Our vision is to reduce remittance cost in Africa - XpressMoney
He will be presenting 'Remittance Architecture – The Need Of The Hour' at the 6th Remittance & MobileMoneyExpo in Lagos- Nigeria on Feb 02 & 03.
MMA: YOUR ASSESSMENT OF THE AFRICAN REMITTANCE SPACE?
Remittance industry in Africa has been growing steadily in the past few years. According to the latest World Bank report, the projected 0.9 percent rise in remittances to Sub-Saharan Africa region in 2015 represents only a small improvement from 4 percent growth in 2014.
• Remittances to Nigeria, which account for around two-thirds of total remittance inflows to the region, were expected to decline by 0.3 percent, to roughly $20.8 billion in 2015.
• Growth in remittances across Africa as a whole in 2015 were largely driven by strong remittance growth in South Africa (9.9 percent) and Kenya (8.6 percent)
• Ethiopia and Uganda showed moderate growth in remittances (1.8 percent and 2.4 percent, respectively), while remittances remained flat in Senegal
• The growth rate of remittance flows to the region is projected to rise to 3.3 and 3.7 percent in 2016 and 2017
MMA: SHARE MORE ABOUT THE XPRESS MONEY REMITTANCE INNOVATIONS?Technology plays a very important role in the remittance industry in today’s scenario. More and more customers are now shifting from traditional cash to cash remittances to newer channels of remittances.
Xpress Money has taken a big leap in technological innovation with the introduction of its new service, XOPO – a money transfer app. This app enables users to transfer money internationally (including Africa) across multiple social channels like Facebook, Twitter, WhatsApp, WeChat, etc. As of now, the service is available to users in UK and will gradually be expanded to other markets within the Xpress Money network.
Early last year, Xpress Money partnered with MTN Ghana to enable the customers to transfer money directly into the mobile wallets of registered MTN users in Ghana. This tie-up resulted in Xpress Money becoming the first money transferor to offer cash to mobile service to Ghana from the GCC region. Similarly, the company has associated with Safaricom in Kenya, where customers can remit money using their M-Pesa platform.
We are on the verge of offering kiosk-based money transfers in Australia, which will also be extended to other countries in due course.
The company will also be launching Online Money Transfer service in the UK soon, to be followed by other key markets like US, Canada & Australia.
MMA: IMPACT OF NEW TECHNOLOGIES ON THE INDUSTRY
For today’s customers, time is money and convenience is priority- they look for options that are convenient and time-saving.
The remittance industry is increasingly leveraging social media and mobile penetration for faster growth and ease of transactions. Technological innovations have empowered customers to send money to their loved ones through a simple application and this has influenced people to adopt new modes of money transfer.
Online / Mobile money transfers have taken convenience to a different level. Gone are the days when a remitter had to travel miles to send money to the loved ones. Today, he / she can do money transfer sitting in the comfort of office or home or while on the move, 24*7. Remittance solutions (like Kiosks and ATM-based money transfers) provide convenience and efficiency for service providers as well. These solutions have the potential to turn the convenience store into a hub for expats, offering them services across multiple platforms, while saving their time and adding to their convenience.
MMA: ARE AFRICANS ENJOYING THE BENEFITS OF LOW COST REMITTANCES YET?At the 35th G8 Summit, 2009, a decision was taken to reduce the average global remittance cost from 10 percent then to 5 percent in 5 years. This is famously known as the ‘5×5’ initiative. While the global average currently stands at 7.68%, the Sub-Saharan African region is still battling with a sufficiently higher average cost of 12%.
While there is enough & more to be done by the various stakeholders to reduce the global average cost & in particular the cost of remittances to Sub-Saharan Africa, Xpress Money has initiated plenty of measures to keep the cost down. Our global average cost is just 2 percent & in order to drive the costs lower for Africa, we have recently, announced a 38% reduction in transfer fees for the region from the UAE.
By consistent efforts from all the international agencies, we should be able to accomplish the goal set by G8 countries under the 5*5 initiative.
MMA: WHAT AREAS OF IMPROVEMENT IS REQUIRED FOR INNOVATION TO FOSTER IN THE REMITTANCE SPACE IN AFRICA
Globally, Sub-Saharan Africa is one of the most expensive regions to remit money to but constant innovations through the use of technology can address the issues revolving around remittance costs.
Kenya is a case in point when it comes to innovations. MPesa, a household name in Kenya is the result of a fantastic ecosystem which Safaricom built by bringing in many stakeholders together. While there is room for more such innovations across African countries, there needs to be enhanced collaboration between Telcos, Banks & the regulators. As we have seen in Kenya’s case, this needs to lead to a complete win-win situation for all concerned.
MMA - YOUR VISION FOR THE INDUSTRY IN AFRICA AND MARKET OUTLOOK.
Xpress Money’s vision for the industry is to reduce the cost of remittances in Africa from the current 12% to 5%. This would allow close to an additional 2.5 to 3 billion dollars flowing into Africa and the recipient countries can reap the benefits of the incremental inflow.
The reduction in fees would lead to higher conversion to formal channels of remittances.
Adoption of technology in Africa has already proven successful in certain countries, which has drastically improved customer convenience. Other African countries should follow suit.
MMA - WHAT STAKEHOLDERS SHOULD EXPECT AT THE REMITTANCE AFRICA CONFERENCE IN LAGOS - NIGERIA.
• It is crucial to create engagement and dialogue between the stakeholders, in making remittances affordable & convenient.
• Adoption of technology could be one of the key drivers to accomplish the above & the best practices followed by a few countries in the region can be replicatedelsewhere.
• Exclusive agreements by international money transfer operators with service providers in the recipient countries is still one of the major barriers for reducing the cost of remittances and this is something the agencies would need to work on.
Like several other countries which have already taken this path, African nations also need to work towards creating a level-playing field through an open market architecture, which will eventually result in lower cost of remittances & enhanced customer convenience.