When Racheal Umutesi, a Rwandan living in Canada, sends money home to support her family, a portion of it disappears before it reaches them. Beyond the transfer fee charged by the money transfer service, exchange rate mark-ups and intermediary charges quietly reduce the value of the remittance. ALSO READ: Nduhungirehe lauds diaspora role in devt as remittances surpass Rwf700bn Her experience reflects that of many Rwandans abroad and underscores the challenge Parliament now wants addressed through reforms aimed at making remittances cheaper and easier. ALSO READ: eKash harmonises Rwanda's bank, mobile payments Umutesi said: You budget for a certain amount, only to realise that by the time the money arrives, a portion has been lost through exchange rates and other charges. It can be frustrating because you want your family to receive as much as possible, but the costs add up. The difference may seem small on a single transfer, she said, but over the course of a year it amounts to hundreds of dollars that could otherwise have gone towards school fees, medical bills or daily living expenses for her family. Cost of cross-border money transfers Parliament has directed the Ministry of Finance and Economic Planning to present, within six months, a formal system that will make it easier for members of the diaspora to send money home and invest in the country. Experts say the proposal is achievable but it will require coordinated action involving the government, regulators, commercial banks and fintech companies to address the factors that make international remittances expensive. Finance and economic expert Jean Claude Rwubahuka said the biggest challenge lies in the cost of cross-border money transfers, which remains a global issue rather than one unique to Rwanda. The biggest issue is the cost of transferring money internationally, and it is a global challenge, especially for African countries. Many international payments pass through correspondent banks before reaching Rwanda. Each intermediary adds processing costs and extends settlement times, making remittances more expensive, he said. According to Rwubahuka, reducing these costs will require collaboration between government institutions, financial service providers and regional payment systems, rather than action by the ministry of finance alone. The government can facilitate the process, but it cannot do it on its own. It will require collaboration with commercial banks and other financial institutions, he said. He also pointed to the Pan-African Payment and Settlement System (PAPSS), developed by Afreximbank, as an initiative that could lower the cost of intra-African payments by allowing transactions to settle in local currencies without routing through financial institutions outside the continent. Florien Maniraho, the Chief Executive Officer of AvadaPay Rwanda, a pan-African payment platform, said the transfer fee customers see when sending money is often only a fraction of the total cost. The fee a sender sees on screen is rarely the full cost. The less visible components are typically the most expensive, he said. He explained that compliance requirements such as Know Your Customer (KYC), Anti-Money Laundering (AML) and Counter-Terrorism Financing (CTF) checks carry fixed costs regardless of the amount being transferred, making smaller remittances relatively more expensive. In addition, transactions frequently pass through several correspondent banks and payment processors before reaching their destination, while foreign exchange margins and fragmented payment systems further increase costs. Sub-Saharan Africa remains the world's most expensive region for receiving remittances, with transfer fees still well above the United Nations Sustainable Development Goal target of reducing average remittance costs to below three per cent, he said. According to Maniraho, Rwanda has already addressed much of the domestic payment challenge through eKash, the national instant payment system. The platform enables transfers between banks and mobile money providers, with customer fees capped at Rwf20. The last mile is largely solved. The remaining challenge is the international leg of the transaction and currency conversion, he said. To reduce remittance costs, Maniraho said regulators should adopt proportionate, risk-based rules, support digital onboarding, and require greater transparency in foreign exchange pricing. He added that banks should provide secure access to their payment infrastructure, while fintech companies should automate compliance processes and integrate with national payment systems. Maniraho said Rwanda could also draw lessons from countries that have lowered remittance costs through digital payment innovations, including Kenya's use of mobile money wallets, India's Unified Payments Interface (UPI), Brazil's Pix instant payment system, and the Pan-African Payment and Settlement System. He added that Rwanda's digital identity infrastructure gives the country an advantage by making customer verification faster and less costly. If implemented successfully, experts say a simpler remittance system could increase the amount of money reaching households, encourage more frequent transfers, strengthen financial inclusion, and make it easier for Rwandans abroad to invest in businesses and other opportunities at home. However, Maniraho cautioned that lower fees alone will not determine the success of the initiative. While cost is vital, trust and reliability are equally important. A cheap system that is unreliable will not be adopted, he said.
