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After years of consecutive growth, remittances to Africa are predicted to drop by 23.1% this year due to COVID-19, as per the World Bank reports. However, as lockdown measures begin to ease across the world and the economy picks up again, we expect the remittance sector to boost towards the end of the year.
Here is why you should consider investing in, and expanding your remittance business to Africa.
1. Large, growing market:
In 2018, Africa received a record high of $82 million in remittances, and this growth has been increasing yearly. As the COVID-19 pandemic is slowing down in Europe and things are returning to normalcy, Africa has yet to experience the worst, with predictions that its economic growth will halve in 2020. This will create a greater need for remittances from family members abroad to pay for expenses.
2. Increase in migration
Job losses are inevitable with lower revenues which, as a result, will lead to increased emigration from Africa for employment opportunities. This will also increase the influx of money being sent back to families, growing the remittance market further.
3. Digital Payments Network
Kenya’s MPesa and Nigeria’s Paga have been case studies for the most successful digital payment platforms all over the world. To curb the spread of the virus through cash, usage of such platforms has soared, even in the remittance sector. There is a large potential to tap into this network and improve the ease and accessibility of remittances in the continent.
4. Large Market Gap
There is also a high dependence on parallel or black markets, which offer better rates, making them more favourable, despite the security risk. Hence, there is a large gap that can be filled in the market with products that offer competitive rates, are safe, and improve accessibility.
5. Poor Existing Infrastructure
The cost of remittances to Africa stand at the highest in the world at 9%, largely due to the usage of cash, driving up the logistical cost of sending money. There is are a lot of potential opportunities for digitisation in the sector, to make the market more competitive and reduce reliance on parallel markets.
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 to Africa, contact our team at [email protected].