Middle East & Africa Digital Remittance Market Outlook, 2029

The trend is changing the face of digital remittances across the Middle East and Africa as mobile-first millennials and Gen Z, with their increased preference for services in digital financial inclusion, take over. This shift in demographics is driven by high mobile penetration rates and a growing tech-savvy population that values convenience, security, and affordability in financial transactions. This thus calls for increasing demands for seamless, efficient remittance solutions that best fit their preferences and lifestyles of these newer generations.

MEA's younger Millennial and Gen Z demographic cohorts display a preference for digital channels when carrying out remittance transactions, simply because they grew up with mobile technology at their fingertips and are, therefore, more at ease on online platforms. For example, mobile money services, such as M-Pesa, have greatly transformed financial inclusion in countries such as Kenya by providing people with the ability to send and receive money safely via their mobile phones, thus eliminating bank accounts.

While the use of digital remittance services is gaining traction in MEA countries, characteristics such as convenience - more so at the hands of mobile applications - the competitive exchange rates from a plethora of rising fintech companies, and the speed of such transactions blend to make it an attractive option against conventional banking mechanics. Companies like WorldRemit, based in the UK but highly represented in MEA, have ridden on these trends, providing easy-to-use platforms supporting instant transfers to numerable countries in the region. Cultural factors are playing a significant role in the shaping of the digital remittance landscape in MEA.

Family systems of supports or obligations often prompt people to send money to relatives living in different countries or regions. For instance, platforms that respect and answer to these cultural nuances - the requirement of security and trust in financial transactions - shall win the hearts of most users. In a nation such as the United Arab Emirates, with its millions of expatriate workers, online providers of digital remittances like TransferWise and Xpress Money work to serve at competitive rates and seamless user experiences from their mobile apps. It meets the concerns of the people who first consider safety in financial dealings by using advanced encryption technologies in securing the transactions on these platforms.

According to the report, the Middle-East & Africa Digital Remittance market is expected to reach a market size of more than USD 2 Billion by 2029. MEA has high mobile penetration rates, whereby the bulk of the population accesses financial services through their smartphones. The high level of mobile adoption allows mobile wallets and payment apps to be leveraged for performing remittance transactions. Most countries in the Middle East, such as UAE, Qatar, and Saudi Arabia have large expatriate populations. These workers regularly remit part of their earnings back home to countries in Africa and Asia. Large remittance flows result from labor migration, regional trade, and economic integration as some of the major economic factors.

Countries such as Egypt, Nigeria, and Kenya have been major recipients, with such inflows making a very significant contribution to the economy. Through financial-inclusion programs, governments drive in most MEA markets to achieve the objective of access to banking and digital payments. For example, Kenya has innovated the space of remittances through initiatives like M-Pesa, making mobile money transfers quite easy, effective, and less cash-dependent. While the regulatory framework does vary across various markets of MEA, it is generally supportive of FinTech innovation and digital payments.

Policies related to consumer, competition, and the stability of financial systems are increasingly being called upon by governments, all of which have a strong bearing on the growth of digital remittance services. MEA's financial services are becoming digital on the back of technological advancement and changing consumer behavior. Companies and governments are investing in the digital infrastructure that facilitates safe and efficient cross-border transactions.

Blockchain technology is getting popularized across MEA with its potential to enhance the security and transparency features of remittance transactions. FinTech startups and established players are testing blockchain solutions that can provide faster, cheaper services. For example, Plans are underway in the AU's Agenda 2063 to enhance the financial integration and digital connectivity of Africa. Initiatives like the AfCFTA will be meant to streamline intercountry trade and economic activities, a fact that might actually influence remittance flows within the continent.

Market Drivers

• Large Expatriate Workforce: The Middle East, particularly countries like the UAE, Saudi Arabia, and Qatar, hosts a large expatriate workforce. These workers send substantial remittances back to their home countries, creating a high demand for efficient remittance services. Digital platforms offer a faster, cheaper, and more convenient alternative to traditional methods, appealing to expatriates who need to support their families abroad. This significant expatriate population drives the growth of the digital remittance market in the Middle East.
• Mobile Money Adoption in Africa: Africa has seen a rapid adoption of mobile money services, particularly in countries like Kenya, Nigeria, and Ghana. These services provide financial access to unbanked populations, enabling them to send and receive money digitally. Mobile money platforms have revolutionized the remittance market by offering a secure, convenient, and cost-effective way to transfer money, particularly in regions with limited banking infrastructure. The widespread use of mobile money drives the digital remittance market across the continent.

Market Challenges

• Regulatory Complexity: The regulatory environment in the MEA region is highly varied and often complex, posing significant challenges for remittance providers. Different countries have different financial regulations, and compliance can be particularly challenging in regions with unstable political and economic conditions. Navigating these diverse regulatory landscapes requires substantial resources and expertise, increasing operational complexities and costs for remittance companies. Ensuring compliance while maintaining efficient service delivery is a critical challenge in the MEA region.
• Security Concerns: Security concerns, including fraud and cyber threats, are significant challenges for the digital remittance market in the MEA region. The increasing adoption of digital platforms makes them attractive targets for cybercriminals. Ensuring robust security measures to protect customer data and transactions is crucial for maintaining trust and confidence in digital remittance services. Companies must invest in advanced security technologies and continuously monitor and mitigate risks to safeguard their platforms.

Market Trends

• Blockchain and Cryptocurrencies: The adoption of blockchain technology and cryptocurrencies is a growing trend in the MEA region. Blockchain offers a transparent, secure, and cost-effective way to conduct cross-border transactions, reducing fees and processing times. Cryptocurrencies provide an alternative means of transferring money, particularly in regions with volatile currencies or restrictive financial systems. The increasing use of blockchain and cryptocurrencies is transforming the remittance landscape, offering innovative solutions to traditional challenges.
• Partnerships with Telecom Companies: In Africa, partnerships between remittance providers and telecom companies are becoming increasingly common. Telecom companies have extensive reach, particularly in rural areas, and can provide the necessary infrastructure for mobile money services. These partnerships enable remittance providers to leverage telecom networks to offer their services, reaching a broader customer base and enhancing financial inclusion. The collaboration between remittance companies and telecom operators is driving the growth of digital remittance services in Africa.

In the Middle East, the dominance of outward remittance is due to the large expatriate workforce.

The United Arab Emirates, Saudi Arabia, Qatar, and Kuwait host millions of expatriate workers from countries like India, Pakistan, Bangladesh, the Philippines, and many African nations. These workers migrate to the Middle Eastern nations for employment and, in most cases, remit major shares of their incomes home. The remittances that these expatriates send help their families, as well as the economies of their respective countries, survive. The online remittance mechanism offers the expatriate workers a reliable, faster, and cheaper channel for money transfer, which is an absolute necessity given the volume and frequency of the transactions.

The high penetration levels of mobile phones and increasing internet connectivity in the Middle East support the adoption of digital remittance services. The majority of expatriates would use mobile apps and online platforms to send money home rather than relying on banking channels, which be less convenient or more expensive. Financial institutions and FinTech companies across the Middle East promptly recognize this demand and tailor-made-to-suit solutions to answer for the needs of an expatriate workforce. The competitive market strengthens innovation and constant betterment of the service offering, ensuring users continue to indulge in effective and secure remittance options.

Africa is among the largest recipients of remittances, some are equal countries with sizable outward remittance flows resulting from intra-African migration. That's when workers move to another African country for better opportunities and send the money home. Mobile money services' growth across Africa has enabled/remitted huge revolutions in remittances that have provided financial access to the unbanked populations. In Kenya, for example, mobile money platforms such as M-Pesa make sending and receiving money very easy, hence supporting the flow of remittances both within the continent and internationally. In areas where traditional banking infrastructure is highly limited, such platforms come in very handy, and therefore digital remittance services become a favorite to many.

The banks are dominating the digital remittance market of the MEA region because of the wide network reach, well-established customer relationships, and various strategic tie-ups or partnerships that they have formed with international financial networks.

In the Middle East, some large banks, such as Emirates NBD, National Bank of Abu Dhabi, and Saudi National Bank, have been present for decades, building their presence and gaining consumer trust. Remittance services through these banks are widely utilized today by expatriates working in the UAE, Saudi Arabia, and Qatar, since this represents a familiar, reliable, and accessible solution. Banks in the MEA region offer expatriates genuinely all-rounded financial solutions through competitive exchange rates, a variety of currency options, and multiple secure modes of transfer.

The wide geographical coverage in terms of branches and ATMs makes access to remittance services easy for those clients who still prefer traditional banking interaction for their financial transactions. This physical presence complements digital offerings, providing a hybrid approach that fits diverse customer preferences. Strategic partnerships with international financial networks, such as SWIFT, enable MEA banks to conduct smooth cross-border transactions to any destination across the world. This type of partnership enhances the speed, reliability, and efficiency of remittance transactions, guaranteeing that funds are delivered on time to any recipient worldwide.

Besides, banks in the MEA region focus on compliance with regulations, which is done in line with stringent frameworks created by local authorities in regard to safeguarding transactions and minimizing the risks associated with money laundering and fraud. Customer trust forms the very bedrock of the banks' stronghold on the MEA digital remittance market. T5o hold on to customer trust and confidence, banks are making sure that strong security measures and customer service excellence are in place. Personalized advisory services - backed by relationship managers and 24x7 support - give way to a great customer experience, ensuring long-term retention. Garnering an unexampled capacity for continued response to technological changes and shifting consumer preferences, MEA banks are leading from the front within the digital remittance landscape, bringing innovation to the region while promoting financial inclusion.

The personal digital remittance services that have taken the lead in the MEA market, given the very high mobile penetration rates and the preference for user-controlled transactions among consumers.

Countries in the Middle East, like UAE, Saudi Arabia, and Qatar, show enormous smartphone adoption with a massive number of users relying on their mobile apps for day-to-day tasks, including remittances. Some of the pay facilitators realized by some merchants in this domain include Payoneer, Skrill, and PayPal, whereby they offer a simple mobile platform that allows users to send and receive money quickly and securely. For instance, Skrill allows for the sending of cross-border money through its mobile application, which has robust security measures in protecting those transactions.

Equally, PayPal, the world's leading digital payment processor, has a platform on which people can send cross-border remittances to, for instance, expatriates or migrant workers who need faster ways and means to send money back home to support families. It further drives personal digital remittance services in the MEA region is the engagement with and localization of services for the customer. It offers multi-language support, support for local currency, and other facilities that are culturally sensitive - features widely popular across the region. Understanding the particular needs and preferences of consumers in MEA promotes trust and loyalty, which are drivers to increase adoption and usage.

The individual companies that offer services in terms of personal digital remittances have been trying to add innovation and technology to the MEA in the drive towards competitiveness. Implementing technologies like blockchain for secure transactions and artificial intelligence for a more personalized customer experience can help them optimize the speed of transactions, cost reduction, and mitigation of risks, further underpinning the attractiveness of the digital remittance services in a highly competitive market landscape.

Saudi Arabia dominates the digital remittance market in MEA region due to country's huge expatriate population and government efforts toward promoting the need for digital transformation within the financial sector.

Saudi Arabia has a large expatriate population, with millions of foreign workers living and working in the country. Most of these workers have to remit money to families and loved ones back in their home countries, generating a high demand for remittance services. Recently, the Saudi Arabian government has been trying to popularize digital remittance services as a way to facilitate money transfers abroad more easily and quickly than was possible with traditional methods. Increasing digital transformation efforts by the government within the financial sector has boosted the growth of digital remittance services in Saudi Arabia.

The authority called as Saudi Arabian Monetary Authority has taken several initiatives to popularize the use of digital payments and enhance the financial infrastructure of the country. For instance, in 2019, SAMA implemented the Instant Transfer System, which enables customers to transfer funds between banks in real-time. The government of Saudi Arabia has joined hands with the private sector in developing digital remittance solutions in light of its large expatriate population in the country. For example, Saudi British Bank, commonly referred to as SABB, and Al Rajhi Bank have launched their digital remittance services through which money can be sent to foreign countries using a mobile phone.

Years considered in this report:

• Historic year: 2018
• Base year: 2023
• Estimated year: 2024
• Forecast year: 2029

Aspects covered in the report:

• Digital Remittance market outlook with its value and forecast, along with its segments
• Various drivers and challenges
• On-going trends and developments
• Top profiled companies
• Strategic recommendation

By Type:

• Inward
• Outward

By Channel:

• Bank
• Money Transfer Operation
• Online platform
• Others

By End User:

• Migrant Labour
• Personal
• Small Business
• Others

The approach of the report:

This report consists of a combined approach of primary and secondary research. Initially, secondary research was used to get an understanding of the market and list the companies that are present in it. The secondary research consists of third-party sources such as press releases, annual reports of companies, and government-generated reports and databases. After gathering the data from secondary sources, primary research was conducted by conducting telephone interviews with the leading players about how the market is functioning and then conducting trade calls with dealers and distributors of the market. After this, the research team made primary calls to consumers by equally segmenting them in regional aspects, tier aspects, age group, and gender. Once the research team attained the primary data, they verified the details obtained from secondary sources.

Intended Audience

This report can be useful to industry consultants, manufacturers, suppliers, associations, and organizations related to the Digital Remittance industry, government bodies, and other stakeholders to align their market-centric strategies. In addition to marketing and presentations, it will also increase competitive knowledge about the industry.