Leading money transfer company Dahabshiil is ready to work with the African Union in partnership with African states to enable them to reform their laws and regulations so as to lower the cost of remitting funds into and within the continent.
Amadou Cisse, AU’s African Institute for Remittances (AIR) Interim Executive Director, said in Nairobi that the new regulations will improve the sector’s efficiency and transparency.
Dahabshiil Chief Executive Officer Abdirashid Duale said they are ready to work with the African Union for the benefit of the larger African community that benefit from remittances from the Diaspora.
Dahabshiil operates in over 126 countries and complies with all relevant international laws regulations and industry best practice, including anti-money laundering, counter-terrorist financing and know your customer regulations. It specifically serves Africa’s more remote regions. Fringe territories are key markets for us, despite and, in part because of, their challenges and Duale says the important aspect of their business is to serve Africa and make life easier and affordable.
“We want to disclose more information about remittance service cost so that consumers can benefit from lower cost of remittance,” Cisse said on the sidelines of the Diaspora Homecoming Reception in Nairobi.
According to a 2015 survey conducted by AIR, Africa has the highest cost of remittance in the world.
“On average, it cost 12 percent to send funds into Africa compared to less than five percent in other regions of the world,” Cisse said.
“This means that if you send 100 U.S. dollars from Europe to Africa, the remittance service provider will on average charge a fee of 12 dollars,” he added.
The Executive Director said there are also hidden costs associated with sending money to Africa.
According to the AU, remittances are now a bigger source of Africa’s capital inflows compared to Foreign Direct Investment or Overseas Development Assistance.
The leading recipient of Diaspora funds in Africa are Nigeria, Egypt, Kenya and Senegal.
“Remittances play a crucial part in the development of many of the 100 plus countries we operate in. They are part of the global economy, they are part of life and their needs need to be taken care of,” said Duale.
“Indeed, Dahabshiil , just like the African Union has the interest of Africa at heart and we as one of the companies involved in remittances are ready to work with them to build the African economy through remittances,” he added.
According to some estimates, half of the nearly 1 billion African population does not have a bank account and as few as 5 to 10 percent use a credit or debit card.
To put into context the importance of remittances to Africa, approximately $37.5bn is sent annually to Africa by its Diaspora. For the region as a whole, this represents 50 percent more than net official development assistance.
The International Fund for Agricultural Development (IFAD) estimates that, on a country-by-country average, remittances represent 5 percent of GDP.
“Clearly, Africa’s remittance figures are compelling and highlight the substantial market opportunity. There are also wider benefits to the economy,” observed Duale