- Index shows that 90% of Kenya’s consumers who receive money transfers want integrated mobile ‘super apps’ so they can manage remittances with other financial needs.
- Kenya’s receivers want choice in digital and in-person remittance platforms as they look to the future.
- Kenya is a leader when it comes to financial innovation especially in the world of mobile money.
Kenya’s consumers are calling for greater innovation in international money transfer services so they can easily manage their personal finance needs.
According to Western Union’s inaugural Global Money Transfer Index, about 90 per cent of Kenya’s receivers want providers to offer remittance services in an integrated mobile ‘super app’, so they can efficiently manage collecting remittances with other commitments, such as paying for utilities.
The Global Money Transfer Index asks consumers how, when and why they use international money transfer capabilities today, as well as their expectations for tomorrow.
The results bolster Western Union’s ‘Evolve 25’’ strategy to combine high-value, accessible retail and digital financial services for all. Kenya has experienced remarkable growth in financial inclusion.
This, in turn, creates greater awareness and expectation for innovation that could further support daily financial needs.
As the country’s consumers consider what they would like more of in future, 82 per cent said they would like to collect their funds in a pre-paid card or e-wallet, while the same number of receivers want providers to offer services with local language capabilities.
“Kenya is a leader when it comes to financial innovation especially in the world of mobile money. The country pioneered mobile money in Africa and is poised to become one of the most innovative and connected economies in the world,” said Mohamed Touhami El Ouazzani, Regional Vice President, Africa at Western Union.
“This is reinforced by the country’s consumers, who are increasingly looking for more exciting and innovative services from money transfer brands,” El Ouazzsani adds.
Digital today, choice tomorrow
Two in three receivers (66%) currently use only digital transfers, while 26 per cent prefer both online and in-person platforms to be available.
However, around double that proportion (53%) believe that in future, all money transfer receivers should be able to choose, compared to 46 per cent who will fully embrace digital.
In contrast, Kenya’s senders said digital transfers is their first choice for the future (56% – rising to 61% of women) with 41 per cent wanting a mix of online and in-person options.
Some 61 per cent of senders currently opt for digital-only services – rising to 67 per cent of those aged 18 to 24.
“At Western Union, we strive to listen to consumers and make strategic decisions so that we can be the money transfer provider they turn to for solutions. Whether it is sending or receiving money in person or through digital platforms, we are always looking for ways to innovate our platforms so that we never fall short of meeting consumer expectations as they manage their daily financial needs,” Ouazzani said.
Remittances performance
Central Bank of Kenya data shows Kenyans working abroad sent home $309.2 million in February, three per cent lower than $349.4 million sent in January. This is the lowest receipt since July last year.
Although CBK did not give reasons for the decline, experts are linking it to the tough economic situation globally, with high inflation squeezing disposable income.
In 2023, remittances globally are projected to decline by one per cent due to weaker conditions in migrants’ destination countries.
Read: Remittances to Africa to grow $5.3B on strong inflows to Kenya, Nigeria
Inflows to low- and middle-income countries (LMICs) withstood global headwinds in 2022, growing an estimated five per cent to $626 billion. This is sharply lower than the 10.2 per cent increase in 2021, according to the latest World Bank Migration and Development Brief.
The cost of sending $200 to the region rose to 6.2 per cent on average in the second quarter of 2022 from 5.8 per cent a year earlier.
Remittances to Sub-Saharan Africa, the region most highly exposed to the effects of the global crisis, grew an estimated 5.2 per cent to $53 billion in 2022, compared with 16.4 per cent the previous year. This was due mainly to strong flows to Nigeria and Kenya.
Remittances to the region in 2023 are projected to soften to 3.9 per cent growth as adverse conditions in the global environment and regional source countries persist.
Remittances as a share of GDP are significant in the Gambia (28%), Lesotho (21%), and Comoros (20%). Sending $200 to the region cost 7.8% on average in the second quarter of 2022, down from 8.7% a year ago.
Remitting from countries in the least expensive corridors is on average 3.4 per cent compared to 25.2% for the costliest corridors.
How Africans are using remittances
Education, healthcare, and household needs remain the main uses of remittances in Kenya and majority of poor countries, according to WorldRemit.
Kenya and Nigeria have had strong inflows according to the World Bank, which notes remittances remain a vital source of household income for low- and middle-income countries.
They alleviate poverty, improve nutritional outcomes, and are associated with increased birth weight and higher school enrolment rates for children in disadvantaged households.
Studies show that remittances help recipient households to build resilience, for example through financing better housing and to cope with the losses in the aftermath of disasters.
Migrants help to ease tight labour markets in host countries while supporting their families through remittances, notes Michal Rutkowski, World Bank global director for social protection and jobs.
“Inclusive social protection policies have helped workers weather the income and employment uncertainties created by the Covid-19 pandemic,” Rutkowski said.
By region, Africa stands to be the most severely exposed to concurrent crises, including severe drought and spikes in global energy and food commodity prices. Digital technologies allow for significantly faster and cheaper remittance services.
However, the burden of compliance with Anti-Money Laundering/Combating the Financing of Terrorism regulations continues to restrict access of new service providers to correspondent banks.
These regulations also affect migrants’ access to digital remittance services. The US remains the largest source of remittances into Kenya.
There has also been growing inflows from the Middle East which has been identified as one of the key drivers in recent months, as the number of Kenyans securing jobs in the region continues to rise.
The gulf states include Saudi Arabia, United Arab Emirates, Qatar, and Bahrain, key destinations for domestic jobs.
According to the Labour Ministry, the number of Kenyans in the Middle East has risen to above 98,000 from about 55,000 in 2019. Globally, the number of Kenyan migrant workers is over four million, with a greater percentage being skilled youth.
