International money transfer company, WorldRemit, predicts that 2020 will be the year of intra-African remittances. The World Bank already estimates that migrant workers within Africa send remittances in excess of $14 billion dollars each year, and in 2018 intra-African remittances represented 20% of global remittance flows according to Ecobank Group.
The African Continental Free Trade Area (ACFTA) agreement which promotes intra-African trade and regional integration is fueling intra-continental movement of people. Migrant workers are no longer just traveling to developed nations for work (traditional south to north migration patterns), opportunities lie closer to home. Between 2015 to 2019, Intra-African migrants grew from 16 million to 19 million. During the same period, migration out of the African continent only increased from 16 to 17 million.
This new trend of south to south migration does not change the desire to send money home, yet the vast majority of remittances are still sent ‘offline’. This informal remittance industry in Africa is estimated to be between two and ten times the size of the formal market.
Money is taken to, and collected from a physical agent which can be inconvenient and usually subject to high fees. Africa has the highest costs for remittances globally, averaging 9% for $200 transaction compared to the global average of 7%. This is far from the UN’s Sustainable Development Goal (SDG) of 3% by 2030.
However, with over 122 million users of mobile money services in Africa, and smartphone connections forecasted to grow to 636 million in 2022, hitting the SDG is likely to depend on building the right infrastructure to support an increasingly mobile population.
With advancements in mobile technology and connectivity across the continent, intra-african remittance services will continue to grow to meet the increasing needs of hardworking and generous migrants who want a cost effective, convenient and secure way to send money home.