- The remittance flow into Africa amounts to approximately $95.6 billion each year
- Roll out of Airtel and MasterCard service will occur in phases to ensure a smooth customer transition.
- About 281 million people, or 4 per cent of the global population, live outside their country of origin.
Competition in the remittance space has intensified with the entry of new players as the race for a share of the annual $95.6 billion cross-border remittances flowing into Africa heats up. Airtel Africa has partnered with MasterCard to unveil a new service for cross-border remittances. Their deal will see customers in Kenya and 14 other African nations become the first beneficiaries of the service.
Airtel Africa and MasterCard will provide a seamless digital experience for consumers, connecting them with millions of peers worldwide. With a mushrooming diaspora community, remittances are now the largest source of forex in many African economies.
Research shows inflows are becoming critical for households in the face of disasters and economic slowdown in Africa. According to Airtel, the implementation will occur in phases to ensure a smooth customer transition.
Remittances at $95.6 billion annually
The remittance flow into Africa amounts to approximately $95.6 billion each year. This makes it a significant source of foreign currency for the continent.
“We are thrilled to embark on this journey with Mastercard as we work together to roll out a world-class remittance service to our customers,” said Airtel Money Chief Executive Officer Ian Ferraro.
The collaboration between Airtel Africa and Mastercard will empower customers to conveniently and accessibly connect with their loved ones around the globe. This initiative will promote financial empowerment and contribute to Africa’s economic growth.
Mastercard cross-border services will be a secure access point for fund transfers across 14 African markets where Airtel operates. These markets are Chad, Congo, Brazzaville, Kenya, Gabon, Kenya, Madagascar, Malawi, Niger, Nigeria, Rwanda, Seychelles, Tanzania, Uganda, and Zambia.
Airtel and Mastercard to help access the global market
Consumers will be linked to wallets in over 145 markets, benefiting from timely delivery, secure transfers, and reasonable transaction costs.
The service comes at a time when remittance inflows have experienced a slight decline globally. This is largely due to the US Federal Reserve’s tightening monetary policy to tackle inflation.
Ngozi Megwa, Senior Vice President of Mastercard for Eastern Europe, the Middle East, and Africa, highlighted the importance of this digital solution, saying, “The digital economy continues to grow and expand, and by rolling out this remittance service, we’re making it easier for more people to transfer funds with ease, security, and certainty.”
According to Mastercard’s 2022 Borderless Payments Report, digital payments are seeing strong growth worldwide. An estimated three-quarters of customers who send and receive cross-border payments use mobile apps.
This surge in cross-border mobile transactions underscores the need for secure and straightforward cross-border remittances options for banked and unbanked consumers.
The UN has established a goal within its Sustainable Development Goals: by 2030, remittance fees should not exceed three percent of the transaction value. While some countries might not achieve this target, others have already met this goal.
The average cost of sending remittances across the Igad region is 8.9 percent compared to a global average of 6.5 percent. The global average is nearly three times the Sustainable Development Goals target rate below three percent.
The cost of intra-regional remittances transfer among the Igad member states is 10.6 percent. This is higher than the sending rate to the region, making it more expensive to send money among members.
According to the World Bank, remittances to low and middle-income countries reached a record high of $540 billion despite the disruption of Covid-19 on the global economy.
Recent studies have shown that about 281 million people live outside their country of origin and sent $781 billion in remittances in 2021 alone.