1.
Africa's
Financial
Report
2022
Impact of Currency Fluctuations on
Remittance Flows in Africa:
A Case Study of Nigeria, Ghana, and
Kenya in 2022
January 2023

2.
Remittance Industry in
Africa
1
2
Impact of Currency
Fluctuations
Cost of Remittances
DeFi can defy the cost of
Remittances
About the Company:
XendBridge
Content
3
4
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3.
RemittanceinflowstoSub-SaharanAfricancountriesfrom2015to2023(inbillionU.S.dollars)
The remittances sent to Sub-
Saharan African countries
have experienced overall
growth from 2015 to 2021,
despite some fluctuations. In
2021, Sub-Saharan countries
received a total of 49 billion
U.S. dollars in remittances, and
in 2022, this amount rose to
53 billion U.S. dollars. It is
estimated that this value will
further increase to 55 billion
U.S. dollars by 2023.
The act of sending money or goods from migrants to their families and friends in their
home countries is referred to as remittances and it is a crucial connection between
migration and development. These remittance flows are crucial because they provide
a more stable source of income compared to capital flows and they tend to increase
during economic downturns or natural disasters when private capital flows decline.
In many developing countries in Sub-Saharan Africa, remittances have remained a
vital source of foreign income, significantly impacting the lives of millions of people
over the past year.
With the increasing trend of using digital tools and services for money transfers,
digital remittances are expected to continue growing throughout 2023. The shift
towards digital, accelerated by the pandemic, is expected to persist as tech-savvy
customers seek affordability and convenience.
Due to the changing economic climate in their host countries, migrants abroad are
making sacrifices to send money back home. A survey study shows that these
migrants have had to reduce their spending to be able to afford sending remittances,
a trend that is expected to continue in the short to medium term.
Remittance
page 1.

4.
Top 5 countries in Africa with the highest values of personal remittances received as of 2021 (in
billion U.S. dollars)
According to industry data, the majority of the funds received through remittances
are used to support families in purchasing food and household goods, offsetting
medical expenses, and meeting education costs. In some countries, the share of
remittances in GDP is quite high, with The Gambia having 28%, Lesotho having 21%,
and Comoros having 20% of GDP made up of remittances.
Apart from Egypt & Morocco that isn't geopolitically part of sub-Saharan. Nigeria ranks the highest in
remittance inflows to sub-Saharan Africa followed by Ghana and then Kenya.
Despite the impact of the global crisis, remittances to Sub-Saharan Africa increased
by 5.2% to reach 53 billion U.S. dollars in 2022. According to the World Bank's report
on Migration and Development, this growth was slower compared to the 16.4% growth
recorded in 2021.
In 2021, the vast majority of remittances sent to Sub-Saharan Africa went to Nigeria, with a total value of 19.2
billion U.S. dollars. Ghana followed, with remittances amounting to roughly 4.5 billion U.S. dollars.
Remittance inflows to West Africa in 2021, by country
page 2.

5.
Decreased purchasing power: Currency fluctuations have decreased the value of
remittances received in local currency, thereby reducing the purchasing power of
recipients, making it harder for them to use the remittances for basic necessities
such as food and housing.
Increased costs: The fluctuation of currencies has also led to increased costs of
remittances, as the exchange rate used to convert the sending and receiving
currencies is affected. Businesses have been required to frequently adjust their
prices in response to these changes.
Decreased demand for remittances: The fluctuation of currencies has also
decreased the demand for remittances as the incentive for people to send money
to their families and friends abroad is reduced.
Increased use of informal remittance channels: Due to the higher costs and
reduced purchasing power associated with formal remittance channels, currency
fluctuations have also led to an increase in the use of alternative remittance
channels, such as hawala and peer-to-peer money transfer on blockchain
networks.
In Africa, inflation has a significant impact on currency fluctuations. When inflation is
high, the purchasing power of the currency decreases, causing the value of the
currency to drop relative to other currencies. This leads to increased currency
fluctuations and higher uncertainty in the exchange rate.
Currency fluctuations have had a substantial effect on remittance flows in Africa,
particularly in countries like Nigeria, Ghana, and Kenya where remittances play a
crucial role in their economies.
In 2022, many Sub-Saharan African countries experienced significant fluctuations in
the value of their local currencies compared to the currency of the remitting country
outside the continent. These fluctuations have affected both the amount and
purchasing power of money received by the recipient, as well as the cost of sending
the money by the sender due to exchange rate changes.
Here are some of the ways in which currency fluctuations have impacted remittance
flows in Sub-Saharan African countries, specifically Nigeria, Ghana, and Kenya:
page 3.
Impact of Currency Fluctuations on Remittances

6.
It is widely known that currency fluctuations in Nigeria, Ghana & Kenya are driven by a
range of economic and political factors, including changes in interest rates, inflation,
government policies, and global economic trends. In the peculiar case of Nigeria,
fluctuations in its currency, the Naira, is also a result of over-reliance on oil exports,
which make up a large portion of its national revenue. The Naira has historically been
subject to substantial volatility, which has impacted remittances and other financial
transactions.
A sum of $23.3 million was recorded as remittance outflow from Nigeria, indicating a net
inflow of $10.09bn in H1 2022 as against a net value of $9.99bn recorded in H2 2021 and
$9.2bn recorded in the corresponding period of 2021.
For Ghana, remittance flows to the West African country are already estimated to reach
about $4.5 billion as of Dec 2022, positioning Ghana as one of the highest recipients of
remittance inflows in Africa apart from Nigeria.
page 4.
These rates are derived from the mid-point between the "buy" and "sell" transactional rates from
global currency markets. They are not transactional /unofficial local rates.
Even with that, in 2022. A total of $10.11 billion was received by Nigerians as diaspora
remittances between January and June 2022 compared to $9.23bn received in the
corresponding period of (Jan – June) 2021.
To mitigate the impact of currency fluctuations/devaluation on remittance flows in
Africa, asides from what government is responsible for doing. New remittance
businesses in the sub-Saharan African markets are adopting digital technology such as
blockchain & cryptocurrency to help mitigate currency risk and improve the efficiency
of their remittance and cross-border payment services, which is helping to reduce costs
and increase access to remittances for recipients in these markets.

7.
In 2021, Tanzania and Nigeria
were the countries in Africa
with the highest costs incurred
on remittances sent. On
average, charges for a money
transfer of 200 U.S. dollars
from these countries
amounted to 27 percent and
19 percent of the sum sent,
respectively.
Top 5 African countries with the highest costs of sending remittances as of 2021 (in percentage
of 200 U.S. dollars)
Cost of Remittance
Approximately 150 million Africans live outside the continent, and remittances from
both North Africa and Sub-Saharan Africa were estimated at 100 billion dollars in 2021.
However, the average cost of transferring $200 to the continent is $16.
The cost of remittance transfers for the African diaspora is the highest in the world,
with an average of 8% compared to the global average of 6%. Given the crucial role
that remittances play in the African economy, it is essential to make it easier and
reduce the fees associated with remittances transfers for the African diaspora.
As At April, 2022
page 5.

8.
Sending money to individuals who lack access to a financial system, particularly in regions
of Africa that heavily rely on remittance such as Sub-Saharan Africa, presents a
significant challenge and comes with a high cost. In the last quarter of 2018, the average
cost of sending $200 to Sub-Saharan Africa was approximately 9%. When applied to the
$53 billion sent to the Sub-Saharan Africa region in 2022, this results in a total remittance
cost of $4.7 billion.
Reducing the cost of remittances to the average global rate of 7% (2018 data) would
result in an additional flow of over $1 billion to regions where it is needed the most, and
the impact would be even greater with a greater decrease in transaction costs. The goal
is to have a streamlined, easy, and cost-effective method for people working abroad to
send money to their families back home.
This aligns with the United Nations' Sustainable Development Goals, which aim to lower
the cost of migrant remittances to 3% and eliminate remittance corridors with fees higher
than 5% by 2030.
page 6.

9.
DeFi can defy cost of remittances
Migrants who seek to send money to their loved ones often face excessive fees from traditional
financial systems. DeFi solutions like Xend Finance and Xend Bridge provide a promising
alternative by leveraging blockchain technology for secure, peer-to-peer transactions without
intermediaries. These solutions offer transparency and security, with fees that are usually lower
than traditional options.
By offering education and promotion, migrants can be empowered to use DeFi, particularly
stablecoins, as a cost-effective way to send money home, especially for those who have
unbanked family and friends in their home country. This can have a significant impact in
reducing the costs associated with sending remittances through centralized finance systems.
How cryptocurrency meets residents’ economic needs in Sub-
Saharan Africa
In the period of July 2021 to June 2022, Sub-Saharan Africa recorded the lowest volume of
cryptocurrency transactions among the regions analyzed with $100.6 billion in on-chain
volume received, constituting 2% of the global activity and showing a 16% increase
compared to the previous year.
Despite being the region with the
least cryptocurrency transaction
volume, Africa has some of the
strongest and most established
cryptocurrency markets.
Specifically, Nigeria and Kenya
rank highly on the Global Crypto
Adoption Index, coming in at 11th
and 19th place respectively. This
indicates a high level of integration
and usage of cryptocurrencies in
everyday financial activities for
many users in these countries.
In Sub-Saharan Africa, the retail market plays a significant role in driving cryptocurrency
adoption and usage. The region stands out with the highest percentage of small retail
transfers below $10,000, with 95% of all transfers being retail-sized. A majority of these
transfers, specifically those under $1,000, are made by individuals, making up 80% of all
small retail transfers in the region.
Additionally, Sub-Saharan Africa boasts the largest share of international payments
made through cryptocurrency, with over 88.5% of transactions being cross-border
transfers. This is largely due to the instability of fiat unstable currencies and a lack of
confidence in the economic system. The low fees associated with crypto have resulted
in its increased usage for international payments, remittances, and commercial
transactions.
page 7.

10.
Cryptocurrency transactions
reached $100.6 billion in Sub-
Saharan Africa, between July
2021 - June 2022 from
$48billion between July 2020
– June 2021 in Sub-Saharan
Africa. With Nigeria, Kenya &
South Africa ranking 11ᵗʰ, 19ᵗʰ
& 30ᵗʰ respectively
Cryptocurrency Trade Volume in Africa from June 2021 - June 2022
The proportion of peer-to-peer (P2P) transactions in Africa's cryptocurrency transaction
volume is 6%, which is more than twice the share in the next most active region, Central &
Southern Asia and Oceania.
Sub-Saharan Africa has adopted cryptocurrency for various reasons, shaped by the
specific needs of each country. People in nations with a struggling economy rely on
cryptocurrency for remittances and preserving their savings, especially if inflation is high.
Meanwhile, in more developed markets, cryptocurrency is perceived more as a
speculative investment.
One example is Egypt, where remittance payments make up around 8% of its GDP. The
country's central bank has even started a project to establish a crypto-based remittance
channel between Egypt and the UAE, where many Egyptians work.
Crypto is also becoming popular in Africa for commerce and remittances. Despite the
existence of thousands of payment networks, few of them are interconnected. Crypto
enables cheaper Intra & Inter Africa remittances and transactions.
page 8.

11.
XendBridge is an innovative blockchain-enabled P2P payment network that is
revolutionizing the way remittances are sent to Africa. With XendBridge, users can quickly
and securely transfer money to friends and family abroad, without having to worry about
costly fees or slow processing times.
XendBridge allows users to send money in a range of different currencies, including fiat
currencies, cryptocurrencies, and other stablecoins. The platform also offers a number of
additional services, such as an escrow service to protect users’ funds, 0% transaction
fees, and 24/7 customer service.
Furthermore, XendBridge provides API integration for businesses and an OTC desk for
high-net-worth individuals and institutions to trade large amounts of money. XendBridge
supports different network chains like BSC, Ethereum, Polygon, and Tron, with Cardano
and Celo support coming soon.
With XendBridge, users can now send remittances to Africa with confidence, knowing that
their money will be securely and quickly transferred to their desired destination. This
revolutionary platform is supercharging the way remittances are sent to Africa, and is
helping to bridge the gap between African countries and the global economy.
page 9.
To get started with XendBridge, go to: www.xendbridge.com

12.
References
"Will remittance trends from 2022 in Ghana continue in 2023?" December 09, 2022. hhttps://guardian.ng/ama-
press-releases/will-remittance-trends-from-2022-in-ghana-continue-in-2023/
"Africa’s Growing Crypto Market Needs Better Regulations" November 22, 2022.
https://www.imf.org/en/Blogs/Articles/2022/11/22/africas-growing-crypto-market-needs-better-regulations
"The world doesn’t need banks, policymakers or NGOs — It needs DeFi" April 17, 2022.
https://cointelegraph.com/news/the-world-doesn-t-need-banks-policymakers-or-ngos-it-needs-defi
"Nasser Bourita: Africa Has the World’s Highest Remittance Transfer Fees" January 12, 2023.
https://www.moroccoworldnews.com/2023/01/353495/nasser-bourita-africa-has-the-worlds-highest-
remittance-transfer-fees
"The 2022 Geography of Cryptocurrency Report" 2022.
https://go.chainalysis.com/rs/503-FAP-074/images/2022-Geography-of-Cryptocurrency
"The economic lifeline for Nigeria in Diaspora remittances" January 16, 2023.
https://www.businessamlive.com/the-economic-lifeline-for-nigeria-in-diaspora-remittances/
"From Morocco, African states call for cheaper remittance transfer costs" January 13, 2023.
https://northafricapost.com/64374-from-morocco-african-states-call-for-cheaper-remittance-transfer-
costs.html
"Togo’s: Minister of Foreign Affairs recently chaired a forum on African remittances in Morocco" January 17, 2023.
https://www.togofirst.com/en/economic-governance/1701-11238-togo-s-minister-of-foreign-affairs-recently-
chaired-a-forum-on-african-remittances-in-morocco
"Remittances see 5% rise in 2022, reveals World Bank report" December 5, 2022.
https://gulfbusiness.com/remittances-see-5-rise-in-2022-reveals-world-bank-report/
"Remittances to Africa grow to $5.3B on strong flows to Kenya, Nigeria" December 21, 2022.
https://theexchange.africa/africa/remittances-to-africa-grow-to-5-3b-on-strong-flows-to-kenya-nigeria/
"World Bank estimates $20.9 billion in remittance inflow for Nigeria in 2022" November 30, 2022.
https://nairametrics.com/2022/12/02/world-bank-estimates-20-9-billion-in-remittance-inflow-for-nigeria-
in-2022/
"Official exchange rate (LCU per US$, period average)" https://data.worldbank.org/indicator/PA.NUS.FCRF

13.
hello@xend.finance
http://xendbridge.com/
@xendbridge
@xendBridge
Thanks for reading
Africa's Financial Report 2022
Impact of Currency Fluctuations on Remittance Flows in Africa:
A Case Study of Nigeria, Ghana, and Kenya in 2022
January 2023
by :
Zacchaeus Akinwale
Data & Research Analyst, Xend Finance
Mercy Emmanuel
Head of Growth, Xend Finance
Contact Us
01-888-3340