Money transfer company Transferwise has resumed remittances to Nigeria after a 17-month break because it has regained confidence in the central bank's handling of the naira currency, its chief executive said on Friday. Remittances or money transfers make up the second-largest source of foreign exchange receipts in Africa's biggest economy after oil revenues. Around $20 billion a year is sent to Nigeria, according to the World Bank.
The London-based company is one of the best funded in Europe's fintech sector but it ceased its service to Nigeria in April 2016 saying it could not offer a true mid-market rate and a transparent fee. Nigeria has at least six exchange rates including a retail rate set by licensed exchange bureaus and a rate for foreign travel. It also has official and black market rates.
Low oil prices caused chronic dollar shortages and in 2016 Nigeria, an Opec member, fell into its first recession in 25 years. It emerged from recession in the second quarter. Rates have neared convergence in the last few months due to improved dollar supply from higher oil receipts. Transferwise said it resumed its service to Nigeria in late September for a small group of users and opened more widely in October.
"We have monitored the market closely over the past year and recent efforts by the Central Bank of Nigeria have strengthened our confidence in the naira," said Kristo Kaarmann, its CEO and co-founder, in emailed responses to questions. The World Bank estimates that remittances to Nigeria fell from $21 billion in 2015 to $19 billion last year because tighter capital controls led to a large part of formal money transfers being diverted to informal channels.
"We commend the central bank in creating a more stable and fair environment for money transfer providers," said Kaarmann, adding that Transferwise had more than 10,0000 requests from customers who wanted to use the firm to send funds to Nigeria. Nigeria, with its population of 180 million, is a key market in an expansion drive by the six-year-old company, which also serves South Africa, Kenya, Morocco and other countries around the world. The company has partnered with fintech payment platforms Flutterwave and Venture Garden Group which have licences from Nigeria's central bank to operate in the country.