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TechCabal Daily – Why are African MoMo operators interested in remittances?

Abubakar Idris 22nd September 2020

MTN Liberia, a telecom company, has partnered with cross-border payments company, Sendwave to support international remittances for its mobile money customers. MTN Liberia’s MoMo users will now be able to receive funds from abroad directly into their wallets.

Over the last few months, mobile money operators across the continent have doubled down international remittances, signing partnerships and opening up other markets to international transfers.

In August, Airtel Africa partnered with MoneyGram, the US company, to support cross-border payments in multiple markets. And in May, French telco, Orange, expanded its remittances services to include Morocco and Burkina Faso in addition to four existing countries.

And in Nigeria, mobile money company, OPay has partnered with WorldRemit to support international remittances to millions of Nigerians using mobile services and a network of offline agents.

What’s driving these partnerships?

Since April, the World Bank has warned that the pandemic and government lockdowns have negatively affected remittances activities. Physical transaction points like banks and agent locations were closed during the lockdowns. In 2019, remittances to Sub-Saharan Africa stood at $48 billion according to the World Bank.

But with all that’s happened since the start of 2020, international transfers to the continent are expected to drop by 23.1% to $37 billion by the end of the year. Meanwhile, for many developing countries, remittance accounts for more than 5% of their GDPs.

The World Bank and a few governments have urged payments companies to address the transaction challenges by digitising remittances transfers, making it more accessible to more people. Mobile money operators are heeding to this call.

This drive could also have a knock-on effect on remittance costs. Average remittance cost to the African region was 8.9% for $200, the highest among global regions. By relying on mobile
payments providers and their competitive pricing, it is expected that fees could drop soon.

Three African entrepreneurs have been selected to join the Endeavor global network. Dr Abasi Ene-Obong, CEO of 54Gene, Benjamin Njenga and Eli Pollak of
Apollo Agriculture were among the nine individuals selected from six markets. Endeavor is a non-profit organisation for high-impact entrepreneurs and their companies. It supports over 2,000 entrepreneurs across 37 markets to scale their companies and drive economic growth.

Ene-Obong, Njenga and Pollak were selected at Endeavor’s Seventh Virtual International
Selection Panel (ISP). Their companies are solving different problems for the health care industry and the agricultural sector.

Ene-Obong’s 54Gene is providing global health industry with much needed genomic data from Africa. While Africa’s population is over 1 billion, less than 3% of the continent’s genomic data is available for research purposes. This limits the kind of medical innovation that can be discovered. 54Gene is solving this problem through local clinical research programs and advanced molecular diagnostics.

Njenga’s and Pollak’s Apollo Agriculture is using digital solutions to provide agricultural extension services, financial services and market access to smallholder farmers in Kenya.

The three newly selected entrepreneurs join a growing number of African founders who are Endeavor entrepreneurs. CEOs of Flutterwave, Carbon, Paga, Daystar Energy, Kobo360 and Migo have all joined the organisation during the last three
years.

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TechCabal Daily – Why are African MoMo operators interested in remittances?

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