Insights on African Diaspora Remittances

What over 100 Africans from 10 different African countries told us.

Over the years and based on individual experiences, we’ve been curiously following the remittance inflows sent by the African diaspora into their home continent. At the onset of the COVID-19 pandemic, one of our founders, Brian, experienced first hand the challenges faced by Africans living and working abroad when they wanted to get anything done properly back home. It turns out that they desperately required a trusted & reliable individual to do things for them or pass as their proxy when dealing with local businesses back home.

At one point, he received remittances and a set of instructions on how to utilize them which saw him spend a number of days criss-crossing 5 counties to fulfill the instructions on behalf of a family member living abroad. Despite his willingness to assist, it turned out that there also wasn’t a convenient and direct way to pay those businesses directly from abroad hence this was bound to happen again.

“When looking at remittances, the focus is often on the sender of the funds and not on the experiences and the challenges that the recipients also face when carrying out sender instructions. Recipients often have to go out of their way to get things done and this leads to a lag in execution and frustrates senders.”

— Brian, Co-founder at Tulix App

This experience, alongside many more led us to identify a key problem worth tackling. We surveyed Africans living abroad to better understand their overall experiences and the most common challenges they faced when sending money back home from abroad.

The consensus is that senders are keen on ensuring that the money they send home is properly utilized by the recipients and they’d like to pay institutions directly from abroad.

We gathered this information from over 100 Africans from 10 different African countries living and working abroad and through our investigations, we identified several pain points and insights when it came to getting things done back home. One respondent highlighted a major problem they faced as:

“Not knowing if all the money I send is actually how much is due to the institution and whether or not the family member has been honest.”

Check out this awesome infographic highlighting other key findings.

The insights we uncovered through our survey also pointed to an increasing but gradual shift away from traditional Money Transfer Operators (MTOs), towards the use of modern and digital Remittance Service Providers (RSPs) when sending money to recipients in sub-Saharan Africa. We found this interesting given the fact that Traditional MTOs still play a big part in the global remittance market but their significance is likely to decline faster in Africa especially driven by the increased use of mobile money on the continent.

However, the RSP space is quickly becoming a red ocean as there are hundreds of digital remittance services serving Africa as a destination market. A lot of development has gone into improving the remittance experience and to bring down the costs associated with such transfers. However, the illiquid nature of many African currencies limits how low these fees can go with many “low cost” RSPs charging lower fees but making their money through an FX spread.

There is no shortage of options when remitting money to Africa and that’s why we aren’t developing another option to add to this tally. We will however seek to work with a large number of existing players who by using the Tulix App can enhance their customer experience for new and existing customers on both ends.

If you’d like to learn more about the Tulix App and its features, follow our development in coming weeks before we release our first version by signing up HERE.

We would also be interested in hearing views on the survey results presented on this post. Feel free to share your thoughts with us on Twitter or LinkedIn.