Surge in Mobile Money Transfers Boosts Africa’s Economy: Forecasted to Hit $33 Billion

According to UK based online service company WorldRemit’s latest report, mobile money remittances in sub-Saharan Africa are tipped to surge, hitting an impressive $33 billion in 2015. This significant upswing is attributed to the growth of over 6% in more than three countries and a steady increase in mobile connectivity.

WorldRemit is a respected name in the digital remittance platform world, known for enabling users to send money to friends and family in distant countries. These kinds of digital platforms have reshaped how people conduct personal and business transactions, breaking geographical barriers and making the process nearly instantaneous.

In recent years, Africa’s mobile phone companies have made strategic inroads into the financial sector. They’ve rolled out mobile money transfer services that have proven notably successful, such as Kenya’s Mpesa and Zimbabwe’s Ecocash. Other local mobile money transfer platforms such as NetOne’s OneWallet and Telecel’s Textacash also made waves, further revolutionizing the face of financial interactions across the continent.

Although WorldRemit flagged a possibility of stagnation in the sector this year, it strongly noted that dramatic growth in three key countries would more than compensate for any slip. “Stagnation in remittances to Nigeria was offset by robust 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,” WorldRemit outlined in their report. It further observed the mobile money transfers remain relatively high as the services continue to grow.

While the report applauded the sector’s growth, it sounded a warning note about the high fees associated with it. “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%); due largely to the cost of bricks-and-mortar agent networks of traditional firms. There is massive potential for mobile technology to slash costs on both the sending and receiving sides,” it added.

As Africa continues to leapfrog traditional banking and land on mobile money platforms, the sector promises to be transformative for the continent’s economy. This growth trend speaks volumes about the potential of the African digital finance sector as a key player in carving a prosperous future for its people.

source: afkinsider