Mobile Money Africa

Africa

Emmanuel Okoegwale

According to IFAD, the impact of remittances is recognized in all developing regions of the world, constituting an important flow of foreign currency to most countries and directly reaching millions of households, totaling approximately 10 per cent of the world’s population. The importance of remittances to poverty alleviation is obvious, but the potential multiplier effect on economic growth and investment is also significant.
Remittances, the portion of migrant workers’ earnings sent back home to their families, have been a critical means of financial support for generations. North African countries such as Morocco and Egypt are the continent’s major recipients. East African countries heavily depend on these flows, with Somalia standing out as particularly remittance dependent where it accounts for accounts for 13% of Per capita Income in a country that is destabilized by war over the years and also the Ship Hijacking capital of the world.

African accounts for less than 6% of the world Remittances with over 40 Billion USD dollars sent annual from Migrant workers in other parts of the world to Family members and loved ones, in Africa. Though a significant size of the amount gets to the final destination through informal channel.Only 10 Billion USD are recorded officially but other unofficial channels, though unsafe, exist alongside the operations of the Western Union and MoneyGram of the world.

Africa is still grappling with developmental challenges of monumental proportions with significant populations still living under two USD dollars a day and low internal capacities to produce goods and service soaring  unemployment  rates. Many Africans are selling off their properties to migrate to the developed world  and in some extreme cases, embarking on the death Valley trek or crossing Shark infested waters  to start a new life and send money home.

Remittances to Africa though not much in value to amounts sent to the Caribbean and South America but Africans are paying more to send their loved ones money across the continents. Transfer costs are higher and remittance senders obtain less value for their money. Most African countries restrict money transfers to banking depository institutions, and restrict outbound flows of money unless used for trading.

In Nigeria, in absence  of a  robust National ID systems, some recipients  will be required  to apply for a National Passport at 100 USD so as to enable them cash their international remittance with value which might be less 100 Dollars.

Mobile Money providers like Wizzit, M-pesa, Tagattitude are looking at this challenge as an opportunity to tap in the 40 Billion USD dollar industry using their platforms which may not require huge infrastructure outlay and leveraging on the existing ATM footprints of Partner Banks as cash out points via the Mobile Phones.

With Informal channel unsafe and unreliable, formal channel is expensive and require documentation for recipients (Low Value and High Value), the Mobile may be the way to send love Home to Africans in coming years.