mediacongo.net – News – Africa, a huge and promising market for money transfer

African remittances, vital for the continent, represent several tens of billions of euros each year. Problem: the costs of these financial transactions are higher than elsewhere. Today, fintechs (financial start-ups) shake the monopoly of American institutions. Interview with Catherine Wines, co-founder of the British company WorldRemit.

Where is the money transfer market to Africa?

At the global level, it is a huge market, estimated by the World Bank at $ 500 billion and dominated by US companies Western Union and MoneyGram

Just for sub-Saharan Africa, the total amount of remittances is 40 billion euros, according to the World Bank. However, it is a fragmented market of 54 countries and not very competitive. As a result, transfer fees are higher than elsewhere: 9% on average, versus 7% for the rest of the world. The World Bank would like these fees to be increased to 3% by 2030.

Western Union and MoneyGram have developed a network of partners on the continent bound by exclusive contracts. Initially, it was difficult for newcomers to settle there. But today, these contracts become illegal.

How did the African market liberalize?
It's technology that has made things happen. In this case with the development, in Kenya in 2007, mobile wallet (mobile money) from a cell phone, thanks to M-Pesa, platform of the telecom operator Safaricom.

You must see that according to data from the World Bank, 32.8% of Africans have a bank account while 80% of them have a mobile (in fact, the figures are inaccurate … The World Bank and indicates a rate 73% for 2017. While a study by the GSMA, an association of some 800 operators and mobile phone manufacturers around the world, reports "for sub-Saharan Africa (of) a penetration rate of unique mobile subscribers (…) by 44% at the end of 2017 [Editor's note]

To send money, they can directly use a phone number connected to a virtual account. This avoids entrusting this money to a third party. Then they started making payments to each other. From there have developed other services: loans, insurance … With a finding: the mobile wallet is more efficient, safer, cheaper.

Your company arrived at the same time on this market …
WorldRemit, an online service that allows you to send money to your loved ones abroad from a computer, smartphone or tablet, was founded in the UK in 2010. Since then, we have decreased transfer costs and broke the monopoly of the big ones in the sector. Today, we charge fees in the order of 5%. Western Union, which previously claimed more than 10%, had to reduce its own. (On its side, this company, questioned by Geopolis, says "on average" to take "about 5% of the sum sent" whatever the country. ] "We do not disclose specific information at the regional level" she explained, her competitor, MoneyGram, explained to us to charge an average fee of "less than 5%, including foreign exchange operations " after having reduced them, " for Africa, by more than 4% ", Ed.)

At the beginning, we developed towards the 'Europe. We are now working around the world. For its part, Africa generates 50% of our customers' shipments and 50% of our revenues. We have offices in Senegal, South Africa, Kenya, Rwanda, Uganda. Today, we account for 75% of international mobile shipments to the continent. We have some competitors in our niche, small companies, which are not yet as developed as us.

You are seeking to establish yourself in French-speaking Africa. You have just started at Senegal . What is special about this region?
It's a difficult market because of the regulations. To send money, you have to go through a bank. Banks thus have a grip on international transfers. Consequence: discussions with partners take time. Since it takes time to change habits in a sector where 90% of shipments are still physical.

Is your company profitable today?

No, not yet. The choice of our investors is to be global. We need money to grow. In this case: obtain licenses (as in the United States), set up a partnership and marketing policy, develop a brand, establish trust. In 2014, we raised EUR 220 million from venture capital companies.

Between 2016 and 2018, WorldRemit's turnover (550 employees worldwide) increased by around 50%. year to reach 60 million British pounds (67.15 million euros) this year. At the end of 2017, we had 2 million customers. Today (in July 2018, Ed), we have 2.5-3 million. We set a target of 10 million by the end of 2020.

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