![]() ![]() ![]() “In the early stages of the African remittances market one or two companies signed up pretty much every single place that was legally allowed to pay out so it basically stopped competition,” said Leon Isaacs, managing director of the International Association of Money Transfer Networks.īut countries like Ghana and Nigeria have now banned these types of clauses, said Isaacs, a sign that governments are waking up to the importance of these flows. “As more and more entities start offering the service, competition increases and the laws of supply and demand kick in and that will regulate the market,” he said.Įxclusivity agreements between money transfer companies and banks are also common in Africa, restricting banks to paying money out from only one company. Once a wider range of institutions are permitted to offer remittance services, such as post offices and retail outlets, competition and demand will increase, said Richard Malcolm, Western Union’s vice president for Southern and East Africa. Africa has the least payout locations in the world, which means recipients who live in rural areas face the prospect of traveling for a day or more to collect their money. There are other expenses besides the transaction fees. The global average cost is just over 9 percent.Īn average transaction cost of 11.67 percent would have deprived some of the world’s poorest people of more than $7 billion in 2012, the World Bank says. Now, with official remittance flows to the continent growing to a record $60.4 billion in 2012 - overtaking foreign direct investment and official development assistance as the largest external financial source for the first time, according to the African Development Bank - it is likely to gain more urgency.Īfrica is the most expensive continent to send money to, with transfers costing an average of 11.67 percent of the amount being sent, compared to around 8.35 percent for Asia. ![]() The need to reduce the cost of remittances to Africa may be one of the few issues to have rappers, economists and policymakers nodding in agreement. JOHANNESBURG, June 7 (Reuters) - In his 2009 album Troubadour, Somali rapper K’naan dedicates the song “15 Minutes Away” to “everybody that’s had to wait on a money transfer” and complains, “it’s kind of wack when they charge you like 10 percent on the dollar.” ![]()
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