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Intra-Africa remittances were predicted to surge this year as a result of the upcoming AfCFTA agreement and increased movement of labor within the continent. Coupled with loss of employment as a result of COVID-19, we expect increased migration in the region, which in turn will increase intra-Africa remittances.
Here are 5 things that need to be done to sustain this growth.
Adoption of digital payments has accelerated across the world to minimise the risk of spreading the virus with cash. Customers remitting money currently are also switching to digital remittance platforms and we expect this trend to continue with more companies developing or integrating with digital platforms.
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With digitisation, we also foresee integrations with non-cash channels such as mobile money and digital bank accounts, which will increase reliability and accessibility, even in remote regions.
The cost of remittance to Africa is the highest in the world at 9%. This is largely due to the the logistical costs associated with the usage of cash. Digitisation and integrations with mobile money and bank accounts will eliminate this cost, making remittances cheaper.
A significant percent of remittances are conducted informally due to more favourable rates, despite being less secure. With the advent of digitisation, we expect the formal sector to offer comparable rates to the parallel markets allowing for more affordable and secure transactions.
Another shift we expect to see is easier KYC practices, by allowing receivers of remittances to connect their digital wallets to their SIM cards, and complete KYC virtually. This again will make remittance easier and more accessible on the continent.
TransferZero is a leading API solution, giving customers access to mobile money, cash, and bank payouts across the continent. TransferZero features state-of-the-art technology for easy, seamless integration and reliable operation of the API. For more information about how our API can help you expand your African footprint, contact our team at [email protected]