apps, that they don’t are nothing more than money transfer services – Western Union with a sexy app and good marketing,” Hundeyin told WeeTracker.
He would suffer a similar disappointment when he attempted to transfer money from Nigeria to a relative in Ghana later that year, discovering to his dismay that there was virtually no reliable way to send 65,000 NGN. (~US$156.00) straight from Nigeria to a recipient in Ghana; a country that is quite possibly Nigeria’s greatest economic and diplomatic ally in Africa. A bit ironic, no?
“Simply put, there is no known cross-border payment solution in Africa that works reliably and faster than the speed of an oil tanker crossing the Suez Canal. cross-border payment services for Africa, but invariably these are just remittance services that are just duplicating what Western Union has been doing for decades,” says Hundeyin.
“As long as the transaction involves sending money in a straight line from one African country to another, like from NGN to XOF, there is categorically no way to do it quickly, reliably and electronically. Ecobank might disagree, but even his service just doesn’t meet those parameters,” he adds.
Well, that sums up the problem of moving money across African borders; intra-African transfers or cross-border payments appear as an eternal and incurable headache. Along the very few corridors where intra-African formal money transfer is actually possible, it is notoriously expensive; even more expensive than sending money to Africa from North America or Europe.