Investors update: Remittances to Nigeria to hit $26bn by 2025

Remittances to Nigeria to hit $26bn by 2025

Highlights

• Remittance flow to Nigeria will rise to $26 billion by 2025 from $20.1 billion in 2021, according to estimates by Agusto & Co., a Pan-African credit rating agency.
• Despite more Nigerians being discouraged by the country’s economic conditions and looking overseas for opportunities, their remittances continue to play a crucial role in sustaining the Nigerian economy.
• Unpopular policies of the Central Bank of Nigeria (CBN) have restricted remittance flow into the country but the improved economic conditions in developed nations are expected to drive overseas inflows.

Source: Zawya

Our Takeaway

The projected growth in Nigeria’s diaspora remittance figures would offer the apex bank more firepower to meet the increasing demand for FX amid the country’s ongoing forex shortage crisis. Beyond that, however, the trend gives credence to a number of remittance-focused tech startups—like NALA, Chipper Cash, Zazuu, and Sendwave looking to capture some market share from dominant traditional players that control as much as 80% of the market—and Pangea, Daba Finance, and Bantaba, which aim to address help startups source capital by connecting founders with the diaspora wealth through digital infrastructures.

---

Uber partners Safaricom to digitize ride payments

Highlights

• Ride-hailing giant Uber has partnered with Safaricom to allow riders across Kenya to pay for trips via M-PESA. 
• The M-Pesa payment option now comes embedded in the Uber app. Meanwhile, the company will also disburse payments to drivers on the platform via the mobile money service.
• The rollout follows a collaboration with UberEats that allowed consumers to pay for deliveries through M-PESA and delivery people to also receive their earnings through M-PESA. 

Source: ABC

Our Takeaway

Safaricom’s results for the last financial year show that the company processed 6.4 billion payments through M-PESA. In addition, data from the Central Bank of Kenya shows the number of total card payments in the country was at 70 million for the same period making M-PESA the most preferred mode of cashless payments. The collaboration is especially set to benefit drivers who lack bank accounts, with Uber’s data showing that about 20% of drivers on the platform do not have bank accounts and therefore lack the opportunity to fully leverage digital trips. 

---

Egypt’s bonds rally most in emerging markets after rate hike

Highlights

• Egypt’s dollar bonds rallied the most in emerging markets after the nation resumed its monetary-tightening cycle, boosting optimism that authorities will get an IMF bailout back on track.
• Debt due February 2026 rose 0.9 cents on the dollar to 53.4 for its biggest gain since July 14 while the extra yield investors demand to own the country’s securities rather than US Treasuries narrowed 3 basis points.
• In addition, ten other Egyptian bonds occupied the best-performing slots in the Bloomberg Emerging Markets Sovereign Total Return Index.

Source: Bloomberg

Our Takeaway

Egypt is currently trying to steer its economy out of a crisis triggered by the global economic shock caused by the Russian invasion of Ukraine. Since March 2022, the Egyptian pound has been devalued by nearly. While the Central Bank of Egypt unexpectedly raised interest rates on Thursday to 19.25%, experts believe it still needs to do more in terms of rate hikes and devaluation. The rate hike came after inflation hit an annual 35.7% in June. For July, the expansion is expected to reach a record 36.6% year-on-year (YoY) compared to the central bank’s target of 5%-9% by Q4 2023.