04 Sep 2024
Indeed, remembering the diaspora's economic contribution is imperative, especially in many developing countries where the main inflow is through remittances. Remitting money back home has always been one of the primary necessities for Nigerian expatriates staying in Germany, for they need the money to support their families, invest in local businesses or stabilize the country’s economy.
Nevertheless, the costs incurred with these remittances have been a significant challenge at a one-time fee. This article focuses on understanding how to send money to Nigeria from Germany, the steps to reduce fees owed to Nigerian expatriate residents in Germany, and the implications of the changes.
Here are the factors that increase the importance of remittances:
Nigerians rely heavily on the money that their fellow citizens send back home from countries where they are working. To the World Bank, Nigeria was among the top ten countries that received about $24 billion in remittances in 2022. Such funds assist in eradicating poverty, offer education and healthcare, and enhance the standard of living for beneficiaries. To the Nigerian expatriates in Germany, remitting money to Nigeria from Germany is not a duty but an important contribution to Nigeria’s economy.
For those concerned, It has bestowed on people the power to feed families, build homes, and build a better future for their children. In terms of social impact, these funds assist in decreasing regional disparities and improving community well-being. The process of transferring money to Nigeria from Germany online, therefore, has great implications both to the individual and to the country.
Some of the challenges of remittance transfers are as follows:
International money transfer, particularly to Nigeria, has been characterized by horrendous charges that can go up to 10 percent of the amount transferred from Germany. This has discouraged many people who want to send money online to Nigeria from Germany, thus reducing the overall number of remittances.
Controversies have also ranged from fixed high fees from traditional remittance service providers. Inverse exchange rates, other charges such as fees for transferring money and extra charges by the receiving bank in Nigeria erode the value arrived at by beneficiaries. This lack of transparency has led to a trust deficit, and receivers need help making informed decisions by the senders.
Industry constraints such as regulatory and compliance have also led to additional costs and complications to remittance transfers. There is also a variation in how the different countries approach the implementation of measures and policies aimed at anti-money laundering (AML) and combating the financing of terrorism (CFT). The attempts to conform to these regulations have exposed the need to incur certain delays and additional costs while transferring funds online from Germany to Nigeria.
Read more: Remittances to Nigeria from Germany Made Simpler.
Some of the innovations in the remittance sector are as follows:
The increasing incidence of internet use makes it easier for people to send money online. This indicates that money transfers from Germany to Nigeria have become more convenient, efficient, and affordable. Previous remittance corporations offering their services in the market succeeded in charging higher fees, making things complicated for consumers and forcing them into their corners. However, with the entrance of innovative companies such as ACE Money Transfer, WorldRemit, Remitly, and others, they have set lower prices and easy-to-understand interfaces.
Other technologies that have been considered to disrupt the remittance industry include Blockchain technology. Blockchain leads to eradicating third parties in transferring capital and eliminating costs and time spent on transactions. Online money transfer platforms employing blockchain solutions offer a more transparent and efficient way to make an online money transfer from Germany to Nigeria.
New and more accessible cash services, such as those delivered through mobile phones, are proving popular, whereas full banking facilities are scarce. Some mobile money service providers, such as MTN and Airtel remittance services, have partnered with companies to ensure recipients receive their foreign exchange directly in their mobile money wallets in Nigeria. This innovation has reduced costs and improved access for recipients in rural areas.
Realizing the role of remittances in their economies, the Nigerian and German governments have embraced the need to ease the cost of transferring money back home. In addition, bilateral agreements with countries have been signed to enhance financial cooperation and reduce remittance charges. These agreements are mainly tailored towards improving the general perception and business conditions for remittance service providers around the globe.
The regulator has made changes to open market competition for remittance service providers. There are also reduced regulatory issues and paperwork, which gave authorities a signal to open the market to more participants and lower the price. He also noted that the Central Bank of Nigeria (CBN) has adopted policies to ensure exchange rate stability and eradicate hidden charges.
This has led governments worldwide to engage other stakeholders in the private sector to find a solution to the remittance cost problem. Efforts such as introducing the African Diaspora Investment Fund (ADIF) and incorporating Fintech partners have helped provide solutions that seek to bring down costs. Such partnerships rely on technology to reduce the costs of remittance services and introduce more significant efficiency.
Efforts to create financial literacy campaigns for Nigerian expats within Germany have also been essential. Information on available remittance facilities, their costs, and the necessity of informal transfer has helped the financial literacy programs most cheaply and effectively support expatriates in making informed decisions.
Following are Some of the significant factors that define the roles:
To a certain extent, they provided competitive pricing that has disrupted the remittance market by traditional players. As such, these companies have embraced technology in their operations, intending to cut down on expenses and offer better deals to consumers. For example, Wise and WorldRemit can offer much cheaper options than banks for a money transfer from Germany to Nigeria.
Fintech platforms prioritize UI to ensure that the next step of money transfer through the online platform to Nigeria becomes easily manageable by an individual in Germany. Connected through unified, graphical and intuitive front ends, these platforms include mobile applications and round-the-clock customer support to deliver user-friendly remittance solutions.
Therefore, the effort to eliminate high fees in making a money transfer from Germany to Nigeria for Germans-based Nigerian expatriates is a step towards financing for all and the general economic liberty. Besides helping those who care for their families back home by eradicating the issue of excessive fees usually charged by the money transfer agencies, this also encourages the economic development of the diaspora groups since they are capable of saving more money without necessarily having to spend it on expenses, like fees, associated with transferring their cash back home. The cuts in remittance costs improve the effectiveness of the financial transfer process and ensure that a higher proportion goes to Nigerian beneficiaries.
As a result of this cut, Nigerian expats will have more discretionary income, enabling them to save more, send more money home, or spend more on their German lifestyle.
Decreased remittance fees can help Nigeria's economy by encouraging foreigners to send more money home, which can help communities, companies, and families.
A major hardship for Nigerian expats is the high expense of transferring remittances from Germany to Nigeria.
The primary beneficiaries of this strategy are foreigners from Nigeria who reside in Germany.
