Nigeria trailed Egypt in terms of foreign remittance to the African continent which hit $95 billion in 2024, a new report by the Institute for Security Studies (ISS), a Pretoria, South Africa-based organisation has stated.
According to the report, remittance into Africa surged from $53 billion within a decade, an increase in the continent’s share of the continent’s Gross Domestic Product (GDP) from 3.6 per cent to 5.1 per cent over the same period.
“In just over a decade, remittance inflows to Africa have surged from approximately $53 billion in 2010 to roughly $95 billion in 2024. This reflects an increase in their share of the continent’s GDP from 3.6 per cent to 5.1 per cent over the same period, making remittances one of Africa’s largest and most stable sources of external finance.
“Despite their scale and stability, they remain overlooked in Africa’s economic development debates. Remittances to Africa have matched or exceeded the value of Official Development Assistance (ODA) and Foreign Direct Investment (FDI) in recent years, underscoring their growing macroeconomic significance,” the report added.
For instance, the report stated that in 2024, FDI inflows to the continent reached $97 billion, roughly in line with remittances, with around 36 per cent of this FDI concentrated in a single urban development project in Egypt, making the remaining continent’s 2024 FDI about $62 billion.
In recent years, remittances to Africa have matched or exceeded the value of ODA and FDI, underscoring their growing macroeconomic significance Egypt, Nigeria and Morocco accounted for the largest shares of Africa’s remittance inflows in 2024, the ISS report noted.
By contrast, several countries, including Angola, Seychelles and São Tomé and Príncipe, received less than 1 per cent of total inflows, highlighting stark disparities in remittance dependence. Regionally, North and West Africa attracted the highest overall remittance volumes.
“Remittances are pivotal in sustaining household livelihoods, particularly in low- and middle-income countries. Unlike ODA or FDI, remittances are sent directly to households to cover essential expenses, mostly bypassing bureaucratic channels.
“Therefore, they have a direct impact on a family’s food security, healthcare, housing and education. Recipients spend most of these funds locally, stimulating trade and services, and sometimes investing in community infrastructure.
“In 2019, for instance, approximately 65 per cent of Kenya’s population and almost half of Gambia’s population relied on remittances as a key source of household income. These statistics reinforce the argument for including estimates in national poverty alleviation strategies, especially where formal employment and social protection systems are fragile or underdeveloped,” the report stressed.
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On a broader scale, remittances, it said, provide a stable source of foreign exchange, which helps bolster national reserves and reduce external vulnerabilities. In several African countries, including the Gambia, Lesotho, Comoros, South Sudan, Liberia and Somalia, remittances accounted for more than 10 per cent of GDP.
Although discussions on development tend to focus on big-ticket investment, trade deals or aid flows, this neglect, according to the report, persists even though remittance flows are typically more stable and countercyclical, providing a critical buffer in times of crisis, as seen during the COVID-19 pandemic when ODA and FDI declined.
A substantial share of Africa’s remittance flows, according to the report, continues to move through informal channels, such as hand-carried cash or unregistered transfer systems, particularly evident in the DR Congo, Libya, Zimbabwe, Somalia and Nigeria.
This persistent reliance on unregulated intermediaries undermines financial inclusion, masks the full scale of diaspora contributions and weakens data for policymaking, the report stressed.
“Closing the gap between remittances’ potential and their current use requires action on three fronts: lowering costs and formalising flows, integrating them into national financial systems and creating incentives for diaspora investment.
“Lowering transfer costs and formalising remittance channels is the first essential step. The average cost of sending money through mobile applications to Africa was around 5 per cent of the amount transferred in 2023, far above the UN Sustainable Development Goal (SDG) target of reducing transfer costs to 3 per cent by 2030. Addressing these bottlenecks will require both regulatory innovation and investment in inclusive financial ecosystems.
“Technological advancement is starting to break some of these barriers. The recent expansion of financial technology (FinTech) platforms has been instrumental in facilitating faster, cheaper and more secure cross-border payments. Mobile money platforms, blockchain-based transfers and peer-to-peer (P2P) apps can enable simple payments and cut costs drastically, such as M-Pesa, MTN MoMo and Airtel Money,” it said.
This transformation, according to the report, is largely driven by the rising intra and extra-African migration, which is reshaping financial flows on the continent and reflects a broader shift toward the need for more formalised channels.
The AfCFTA Protocol on Digital Trade and cross-border payment systems like Pan-African Payment and Settlement System (PAPSS), it said, offer a framework for harmonising rules, lowering costs and expanding formal remittance corridors.
The report stated that a second priority is to link remittance inflows more effectively with national financial systems, as the growing use of FinTech-enabled remittance transfers is not uniform across the continent, and a missed integration with broader financial systems persists.
Few African countries, it said, have robust frameworks to link remittance inflows with savings, insurance or productive investment, so their potential as an overarching development lever remains largely untapped.
The report, according to Arise news, added that stronger policy frameworks are needed to connect remittances with financial products and domestic capital mobilisation.
“Finally, creating incentives for diaspora investment can turn remittances into a long-term source of development finance. If better harnessed, remittances could support structured savings, investment products or diaspora bonds, providing a sustainable source of capital for national development.
“However, increased reliance on remittances also carries risks. Economic shocks in host countries can reduce flows, heavy dependence on inflows may disincentivise structural reforms in-country, and digital channels bring cybersecurity and fraud concerns. Clear incentives, balanced with safeguards, are needed to channel diaspora capital productively while avoiding overdependence.
“Another underexplored frontier is that while the bulk of Africa’s remittance inflows traditionally originates from the Gulf States, North America and Europe, there is a growing trend of intra-continental remittance flows. Approximately one-fifth of total remittances stems from transfers within Africa. In 2023, this accounted for about $20 billion of remittances originating from within Africa,” the report noted.
With globalisation intensifying and migration on the rise, remittances will remain a steadily growing pillar of Africa’s financial inflows, the report stated, with a recent AFI–ISS study finding that if robust financial reforms are pursued, Africa’s net remittances will reach approximately $168.2 billion by 2043, compared to $137.2 billion under the baseline trajectory.
“There are valuable policy lessons from other Global South economies, which have pioneered successful models for transforming remittance flows into broad-based growth. These show that remittances can shift from mere consumption support to productive investments in small enterprises, rural infrastructure, health systems, education, and more,” it said.
According to the report, deliberate efforts to promote financial literacy, reduce transaction costs, incentivise formal remittance flows and align diaspora finance with local development needs can turn remittances into engines of inclusive economic development.
“ As Africa navigates debt stress, climate pressures, economic transformation and global power shifts, the time to rethink remittances is now. They are a strategic asset for Africa’s financial future,” it added.