WorldRemit, an online remittance provider, has called for the urgent restoration of money transfers to Nigeria as draconian new rules leave virtually all money transfer operators (MTOs) unable to provide services to the West African country.
Only three companies – Western Union, MoneyGram and Ria – will be able to continue operations, following an extreme and unexpected move by the Central Bank of Nigeria.
WorldRemit, in common with all other international MTOs, has been instructed by its local correspondents that transfers to Nigeria will no longer be processed and is, accordingly, suspending services immediately.
WorldRemit founder and CEO, Ismail Ahmed said: “This move is arbitrary, inexplicable and hugely detrimental to the Nigerian diaspora who rely on hundreds of money transfer companies and banks, providing them with choice, convenience and competitive pricing.
“Even now, as we suspend our service, there is no clarity on why this sudden change has happened. If it is on the basis of new rules, there was no warning. If it is a re-interpretation of old rules, local correspondent networks and banks should have been forewarned.
“This reverses the progress made by the country when the Nigeria Central Bank banned Western Union’s exclusivity agreements that had created a near-monopolistic position in the international money transfer market. Western Union controlled 78% of the market share when CBN outlawed exclusivity agreements with local banks.”
Until now, money transfer operators such as WorldRemit operated via partnerships with licensed local correspondents in Nigeria, enabling transfer of funds to local bank accounts – providing a more efficient service than the SWIFT infrastructure.
WorldRemit has also raised concerns about a 2015 memorandum from the Central Bank of Nigeria, setting out minimum requirements for companies offering international Mobile Money transfer services to Nigeria.
The guidelines specify that any company offering mobile money transfers must have minimum net assets of US $1 billion and have been operating for more than 10 years.
The US $1 billion minimum net assets requirement refers to any company that wishes to offer remittances to mobile money services in Nigeria and does not apply to any company wishing to offer remittances to Nigeria in general.
However, remittance service providers – including WorldRemit – have argued that the US $1 billion minimum net assets requirement will prevent new entrants and competition in the mobile money remittances market in Nigeria.
WorldRemit received a US $40 million Series A investment from Accel Partners in 2014, and a further US $100 million Series B led by Technology Crossover Ventures (TCV) in 2015.
In November 2015, WorldRemit was named the UK’s fastest growing technology company in the Deloitte UK Technology Fast 50 awards.
WorldRemit is the world leader in transfers to mobile money accounts and had been planning to launch remittances to mobile money services in Nigeria.
“It looks like all systems in Nigeria are currently geared against encouraging new entrants and competition in the mobile remittance markets. That is worrying in the extreme,” said Ismail Ahmed.
WorldRemit handles more than 40,000 money transfers to Nigeria every month. The West African country receives more than US $20 billion in remittances annually from migrants around the world.
WorldRemit provides international money transfers through its mobile apps and web service. In addition to cash pickup and bank deposit options, WorldRemit offers instant transfers to more than 30 Mobile Money services, with more than 100,000 transfers per month being received directly on mobile phones.