Mobile remittances present a key opportunity for inclusion into the formal financial systems for millions of Africans as two regional fintechs come together to make it happen.
The Kenya-headquartered payment solutions provider Cellulant is leveraging KrosPayz, the Africa-wide digital payments platform of its newfound partner Money Q, to provide African expatriates with remittance services.
Cellulant’s partnership with the Dubai-based fintech solutions company will allow Africans living abroad to pay for bills and recharge airtime for their beneficiaries across Africa.
A path to empowering underserved communities
Mobile remittances present a unique opportunity for millions of people to access the formal financial system, bringing financial services and prospects for revenue generation closer to their communities.
Furthermore, remittances help reduce poverty, enhance nutritional well-being, and result in increased birth weight and higher school enrollment among children from underprivileged households.
At the macroeconomic scale, remittances play a stabilising role, smoothing out fluctuations in growth and supporting countries’ adaptation to policy disruptions.
With regards to remittances’ microeconomic influence, they provide poor households with the means to enhance their children’s health and education prospects, accumulate savings and increase expenditures on consumer durables and human investment.
The impact of remittances is so great that in 2022, foreign direct investment and official development aid to low- and middle-income countries was exceeded threefold by $626billion remittance flows.
Looking at Sub-Saharan Africa (SSA) specifically, remittances increased by 16.4 per cent back in 2021 but enjoyed a smaller rise of 5.3 per cent a year later.
The slowdown in activity results from the easing of covid-19 travel restrictions, but cost barriers also play a role.
The cost of sending remittances from the SSA to other regions is among the highest in the world. The cost of sending $200 internationally remained high, at six per cent, in the second quarter of 2022; double the Sustainable Development Goal target of three per cent.
However, the global community, including the G20, is actively acknowledging the need to expand the flow of remittances to and from Africa and decrease the expenses associated with the process.
Digital transactions for global communities
Mobile operators’ digital technologies offer remittance rates at a low 3.5 per cent, but only one per cent of transactions happen through digital channels.
“Remittances are the single largest source of foreign exchange for many developing economies, and they are stable and resilient in the face of economic downturns,” explains Richard Gesimba, Cellulant’s vice president of global and regional merchants.
“They have been described as developing countries’ most stable, abundant and secure sources of foreign aid,” he continues. “This partnership reaffirms our commitment to enabling businesses, banks and consumers to make fast and efficient payments across Africa.”
“By leveraging Cellulant’s presence and partnerships on the continent, Money Q will be able to provide its services throughout Africa,” concludes Gesimba.
As a result, KrosPayz digital wallet will launch first in Malawi this April, allowing customers to pay for utility bills, recharge airtime, transfer funds to individuals and companies, and make purchases in local markets using QR codes.