Sub-Saharan Africa sees remittance gains through mobile money expansion

Remittance costs in Sub-Saharan Africa remain among the highest in the world, placing a financial burden on migrant workers and the families who depend on cross-border transfers. As governments and fintech firms promote digital payment systems as a solution, the real question is whether these innovations are actually lowering transaction fees.

A study titled “The Impact of Mobile Money and CBDCs on Remittance Fees: Evidence from Nigeria and Sub-Saharan Africa,” published in Economies, assesses whether mobile money and Nigeria’s central bank digital currency, the eNaira, are delivering measurable cost reductions.

Mobile money drives measurable cost reductions

Mobile money platforms, which allow users to store, send, and receive funds through mobile phones without requiring traditional bank accounts, have transformed domestic payment ecosystems in several African countries.

Using regression models and descriptive analysis across remittance corridors, the authors find a statistically significant negative relationship between mobile money adoption and remittance costs. Countries with higher levels of mobile money usage tend to experience lower average remittance fees.

The mechanism behind this reduction is straightforward but powerful. Mobile money increases competition in the remittance market by offering alternative channels outside conventional banking systems. Traditional bank-dominated remittance corridors often involve high fixed costs, intermediary fees, and limited competition. Mobile money providers, by contrast, leverage digital infrastructure to reduce overhead and streamline transactions.

Moreover, mobile money platforms enhance interoperability within domestic financial systems. When recipients can receive funds directly into mobile wallets, the need for cash pickup or bank branch visits declines. This reduces operational costs and increases transaction efficiency. The study suggests that these structural changes contribute to downward pressure on remittance fees.

The findings carry particular weight in Sub-Saharan Africa, where financial inclusion levels have historically been low and where large segments of the population operate outside formal banking systems. Mobile money has effectively expanded access to financial services while simultaneously reshaping cost structures.

The authors note that the impact of mobile money is not merely theoretical. Their empirical analysis demonstrates measurable reductions in remittance fees in corridors with higher adoption rates. This provides evidence that fintech innovation, when market-driven and widely adopted, can materially benefit households reliant on cross-border transfers.

Nigeria’s eNaira: A CBDC without fee impact

Next, the study examines Nigeria’s central bank digital currency, the eNaira, launched in 2021 as one of the world’s earliest retail CBDCs. Policymakers initially promoted the eNaira as a tool to enhance financial inclusion, improve payment efficiency, and potentially reduce transaction costs, including remittance fees.

To evaluate the eNaira’s effect, the authors employ the Synthetic Control Method, a quantitative technique used to estimate what Nigeria’s remittance fee trajectory would have looked like in the absence of the CBDC. By constructing a synthetic comparison unit composed of similar countries without a CBDC, the researchers generate a counterfactual baseline and compare it with Nigeria’s actual post-launch data.

The results show no statistically significant reduction in remittance costs attributable to the eNaira during the study period. Remittance fees into Nigeria remained largely aligned with the synthetic control trajectory, indicating that the CBDC’s introduction did not materially alter the cost structure of cross-border transfers.

The authors identify several reasons for this limited impact.

• The eNaira has not meaningfully displaced traditional bank-dominated remittance channels. Banks and established money transfer operators continue to dominate the infrastructure for international transfers into Nigeria. Without structural shifts in market share, fee levels remain largely unchanged.
• Adoption challenges have limited the eNaira’s integration into mainstream remittance flows. Digital infrastructure gaps, limited interoperability with foreign remittance providers, and low user uptake have constrained its potential impact. While CBDCs theoretically reduce transaction layers and settlement friction, these efficiencies do not automatically translate into lower fees unless the currency is embedded in active remittance corridors.
• Competition dynamics matter. Mobile money platforms often compete directly with incumbents. In contrast, a CBDC introduced without parallel regulatory or competitive reforms may operate alongside existing systems rather than disrupt them.

The study’s findings do not suggest that CBDCs lack long-term potential. Instead, they highlight the distinction between technological capability and market outcome. A digital currency can exist without altering fee structures if underlying market incentives remain unchanged.

Policy implications for digital financial reform

Mobile money, driven by private-sector innovation and competitive dynamics, demonstrates measurable cost reductions. Nigeria’s CBDC, at least in its early implementation phase, does not.

The policy implications extend beyond Nigeria. Governments exploring CBDCs as tools for remittance cost reduction must consider structural market conditions. Digital infrastructure, regulatory frameworks, interoperability standards, and competitive pressures are critical determinants of impact.

The authors argue that CBDCs alone cannot guarantee lower fees. For cost reductions to materialize, digital currencies must integrate seamlessly with cross-border payment systems, incentivize usage by remittance providers, and operate within competitive environments that encourage price adjustments.

The research also underscores the broader role of fintech in financial inclusion. Lower remittance costs translate directly into higher disposable income for recipient households. In regions where remittances represent a significant share of GDP, even small percentage reductions in fees can have macroeconomic implications.

The study simultaneously cautions against overestimating the immediate transformative power of CBDCs. Early-stage adoption challenges, technological limitations, and institutional inertia can delay measurable outcomes. Policymakers must therefore design complementary reforms that address competition, interoperability, and consumer trust.

The findings are particularly relevant as more countries pilot or consider CBDC deployment. While the promise of faster, cheaper cross-border payments remains central to many CBDC narratives, empirical evidence suggests that implementation details determine success.