London based international money transfer company WorldRemit has seen its volumes of transfers to Africa increase by 80% in the past year, and is now sending more than $1.6bn at an annualised rate.
The company says that its new proprietary service, launched this week, will reduce the costs of sending money between countries in Africa, which they say are currently prohibitive, although a recent continent-wide free trade agreement signed by 44 African countries has provided hope that the situation can be improved in that regard.
World Remit said in a press release that it plans to initially target the fast-growing economies of East Africa, notably Kenya, Rwanda, Tanzania and Uganda. Company founder Ismail Ahmed commented that “just as WorldRemit has revolutionised the way people send money from developed countries, our vision is to do the same within Africa.”
World Remit, whose customers transfer money to more than 145 destinations worldwide, from more than 50 companies, announced in August that it would be partnering with Safaricom, which will grant them access to 28.6 million MPESA mobile money accounts in Kenya.
The 2 companies had already enjoyed a burgeoning relationship, with customers increasingly transferring money internationally into MPESA’s digital wallet. World Remit say that they are targeting 10 million customers connected to emerging markets by 2020.
In Kenya alone, inward remittances are worth more than $1.95 billion to the economy, the Central Bank says, thanks to a diaspora of more than 3 million Kenyans living and working overseas, mainly in the UK, US, Australia, Germany, Canada and the Nordic countries.
Sitoyo Lopokoiyit, Director of Financial Services at Safaricom, commented: “Every day, M-PESA empowers more than 28.6 million customers with diverse financial capabilities to send and receive money, and to make seamless payments. Partnerships have been the cornerstone of this transformation and we are glad to have WorldRemit as a key partner to provide our customers with a world-class remittance experience.”
World Remit, whose customers make more than 1 million transfers every month, will be entering a competitive market for international money transfer in Africa, that is increasingly mobile-based, with many Africans bypassing traditional bank accounts and setting up digital wallets instead.
According to research by the World Bank, recorded remittance flows to Africa, as shown in are estimated to have increased from $9.1 billion in 1990 to nearly $40 billion in 2010, although unrecorded flows are thought to substantially increase the figure.
Remittances to Africa equaled 2.6 percent of GDP in 2009, higher than the average of 1.9 percent of GDP for all developing countries. Nigeria is the dominant destination, attracting around $10 billion, or nearly half of all inbound African remittances, with Sudan, Kenya, Senegal, South Africa, and Uganda the next largest according to the World Bank’s research, which also reveals that:
“As a share of GDP, however, the largest recipients are Lesotho (28.5 percent), Togo (10.7 percent), Cape Verde (9.4 percent), Senegal (9.3 percent), and The Gambia (8.2 percent). In North Africa, the Arab Republic of Egypt and Morocco—the two largest recipients in North Africa in terms of both U.S. dollar-denominated flows and share of GDP—account for three-quarters of flows to North Africa region, followed by Algeria and Tunisia.”
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