Global remittances to hit $636 billion by 2017
•Mobile money to propel growth
GLOBAL remittances will grow slowly in 2015, but accelerate again in 2016/17. They are projected to reach $586 billion in 2015, at a slower growth rate of 0.4 per cent due to economic conditions.
However, remittances are expected to accelerate again to reach an estimated $636 billion in 2017. These findings were contained in a recent report by the GSMA (2014 State of the Industry Report on Mobile Financial Services), which predicted that mobile money will grow to play a huge role in remittances and help to bring down fees.
The report noted that Kenya showed strongest growth in Sub-Saharan Africa. It disclosed that remittances to Sub-Saharan Africa are projected to grow by 0.9 per cent to reach $33 billion in 2015.
According to it, stagnation in remittances to Nigeria was offset by strong growth in Kenya (10.7 per cent), South Africa (7.1 per cent), and Uganda (6.8 per cent).
Kenya received $1.5 billion in remittances in 2014. With the fees getting higher, the average cost of sending $200 to Sub-Saharan Africa remains at 12 per cent (far off the G20’s target of five per cent; largely due to the cost of bricks-and-mortar agent networks of traditional firms. There is a huge potential for mobile technology to reduce costs on both the send and receive sides.
The report informed that worldwide mobile money usage is exploding. It stressed that 261 mobile money services are now live across 89 countries with 103 million active users as of December 2014.
More than half of these services currently in operation are in Sub-Saharan Africa. 90 per cent of money transfers to Kenya on WorldRemit go to MPesa mobile wallets. According to the GSMA report, mobile money helped to reduce remittance fees.
The report said that the median cost of sending $100 via Mobile Money is $4.0, less than half the average cost to send money globally via traditional money transfer channels. It disclosed that mobile money remittances are growing fast, stressing that 2014 saw a steep increase in the number of international remittances via mobile money.
The value of mobile money remittances represents a tiny fraction of total flows, but was the fastest growing of all mobile money services in 2014. Commenting on the report, Senior Mobile Analyst at WorldRemit, Alix Murphy said: “Mobile Money will play a pivotal role in global remittances, helping to reduce fees, improve speed and convenience for users.
Most importantly, Mobile Money is a key enabler of financial inclusion. There are currently two and a half billion unbanked people in the world that is without a bank account.
One billion of these people already have access to a mobile phone and so a potential means of accessing financial services. “Make no mistake – for many people in the world, Mobile Money will be their main or only means of accessing financial services. That’s why WorldRemit has worked hard to connect to more Mobile Money services than any other money transfer firm.”
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