Bureau De Change operators in Nigeria have accused unlicensed online firms and Fintech companies of diverting diaspora remittances.
The President of the BDC operators Aminu Gwadebe, expressing concern on the issue, said that diaspora remittances are now being redirected away from the official market, which are diverted by some Fintech and unlicensed companies.
Mr. Aminu lamented that this operation has led to the lack of formal documentation of remittances sent to Nigeria in dollars, while stating that most of the diaspora remittances are being diverted outside the parallel market.
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In his words,
“We had a meeting with the banks where we even tried to bring up the issue of diaspora remittances so that we can harness it and bring liquidity, but they said they don’t see it. That’s the truth of the matter, a lot of unlicensed online firms are in the process.
“It’s not in the official market, it’s not even in Nigeria, it’s not even coming, that is the truth of the matter, It’s being left abroad to be financing the 41 banned items and other illegal speculation holding activities. People are sending money but the thing is that it is not coming through a regulated and official channel.”
Also speaking on some fintechs diverting diaspora remittances, he said,
“Yes, to some other channels that operate under different jurisdictions all over and lack standardized regulations. Can you tell me about Binance that is not in Nigeria, Nigerians are not doing transactions of Binance.
“These are borderless platforms, they don’t have borders, they don’t have offices, you don’t even know where they are, are they operating in Kenya, South Africa, Nigeria or Ghana. They just don’t transfer money through an agent, there are a lot of online platforms that are being advertised in all these places where we have Nigerians and they are highly speculative, sometimes their rates are even higher than what is obtainable in the parallel market.”
Mr. Aminu however acknowledged the malpractice carried out by some unscrupulous BDC operators, whom he accused of receiving diaspora remittances and not reporting it officially. He further warned that any BDC operator caught doing transactions and refusing to send the returns of its activities is going to be severely dealt with.
On the role of government in this, he suggested the implementation of stricter measures for market players engaged in such activities. He emphasized the need for a favorable environment for licensed players, advocating for an expansion of the BDC business model beyond the conventional cash model.
Mr. Aminu further added that these measures would involve allowing them to adapt and evolve, fostering healthy competition and transparency to enhance the market’s depth.
Despite the accusation of fintechs diverting remittances, it is understood that these companies have continued to play a significant role in facilitating and optimizing diaspora remittances.
Fintechs have introduced innovative solutions that aim to streamline the process of sending and receiving money from individuals living and working abroad to their families back home. The landscape of international remittance has undoubtedly been altered by the emergence of fintechs, as their remittance services are gaining popularity all over the world.
When compared to traditional banks, these fintechs offer so many advantages.
Let’s look at some advantages;
- Lower Costs:
Traditional remittance channels often involve high fees and unfavorable exchange rates. Fintech companies leverage technology to offer more competitive pricing, reducing the cost of sending money across borders. This appeals to both senders and recipients, as more of the money sent reaches its intended destination.
- Efficiency and Speed:
Fintech remittance platforms typically offer quicker transfer times compared to traditional methods. They use digital platforms to expedite the processing and delivery of funds, providing faster access to funds for recipients.
- Higher Rates of Exchange:
Initially, it was difficult to obtain better exchange rates, as they were not favorable for even medium-sized and small businesses. But things completely changed when FinTech payment solutions started offering competitive exchange rates that were pretty close to the rates that were already in the market.
Looking at the advantages these fintechs offer, it is not far-fetched to understand why they are the preferred option for international remittances.
All parties involved in international remittance have benefited greatly from in fintechs revolutionary impact. It has changed the way people transfer money across borders, and has made international remittance cost-effective, secure, and quick by utilizing cutting-edge technologies.