An international money transfer company has launched an online service for East Africans to send and receive money more easily. Analysts say WorldRemit will lower the cost of transferring money and boost African trade and economies.
Africa has become a thriving market for money transfer companies as its telecommunication facilities improve and its economies grow.
WorldRemit, a British-based money transfer company, recently launched a new digital service in four East African countries. The company facilitates the transfer of at least $1.6 billion to Africa each year.
The co-founder and the head of WorldRemit, Ismail Ahmed, told VOA how money transfers in Africa have changed over the years.
“When we launched our services, 99 percent of remittances were cash both on the sending and receiving side. But today that is changing fast and in the next few years we think as much as 50 to 60 percent of international remittances would move from traditional physical cash, traditional remittances, to digital. And that’s why our services has grown very fast in the last few years,” he said.
Ahmed said that as transactions become digital, the cost of each transfer comes down, and tracking money becomes easier.
“It’s easier for businesses and individuals to move within countries but also across countries. It’s easier to fight financial crime because once the transaction becomes digital, there is an audit trail compared to cash where there is no audit trail,” he said.
Gerrishon Ikiara is an international economic affairs lecturer at the University of Nairobi. He said digital money transfers will boost trade within Africa — but notes that some countries still lack the necessary connections.
“Obviously, the main challenge is the level of infrastructure, because a country without the good infrastructure in terms of electricity and telecommunication infrastructure will make it a bit difficult,” said Ikiara.
The World Bank says $37.8 billion was sent to Africa through remittances in 2017. This year, the amount is expected to be $39 billion.