Mabel stays in the United Kingdom and works as an accountant for a real estate firm. While she is a legal resident and eligible to operate accounts with banks, her transactions to Nigeria are always flagged, making it difficult for her to send money to her mum and three siblings.
Samson is a student in the United States, and his parents still has trouble paying his school fees from Nigeria via traditional banks because of the difficulties in assessing Foreign Exchange.
These are some of the challenges still stifling cross-border remittance for African diasporas. Remittance fees are high, while inconvenience and lack of transparency are also factors hamstringing cross-border remittances.
Cross-border remittances are critical to the local economies in Africa. In a region riddled with economic inequalities and financial illiteracy, cross-border remittances drive prosperity and economic development.
Despite these challenges, cross-border remittances from the diaspora in the wealthier western world significantly impact Africa’s developing economies. These remittances now comprise a significant portion of the country’s Gross Domestic Product (GDP). In Nigeria, for instance, diaspora remittances are set to surpass Foreign Direct Investment (FDI) for the third straight year. World Bank data shows that $17b in remittance inflows contributed to 4% of Nigeria’s GDP in 2020. In 2021, diaspora remittance rose to $19.2b.
For the growth in remittance to continue, digital solutions are emerging to make it easier and quicker for the African diaspora. Lemonade Finance provides diasporas with accounts in their country of residence and country of origin.
With these Lemonade Finance accounts, diasporas are connected financially to Africa; they can send and receive money and carry out other banking services. Lemonade Finance is also looking to add a credit layout to their products and provide debut, virtual and credit cards.
Instead of Mabel going through the hassle of traditional banks to send money to her family, with Lemonade, she sends money from her UK account to her Nigerian account, where she can make transfers to her family. Easy!
Afeez Gbotosho, Product Lead at Lemonade Finance, says