Remittances and Competition: A Policy Analysis Matrix Approach

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Olatomide Waheed Olowa
Olatomide Waheed Olowa
2
Olatomide W. Olowa
Olatomide W. Olowa
1 Federal College of Education(Technical) Akoka

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The phenomenal growth of remittances in recent times has caught the attention of governments particularly in the developing countries, international organizations, Non-Governmental Organizations (NGOs) and the private sector, due to its importance as a viable source of external financing. The main problem identified in transferring these monies is that the competitive environment for money transfers in Nigeria is highly constrained. This is due to a near-monopolistic hold on the market by one money transfer organization (MTO) and the fact that banks are the only entities legally authorized to perform international payments. Findings from the policy analysis matrix results shows divergence in the revenue, costs and profits were negative (-2989360,-172074, -268246, -2549040). This indicates that the society value remittances more than the market. The PCR was negative which shows that the system is not competitive and a negative SRP shows a tax on inbound transfer. The study concluded that money transfer service as rendered by banks and their partners in Nigeria is not competitive. Governments and policy makers can contribute to improving competition, lowering transaction costs, and reducing informality.

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No external funding was declared for this work.

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The authors declare no conflict of interest.

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No ethics committee approval was required for this article type.

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Olatomide Waheed Olowa. 2014. \u201cRemittances and Competition: A Policy Analysis Matrix Approach\u201d. Global Journal of Management and Business Research - B: Economic & Commerce GJMBR-B Volume 14 (GJMBR Volume 14 Issue B4): .

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GJMBR Volume 14 Issue B4
Pg. 15- 19
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Crossref Journal DOI 10.17406/GJMBR

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e-ISSN 2249-4588

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The phenomenal growth of remittances in recent times has caught the attention of governments particularly in the developing countries, international organizations, Non-Governmental Organizations (NGOs) and the private sector, due to its importance as a viable source of external financing. The main problem identified in transferring these monies is that the competitive environment for money transfers in Nigeria is highly constrained. This is due to a near-monopolistic hold on the market by one money transfer organization (MTO) and the fact that banks are the only entities legally authorized to perform international payments. Findings from the policy analysis matrix results shows divergence in the revenue, costs and profits were negative (-2989360,-172074, -268246, -2549040). This indicates that the society value remittances more than the market. The PCR was negative which shows that the system is not competitive and a negative SRP shows a tax on inbound transfer. The study concluded that money transfer service as rendered by banks and their partners in Nigeria is not competitive. Governments and policy makers can contribute to improving competition, lowering transaction costs, and reducing informality.

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Remittances and Competition: A Policy Analysis Matrix Approach

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