International money transfer policy: an overview of Africa regions (series 1. Nigeria and South Africa)
Africa has one of the world’s most mobile populations, and the amount of online money transfers is fast growing year by year in this region.
Experts divide African regions differently. In our article we will use the following classification: Sub-Saharian and not Sub-Sahara regions. Sub-Saharan Africa is, geographically, the area of the continent of Africa that lies south of the Sahara, and the only African countries that are not in the Sub-Sahara are: Algeria, Egypt, Libya, Morocco, and Tunisia.
Sub-Saharian regions split into: Southern Africa, Western Africa, Eastern and Central Africa, how you can see on the map:
One of the main financial players in Africa region is The African Development Bank Group, a multilateral development finance institution. The African Development Bank, or AFDB, has been working with African governments to develop policies and regulations in Africa to improve the transparency of remittance-driven investments and increase remittance inflow.
According to the report 2018 by ICAEW and Oxford Economics, remittance income is a major economic factor for most African countries. Nigeria was the biggest receiver of remittances on the continent 2018–2019 years. Egypt was the second biggest receiver of remittances on the continent. The report notes that despite remittances, playing an important role in African economies, policies should focus on reducing the cost of remitting funds.
Money laundering law in Africa regions
External fraud level is very high, it is a hot spot for money laundering related activities. African governments try to develop policies inviting many administrative global players to share practices and train african institutions, for example, Anti-Money Laundering/Counter Financing of Terrorism (AML/CFT) training program for the Middle East and East Africa Regions (English) by World Bank and actions of FATF (The Financial Action Task Force).
Regulations regarding limits and requirements for the amount of money transferred are important in protecting against fraud and capital flight. While about half the countries have the same limits on and requirements for both inbound and outbound transfers, many african countries (>23) require outbound amounts of less than USD10,000 to be reported to the central bank.
We see increasing numbers of user registrations from these countries and decided to do a research of Nigeria and South Africa first: money transfer policy, withdrawal limits and fees, bank fees, others. Later we plan to cover other countries too.
South Africa is the major financial centre in the region with its developed banking and financial sector. Due to the size of its economy, Nigeria and South Africa has one of the highest number of reported fraud cases on the African continent and as a result these countries try to improve their policy.
Nigeria, West Africa
Nigeria is the most populous in Africa. Nigeria also has the largest economy in Africa. The Word Bank considers Nigeria to be an emerging market.
The laws governing money laundering in Nigeria are the Money Laundering (Prohibition) Act, the Economic and Financial Crimes Commission Act and the Central Bank of Nigeria (Anti-Money Laundering and Combating the Financing of Terrorism in Banks and Other Financial Institutions in Nigeria) Regulations. Details about penalties here.
According to the Central Bank of Nigeria:
- ‘Travelers entering/leaving Nigeria shall be required to declare any amount in excess of N100,000.00 and /or USD10,000.00 (or its equivalent) in their possession on arrival or departure from the country. These amounts may be reviewed by the CBN from time to time.
- Business Travel Allowance (BTA) and Personal Travel Allowance (PTA) shall be subject to a maximum of USD5,000.00 and USD4,000.00 per quarter, respectively.
- BDCs shall continue to observe a maximum direct foreign exchange cash sales limit of USD5,000.00 per approved transaction.
- The declaration on Forms Travel Import (TM) and Travel Export (TE) of foreign currency imports and exports, respectively, of USD10,000.00, and above or its equivalent is required for statistical purposes only.
- Allowable limit of International Money Transfer Operators (IMTO) outbound money transfer per transaction per person shall be USD1,000.00 or its equivalent per quarter subject to review from time to time. Applicable charges by the operator shall be in compliance with the money transfer charges as may be prescribed by the CBN from time to time.’
Bank transfer fees from and to Nigeria
Approximately, bank wire transfer Fee is USD 25–40.
Withdrawals fees and limits
According to some news media on the internet, The Central Bank of Nigeria set a 3% charge of single cash withdrawals above N500,000/USD1,400, for corporate bodies, the benchmark is N3 million/USD8200–5% for withdrawal.
For Individuals, the daily free withdrawal limit is N500,000/USD1,400. The limits apply to the account so far as it involves cash, irrespective of channel (e.g. over the counter, ATM, 3rd party cheques encashed over the counter, etc) in which cash is withdrawn.
Credit, debit and prepaid cards
Nigeria is mostly a cash-based society. In 2015, Nigerians were prohibited to use debit cards outside the country because the country faced a major foreign exchange crisis.
The international usage limits and frequencies for Naira denominated cards shall be defined by each participating bank. However, these limits shall not exceed the total combined amount of Foreign Currency that each individual can access — USD150,000 per annum.
Prepaid cards issued will operate at least within the minimum KYC requirements prescribed by the CBN. However, loadable limits (in Naira and Foreign currency) and daily balances shall be determined by the issuing bank or financial institution.The maximum withdrawal and spending limits for the Prepaid Cards will be determined by the issuing bank.
Crypto currency
The Nigerian government bans on crypto currency is not clear. For example, users in Nigeria can now use the country’s fiat currency to purchase bitcoin on Binance.
According to CoinTelgraph, Bitcoin is legal in Nigeria, but the Nigerian SEC, or Securities and Exchange Commission, warned citizens about cryptocurrency investments are risky.
South Africa
South Africa is not on the FATF list of countries, the country has a developed procedure with tax officials than other regional countries but still the country suffers from corruption.
According to the The South African Reserve Bank, what is the central bank of South Africa:
- ‘A single discretionary allowance within a limit of R1 million/USD70000 per calendar year is available to all South African residents who are 18 years and older, and in possession of a valid green bar-coded South African identity document or smart identity document card. This dispensation may be used for any legitimate purpose (including for investment purposes abroad as well as the sending of gift parcels in lieu of cash excluding gold and jewellery) at the discretion of the individual without any documentary evidence having to be produced to the Authorised Dealer, except for travel purposes outside the CMA, where certain prescribed documentation has to be produced.
- In addition to the single discretionary allowance, residents may export Krugerrand coins or the equivalent in fractional Krugerrand coins up to an amount of R30,000/USD2000 as gifts to non-residents.’
Individuals are permitted to have a foreign currency account with an Authorised Dealer and/or a foreign bank account for the following purposes: (a) for travel (b) foreign investment © legitimate foreign earned income (d) foreign inheritance
Bank transfer fees from and to South Africa
Approximately, South African bank transfer Fee is USD30. Exchange Rate: Approximately a 2% margin is added to the exchange rate when you convert US dollars into South African dollars.
Withdrawals fees
According to Transwire and Finder website articles, local banks in South Africa don’t charge ATM fees for operation, but for transaction in USD300 the 3% currency conversion fee might be charged and the international ATM withdrawal fee is USD5.
The maximum amount you can withdraw from an ATM in South Africa is R3000/USD 200 at a time. To get more money you should visit a bank branch and show an ID.
Credit and debit cards
Individuals with locally issued credit and/or debit cards are permitted to make foreign currency payments for small transactions by means of such credit and/or debit cards. Payments are limited to R50 000/USD3500 per transaction.
Send money to South Africa
As we noticed above, remittance inflow to country is a big part of the economy because Africa has many migrants who work abroad and send money to the family. One of the main problems is cost per remittance.
Dominant players in South Africa and across the continent are Western Union and MoneyGram.
Many African banks incorrectly perceive Western Union and MoneyGram to be the only companies offering international money transfer services. As a result, banks are prepared to sign exclusivity agreements in return for guaranteed volume. More details about online money transfer players can be found here.
Crypto currency
South African Reserve Bank does not supervise or regulate crypto assets currently, but is continuing its effort to monitor this area.
According to other sources, CAs are not legal tender in the Republic of South Africa (RSA) and any merchant or beneficiary may refuse CAs as a means of payment. More details here.
CONCLUSION
The African market is emerging in remittance because of high level of labour migration and focus of the government on creating a cashless society. Each territory has its own specific rules to control money-laundering, fraud which are very high and should be analysed separately.
Specifics of Nigeria and South Africa in limits. In Nigeria the allowable limit of international money transfer per transaction per person is USD1,000 or its equivalent per quarter, while in South Africa USD70,000 per calendar year is available.
In South Africa payments through credit and debit cards are limited to R50 000/USD3500 per transaction. In Nigeria the international usage limits are defined by each participating bank. However, these limits shall not exceed the total combined amount of Foreign Currency that each individual can access — USD150,000 per annum.
Bank wire transfer fees are similar approx. USD25–40 in both countries.
Crypto is not legal in South Africa, while a position in Nigeria is not clear.
Dominanant online remittance providers are Western Union and MoneyGram. Also our global e-wallet STICPAY serves these regions and offer STIC prepaid cards which may be of interest to African customers.
Sources:
https://www.finder.com/travel-money/south-africa
https://transferwise.com/gb/blog/atms-in-south-africa
https://allafrica.com/stories/201909200013.html
https://www.money-transfers.co.za/get-move-money-out-sa.php
https://www.knowyourcountry.com/southafrica1111
https://www.cbn.gov.ng/cashless
https://punchng.com/cbn-slashes-banks-atm-withdrawal-fee-to-n35/
https://www.cbn.gov.ng/documents/Monetarycreditguide.asp
https://gettingthedealthrough.com/area/50/jurisdiction/18/anti-money-laundering-nigeria/
