What the rise in cross-border money transfer means for the economy
The number of people doing cross-border transfers is progressively growing and this is due to a number of factors, including the political will to integrate the region, but also the role of financial services players, including the telecoms.
Telecommunications firms are playing a bigger role in facilitating cross-border transfers, thus revolutionalising cross-border trade and other activities and this is making significant contributions to the entire economy.
The mobile money innovation age has attracted the attention of a lot of telecoms. Today, different companies are trying to take advantage of the highest technology demands, and creating more affordable services and products.
MTN Rwanda, Tigo Rwanda, and Airtel are the only telecommunications companies in the country, sharing the existing market. Tigo Rwanda became the first telecom in the world to make it possible for someone in the country to send mobile money to another country and automatically convert one currency into another.
The Millicom international subsidiary launched its cross-border Tigo cash with its sister operator in Tanzania, Tigo Tanzania in 2013, and it was followed by MTN.
MTN Rwanda and MTN Uganda harmonised their mobile money platforms in 2015.
Airtel also enables cross-border mobile money transfers as well.
So far, cross-border mobile money business has got a boost following a growing cross border money transactions by traders, students and families in the region, and those companies facilitating cross-border money transfers are currently having a competitive edge over others.
Tigo officials indicate that, through the facility, over 28,000 individual transactions have occurred with a value of over Rwf 1.3 billion. This, according to Sunny Ntayombya, is having unprecedented impact to the entire business sector.
“A Rwandan exporter of hides and skins, who sells in DR Congo, doesn’t have to worry about waiting days or weeks for a bank transfer from a business partner in Kinshasa. All they have to do is have a Tigo number and they will be able to receive their payment for their hides straight to their phone. Not only that. When they do receive their payment they can automatically send the payment for their hides to their bank account for free,” he notes.
“As a company, we believe in innovation and listening, and then responding to what our customers want. I trust that our cross-border mobile money platforms have played an important role in not only promoting cross-border trade, but also the dream of a completely borderless East African Community,” he adds.
Ease of doing business
The establishment of cross-border money transfer and the harmonisation of mobile money platforms has eased the cost of doing business, particularly bringing alternatives for people to do payments and transactions across the region.
“An important enabler of doing business is money, and by providing time and cost efficient ways of transferring money, it eases ways of doing business. We have seen that the impact of cross-border money transfer has gone a long way in promoting regional trade,” says Teta Mpyisi, the MTN’s Senior Brand and Sponsorship Manager.
Teta adds that it has strengthened the One Area Network initiative, making East Africa a truly competitive market, but also reckons that cross-border money transfer is an important innovation toward advancing regional integration agenda.
For Victor Nkindi, the owner Hooza Ltd, a digital media company based in Kigali, the introduction of cross-border networks mobile money transfer has given an opportunity for the private sector to even trade with more people in the region.
“EAC governments understood the importance of an economy boosted by cross-border mobile money transfer. And this gave an opportunity to the private sector. We took advantage of the new environment and we have now the possibility to trade with neighbouring countries using cross networks mobile money and remittance platforms,” he says.
“As a digital media we are no longer limited by Rwanda border. Our target audiences are the active mobile phone users in the EAC and Africa. We are able to provide our mobile services and content on demand, both audio and video with the partnership of various telecoms and the end user is now able to access our digital platforms and pay directly through mobile money transfer and other remittance platforms,” he adds.
Promoting digital payments
Experts indicate that the rise of cross-border mobile money transfers is promoting the growth of digital payments and enabling the transition to a cashless economy.
The introduction of innovative platforms like cross-border mobile money which offers security and convenience, Teta believes has enabled the growth of cashless transactions and slowly deepening financial inclusion.
Today, MTN has 1 million active mobile money users who make over 7 million transactions per month, with a monthly transaction value of Rwf 90 billion.
“Basically, what this shows is that people in Rwanda and in the region are embracing cashless economy, and we are on track to continue promoting this transaction,” Teta notes.