Sub-Saharan Africa remains the most expensive region in the world to transfer money to, with an average remittance cost of 8.37% in the second quarter of 2024, according to the World Bank's most recent remittance report. This high cost is attributed to the presence of multiple middlemen and limited access to digital financial services, making it difficult for individuals to send money back to their families and loved ones in the region.

Remittances play a significant role in the region, with $54 billion received in 2023, boosting the economies of many nations. In fact, remittances account for over 20% of GDP in The Gambia, Lesotho, and the Comoros, and over 10% in Liberia, Cape Verde, and Guinea-Bissau. Even in larger economies such as Kenya, remittances are more valuable than some of the country's main exports.

The high cost of remittances to Sub-Saharan Africa is due to a range of factors, including middlemen and foreign exchange fees. Traditionally, sending money to Africa involves a few middlemen, including third-party financial institutions and foreign currency brokers looking to maximize their own profits. Each intermediary contributes an extra fee, raising prices and aggravating delays.

Additionally, while digital remittance services are often less expensive than the worldwide average, the majority of transactions to Sub-Saharan Africa still use traditional cash transfers. These transactions need additional processing and have higher costs. There is also a difficulty with restricted internet connectivity, making it challenging for individuals to access digital financial services.

However, fintech companies have arisen to disrupt the remittance sector by providing cheaper and quicker alternatives. Companies like NALA, Flutterwave, LemFi, Chipper Cash, and Leatherback are using technology to improve cross-border transactions and reduce reliance on traditional banking systems. These startups are reducing remittance costs for Africans living overseas by harnessing mobile money, blockchain, and other financial advances.

The emergence of fintech companies in the remittance sector is a positive development, as it has the potential to increase access to financial services for individuals in Sub-Saharan Africa. With the region's economies heavily reliant on remittances, reducing the cost of sending money home can have a significant impact on the lives of millions of people. As the fintech industry continues to evolve, it will be interesting to see how it addresses the challenges facing the remittance sector in Sub-Saharan Africa.

In conclusion, the high cost of remittances to Sub-Saharan Africa is a pressing issue that needs to be addressed. With the emergence of fintech companies, there is hope that the cost of sending money home will decrease, making it easier for individuals to support their families and loved ones. As the region's economies continue to grow, it is essential to create an environment that fosters financial inclusion and reduces the cost of remittances.