23 Mil African Migrants Remit $35 Billion

Driven by two ‘M’—migration and mobile phone penetration, the cell phone-based money transfer market is next growth frontier in Sub-Saharan Africa (SSA).

With over 23 million migrants—within the region and other parts of the globe, the continent received more than US $35 billion remittance through formal channels last year. Of this total remittance inflow, over US $1 billion was received through mobile money wallets.

Mainstream Money Transfer Operators (MTOs) like Money Gram and Western Union dominate the market for international remittances throughout Africa at present. But their high service charge for remittances is one of the Key reasons due to which people are attracted towards mobile-based money transfer.

The charge to send remittances in this continent is highest of all which stands at 9.5% as against the global average that hovers at around 7.5%.

The convenience to send and receive money through mobile phone-based platform is also posing threat to MTOs. By 2021, Africa is estimated to receive nearly US $2 billion remittances through mobile phone transfer. This is twice the amount of what the continent received in 2017.

The increasing penetration of mobile phone in SSA is further catalyzing the growth of mobile phone-based money transfer market dramatically. As a result, mobile money accounts surged exponentially surpassing bank accounts.

This mobile phone-based platform has already brought in millions of unbanked people in the mainstream of finance. The platform is not just benefiting them with savings and loans for their informal enterprises along with money transfer but is also helping them to perform various activities through the platform.

SSA

Despite this, mobile money transfer has more ground to break in the region as it has only enveloped nearly 20% market of the total viable mobile money rural market.

In order to tap in the opportunity exposed by mobile money, around 150 mobile money service providers are in race to exploit the untapped rural market in SSA. This number of mobile money service providers in the region is more than half of global total—roughly 280.

Besides remittances and other payment solutions, the easiness of this cell phone-based money transfer is contributing to governments of the region as well. For instance, water and sewerage corporation in Dar es Salaam witnessed nearly 40% growth in revenue collection since the initiation of mobile money transfer.

Hence, considering tremendous benefits and contributions of mobile money services, 30 countries in the continent are enabling conducive regulatory framework. The framework is expected to drive the mobile money market further. It is focused on attracting investment in the sector and encourage competition and innovation so that mobile-based money transfer can deliver its benefits to large mass at least possible remittance service charge.

For more information on “Sub-Saharan Africa Mobile Money Remittances Market, Forecast to 2021” please visit https://store.frost.com/sub-saharan-africa-mobile-money-remittances-market-forecast-to-2021.html


Subarna Poudel is a researcher with Frost & Sullivan. He can be reached at subarna.poudel@frost.com


Sapan Agarwal drives content and marketing for Frost & Sullivan. Sapan is based out of Kuala Lumpur Malaysia and can be reached at sapan.agarwal@frost.com | +603 6204 5830

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