Wednesday, April 29, 2015

Daily Archives: Apr 16, 2015

This week the World Bank released data on the state of global remittances (Migration & Development Brief). Here is analysis from online money transfer service WorldRemit of a few of the key findings:

  • Global remittances will grow slowly in 2015, but accelerate again in 2016/17: globalremittances are projected to reach $586 billion in 2015, at a slower growth rate of 0.4% due to economic conditions. However, remittances are expected to accelerate again to reach an estimated $636 billion in 2017.
  • Remittances to Sub-Saharan Africa are projected to reach $33 billion in 2015: growth in the region is expected to be at 0.9% in 2015. Stagnation in remittances to Nigeria was offset by strong growth in Kenya (10.7%), South Africa (7.1%), and Uganda (6.8%). Nigeria, which received $21 billion in 2014, accounts for two-thirds of remittances to the region.
  • Fees remain far too high: the average cost of sending $200 to Sub-Saharan Africa remains at 12% (far off the G20’s target of 5%); largely due to the cost of bricks-and-mortar agent networks of traditional firms.  There is a huge potential for mobile technology to reduce costs on both the send and receive sides.

Reading these findings in conjunction with a recent report by the GSMA (2014 State of the Industry Report on Mobile Financial Services), Mobile Money will grow to play a huge role in remittances and help to bring down fees:

  • Worldwide Mobile Money usage is exploding: 261 mobile money services are now live across 89 countries with 103 million active users as of December 2014. More than half of these services currently in operation are in Sub-Saharan Africa.
  • Mobile Money helps to reduce remittance fees: the GSMA reports that the median cost of sending $100 via Mobile Money is $4.0, less than half the average cost to send money globally via traditional money transfer channels. More than half of WorldRemit’s transfers to Africa go to mobile – either as airtime top-ups or Mobile Money.
  • Mobile Money remittances are growing fast: 2014 saw a steep increase in the number of international remittances via mobile money. The value of Mobile Money remittances represents a tiny fraction of total flows, but was the fastest growing of all Mobile Money services in 2014. N.B. One in five international remittance transfers to mobile money accounts in December 2014 went via WorldRemit. Mobile Money is WorldRemit’s fastest growing receive method.

Alix Murphy, Senior Mobile Analyst at WorldRemit, gives her take on the findings:

“Mobile Money will play a pivotal role in global remittances, helping to reduce fees, improve speed and convenience for users. Most importantly, Mobile Money is a key enabler of financial inclusion. There are currently two and a half billion unbanked people in the world i.e. without a bank account. One billion of these people already have access to a mobile phone and so a potential means of accessing financial services.  


“Make no mistake – for many people in the world, Mobile Money will be their main or only means of accessing financial services. That’s why WorldRemit has worked hard to connect to more Mobile Money services than any other money transfer firm.”

Despite the recent prediction by the World Bank(1) that economic growth in Sub-Saharan Africa will slow in 2015, the region is still home to one of the fastest-growing middle class in the world. As a result, there are vast opportunities on the continent for progressive African entrepreneurs and small and medium enterprises (SMEs) to take advantage of.

Charles Brewer, Managing Director of DHL Express Sub-Saharan Africa (SSA) (, says one sector providing plentiful prospects is the agricultural industry, which is Africa’s largest economic sector representing 15% of the continent’s total GDP and more than $100 billion per year(2). “It is estimated that more than 60% of the globe’s available and vacant land is situated in SSA(3), which suggests that the sector still offers incredible growth.”

Another industry seeing significant growth is the banking sector, which has grown extensively over the last decade and has become a substantial player in emerging-market banking2. Brewer says that the rising middle class and ‘unbanked’ African consumers should continue to drive the industry. “Other industries experiencing growth and offering prospects on the continent include technology, consumer goods and telecommunications.”

In addition to these thriving industries, Brewer identifies five unexpected ‘boom towns’ and cities that are enjoying growth on the back of these industries, therefore providing opportunities for African businesses:

•          Bobo-Dioulasso, Burkina Faso: This second city is blossoming due to substantial growth in the food and agriculture sector. Many small and medium enterprises are setting up factories to locally produce products for both the domestic and export markets, with the main products being fruits, cereals, cotton, vegetable oil, soap and other artisanal products.

•          Ebène, Mauritius: This is an up and coming technology hub which, due to its advanced infrastructure and facilities, has attracted many financial institutions and international legal firms. 

•          Mbarara, Uganda:  Mbarara is a growing industrial town 280km from Uganda’s capital Kampala, which is located in the center of the dairy farming district. As a result of its location, favourable climate and abundant land availability, it has attracted investors involved in the manufacturing of dairy products, as well as breweries and beverage companies expanding to the area.

•          Farafenni, the Gambia: Situated on the north bank of the Gambia River, about 120km inland from the capital Banjul, the town is home to numerous banks and insurance firms. It is experiencing fast growth mainly due to its geographical location on the main road between Dakar and Casamance (the southern area of Senegal), and its close proximity to the ferry to cross the Gambia River.

•          Konza Techno City, Kenya: Having just finished its infrastructure phase, the new technology city is situated 60km southeast of Nairobi and will focus on four economic sectors; namely education, life sciences, telecommunications and business process outsourcing. It is predicted to significantly stimulate technology spending, investment and growth in Kenya.

“DHL is present in every African country and territory, with 37 years of express logistics experience on the continent. With our extensive footprint in Africa, we are uniquely positioned to service these ‘boom towns’ and burgeoning industries,” concludes Brewer.