Nigeria, other SSA countries to receive $34 billion by December
Mobile money operation is seen to be having a positive impact on international remittances transactions across the globe, according to a new report.
Now available in 93 countries including Nigeria, mobile money drives financial inclusion by allowing millions of previously unbanked and underbanked people to access formal financial services.
The Global System for Mobile telecommunications Association (GSMA) in a report released on Monday and made available to The Guardian, informed that mobile money services are available in 85
per cent of countries where the number of people with an account at a financial institution is less than
20 per cent.
GSMA in the new report titiled: ‘Driving a price revolution: Mobile money in international remittances’, discovered that the cost of sending international remittances with mobile money is, on average, more than 50 per cent less expensive than using global money transfer operators (MTOs).
Additionally, where people were able to send remittances from a mobile money account, the average cost of sending $200 was 2.7 per cent, compared to six per cent when using global MTOs. Lower transaction fees can translate directly into additional income for remittance recipients.
GSMA pointed out that mobile money services (covering 170 million mobile money accounts) offered customers the ability to send money across 45 country corridors, a number which is growing quickly year-on-year.
Interestingly, the body revealed that most of these corridors are between African markets where alternative formal remittance channels have a limited presence and can be particularly expensive.
According to Bank in the report, more than 250 million people live outside their country of birth and regularly send money home, providing a financial lifeline to their families and contributing to the economies of their home countries.
Bank revealed that in 2015, global remittances totalled $581.6 billion, of which $431.6 billion, or nearly 75 per cent, was sent to the developing world. It stressed that international remittances play a critical role in the economies of developing countries.
The Bank Group estimates that Sub-Saharan Africa (SSA) will receive $34 billion in 2016, adding that remittances from the UK to the rest of the world totalled an estimated $11.5 billion in 2014.
Though the GSMA research discovered that despite being the world’s poorest region, SSA remains the most expensive place to send money. It however, stressed that the cost of international transfers remains high and directly impacts the income of remittance recipients.
According to it, high fees for remittance transactions also encourage senders to use informal remittance channels, increasing anonymous cash-based transactions and creating new risks for financial integrity.
The research showed that by increasing competition, leveraging existing networks and infrastructure, and capturing smaller remittance values than traditional players, mobile money providers are strategically well-placed to lower international remittance costs. These lower prices, in turn, contribute directly toward achieving targets within United Nations Sustainable Development Goal (SDG) 102, which sets clear objectives for reducing migrant remittance costs.
Chief Regulatory Officer, GSMA, John Giusti, said mobile money is one of the most exciting innovations in financial services, with more than 400 million registered consumer accounts across over 90 countries.
“While today mobile money services are largely used for domestic transactions, international transfers represent the fastest-growing segment of mobile money services. In just a few years’ time, mobile money has moved from a purely domestic service to one that allows migrants to send remittances between more than 20 countries globally,” he said.
The research however, said the cost of international transfers remains high and directly impacts the income of remittance recipients. According to it, high fees for remittance transactions also encourage senders to use informal remittance channels, increasing anonymous cash-based transactions and creating new risks for financial integrity.
Giusti added: “Through mobile money services, the industry is directly supporting the goal of expanded financial inclusion for migrants and their families by reducing international remittance costs, as captured in UN SDG10. The potential gains of achieving this target could be as high as $20 billion in additional income for remittance recipients.”
