Jerry Lukendo Mbokani regularly faces a complex process when remitting money to his aging mother in the Democratic Republic of Congo. Living in Kampala, Uganda for over a decade and a half, Mr. Mbokani first has to convert his earnings into US dollars. He estimates that converting about $100 worth of Ugandan shillings incurs nearly $3 in fees.
Additionally, he pays a $7 withdrawal fee to ensure his mother receives the money without having to pay any charges herself. Mr. Mbokani opts to use mobile money services—digital transfers typically made via smartphones—as opposed to traditional methods like banks or international money transfer agencies. He notes that fees can consume about 10% of the transferred amount.
As the chief executive of the Refugee-Led Organization Network (Relon), Mr. Mbokani is acutely aware that his struggles are shared by many others. The United Nations Sustainable Development Goals aim to reduce remittance fees to less than 3% per transaction by 2030, with the total costs for sending and receiving money between two countries not exceeding 5%. Some experts argue that to truly make remittances affordable, the target should be set even lower than 3%.
The International Monetary Fund suggests that achieving these goals could unlock as much as $32 billion, not counting the money saved directly on lower fees. Lower fees often encourage more frequent remittances, which have significant positive effects on recipient economies.
Despite these goals, progress remains slow. The World Bank reports that the global average remittance fee stands at 6.2%, which is more than double the target. Fees are particularly high for transactions to sub-Saharan Africa, where they average 7.4%. Fees can soar into the double digits depending on the specific country pair involved.
A major factor in these high costs is the lack of uniform regulations across borders. Nika Naghavi, who leads growth efforts at Onafriq—a digital payment network spanning over 40 African countries—notes that payment companies cannot operate under a single license across multiple nations. This fragmented regulatory environment leads to inefficiencies, especially between neighboring countries with active trade and migration patterns. For example, while transfers between Togo and Benin are facilitated by a shared currency and thus relatively straightforward, sending money from Togo to Ghana is significantly more complicated and expensive. According to Ms. Naghavi, “The costs mount significantly due to compliance and regulatory burdens.”
