Economy
Africa’s Remittance Market to Worth $500bn by 2035
By Modupe Gbadeyanka
By 2025, Africa’s remittance market should reach a valuation of $500 billion, the Managing Director and Head of Africa at DAI Magister, Mr Risana Zitha, has projected.
The total value of remittances across the continent reached nearly $100 billion in 2022, with $20 billion in intra-African flows, according to reports.
The improvement in foreign exchange inflows is expected to be buoyed by increased competition, stakeholder collaboration and investment in financial infrastructure.
Remittances comprise a significant portion of the African Gross Domestic Product (GDP).
Despite the importance of remittances to the African economy, the cost of sending money to the continent remains very high.
The UN Sustainable Development Goals state that remittance fees should be less than 3 per cent by 2030, but data from the World Bank suggests that at present the global average is twice this target, with the figure as high as 20 per cent in some parts of Sub-Saharan Africa.
Mr Zitha noted that mobile money has emerged as a game-changer in tackling the challenge of high remittance costs in Africa, adding that he expects increased mobile money interoperability, better financial literacy and streamlined legal frameworks to further drive down fees across the region.
“Looking ahead, the growth of remittances in Africa is expected to continue. Based on the CAGR of 12.1 per cent between 2019 and 2022, the formal African remittance market, valued at $100 billion in 2022, could potentially reach $283 billion by 2035.
“The informal remittance market is estimated to be between 35 per cent and 75 per cent of the total value of formal channels, with Sub-Saharan Africa experiencing a higher proportion of informal transactions than the global average. As a result, the total remittance market in Africa could be worth $500 billion by 2035,” he stated.
“To fully capitalise on the opportunities in the continent’s remittances sector, stakeholders must collaborate to address the challenges and barriers that hinder growth and development.
“Reducing remittance costs should be a primary focus, which can be achieved by promoting competition, improving regulatory frameworks and investing in financial infrastructure.
“This will allow remittance providers to offer more affordable services, benefiting both senders and recipients and contributing to economic growth and development,” he submitted.
“Improving access to digital remittance services is another crucial aspect. While mobile money has made significant strides in Africa, there is still room for expansion.
“Governments and private sector stakeholders should invest in digital infrastructure, such as mobile networks and internet connectivity, to ensure that more people can access digital remittance services.
“Promoting financial literacy and education can also help individuals understand and trust digital remittance channels, encouraging adoption and usage,” he added.
“The ability to harness remittance flows is particularly important at a time when the Sub-Saharan region is experiencing acute hard currency shortages.
“By addressing the challenges and barriers, and leveraging the opportunities presented by technology and innovation, Africa can harness the transformative power of remittances for sustainable development and economic growth,” Mr Zitha concluded.
By Adedapo Adesanya
The Organisation of the Petroleum Exporting Countries (OPEC) has once again trimmed its 2024 and 2025 oil demand growth forecasts.
The bloc made this in its latest monthly oil market report for December 2024.
The 2024 world oil demand growth forecast is now put at 1.61 million barrels per day from the previous 1.82 million barrels per day.
For 2025, OPEC says the world oil demand growth forecast is now at 1.45 million barrels per day, which is 900,000 barrels per day lower than the 1.54 million barrels per day earlier quoted.
On the changes, the group said that the downgrade for this year owes to more bearish data received in the third quarter of 2024 while the projections for next year relate to the potential impact that will arise from US tariffs.
The oil cartel had kept the 2024 outlook unchanged until August, a view it had first taken in July 2023.
OPEC and its wider group of allies known as OPEC+ earlier this month delayed its plan to start raising output until April 2025 against a backdrop of falling prices.
Eight OPEC+ member countries – Saudi Arabia, Russia, Iraq, United Arab Emirates, Kuwait, Kazakhstan, Algeria, and Oman – decided to extend additional crude oil production cuts adopted in April 2023 and November 2023, due to weak demand and booming production outside the group.
In April 2023, these OPEC+ countries decided to reduce their oil production by over 1.65 million barrels per day as of May 2023 until the end of 2023. These production cuts were later extended to the end of 2024 and will now be extended until the end of December 2026.
In addition, in November 2023, these producers had agreed to voluntary output cuts totalling about 2.2 million barrels per day for the first quarter of 2024, in order to support prices and stabilise the market.
These additional production cuts were extended to the end of 2024 and will now be extended to the end of March 2025; they will then be gradually phased out on a monthly basis until the end of September 2026.
Members have made a series of deep output cuts since late 2022.
They are currently cutting output by a total of 5.86 million barrels per day, or about 5.7 per cent of global demand. Russia also announced plans to reduce its production by an extra 471,000 barrels per day in June 2024.
By Aduragbemi Omiyale
A minority equity stake in Chappal Energies Mauritius Limited has been acquired by a Nigerian energy firm, Aradel Holdings Plc.
This deal came a few days after Chappal Energies purchased a 53.85 per cent equity stake in Equinor Nigeria Energy Company Limited (ENEC).
Chappal Energies went into the deal with Equinor to take part in the oil and gas lease OML 128, including the unitised 20.21 per cent stake in the Agbami oil field, operated by Chevron.
Since production started in 2008, the Agbami field has produced more than one billion barrels of oil, creating value for Nigerian society and various stakeholders.
As part of the deal, Chappal will assume the operatorship of OML 129, which includes several significant prospects and undeveloped discoveries (Nnwa, Bilah and Sehki).
The Nnwa discovery is part of the giant Nnwa-Doro field, a major gas resource with significant potential to deliver value for Nigeria.
In a separate transaction, on July 17, 2024, Chappal and Total Energies sealed an SPA for the acquisition by Chappal of 10 per cent of the SPDC JV.
The relevant parties to this transaction are working towards closing out this transaction and Ministerial Approval and NNPC consent to accede to the Joint Operating Agreement have been obtained.
“This acquisition is in line with diversifying our asset base, deepening our gas competencies and gaining access to offshore basins using low-risk approaches.
“We recognise the strategic role of gas in Nigeria’s energy future and are happy to expand our equity holding in this critical resource.
“We are committed to the cause of developing the significant value inherent in the assets, which will be extremely beneficial to the country.
“Aradel hopes to bring its proven execution competencies to bear in supporting Chappal’s development of these opportunities,” the chief executive of Aradel Holdings, Mr Adegbite Falade, stated.
By Adedapo Adesanya
Afriland Properties Plc helped the NASD Over-the-Counter (OTC) Securities Exchange record a 0.04 per cent gain on Tuesday, December 10 as the share price of the property investment rose by 34 Kobo to N16.94 per unit from the preceding day’s N16.60 per unit.
As a result of this, the market capitalisation of the bourse went up by N380 million to remain relatively unchanged at N1.056 trillion like the previous trading day.
But the NASD Unlisted Security Index (NSI) closed higher at 3,014.36 points after it recorded an addition of 1.09 points to Monday’s closing value of 3,013.27 points.
The NASD OTC securities exchange recorded a price loser and it was Geo-Fluids Plc, which went down by 2 Kobo to close at N3.93 per share, in contrast to the preceding day’s N3.95 per share.
During the trading session, the volume of securities bought and sold by investors increased by 95.8 per cent to 2.4 million units from the 1.2 million securities traded in the preceding session.
However, the value of shares traded yesterday slumped by 3.7 per cent to N4.9 million from the N5.07 million recorded a day earlier, as the number of deals surged by 27.3 per cent to 14 deals from 11 deals.
Geo-Fluids Plc remained the most active stock by volume (year-to-date) with 1.7 billion units sold for N3.9 billion, trailed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units worth N5.3 million.
Also, Aradel Holdings Plc remained the most active stock by value (year-to-date) with 108.7 million units worth N89.2 billion, followed by Okitipupa Plc with 752.2 million units valued at N7.8 billion, and Afriland Properties Plc with 297.5 million units sold for N5.3 billion.
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