The World Bank estimates that the cash flow from working migrants to developing countries last year was $ 440 billion, more than double the amount of international assistance to these countries.
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Many founders of FinTech-businesses, wishing to work in the African market, believe that if they start using Bitcoin or blockchain, then a revolution will take place. But in order not to fail, it is necessary to know about the existing problems.
The African money transfer market in 2016 was estimated at $ 429 billion, then we can conclude that from year to year money transfers from one point to another should become more convenient, faster and cheaper.
The two main problems of sending money in Africa — are high commissions and difficult access to banking services for most people. The average commission for a transaction through Western Union is 8-15%, while banks take even more (up to 29% in case of transfer from some countries). Unlike Europe, the commission is charged for each operation, including for replenishment of the account and withdrawal of money in the bank branch. In addition, as a rule, transfers are not instantaneous, and the recipient has to wait for money for several days.
To transfer cash or mobile money from point A to point B, at point A, the agent must accept cash or mobile money from the sender, and at point B another agent must give them to the recipient. The more such points A and B, the better the service works.
As for domestic remittances, in every African country there are mobile operators with their mobile money. People like it, because it is so convenient to pay bills for electricity, etc.
The main African mobile operators are Orange (Orange Money), MTN (MTN Money), Moov (Flooz). In some countries, such as Kenya and Tanzania, the M-Pesa money transfer service is also very popular.
Mobile money is needed for domestic money transfers through USSD-codes. This is a very old technology. This means that this service is available even from old mobile phones without Android. People are used to this way of handling money. To make or withdraw money from the SIM card, you just need to visit the nearest branch of the operator.
The problem of introducing new technologies is that they are too complex for most of the population of Africa. For example, many do not even know how to read and write. Others do not have smartphones, so they cannot install an application that can simplify their life. With mobile money belonging to mobile operators, in all this there is no need. Their success is due to the simplicity of technology and low commissions. The only obstacle to absolute success is that most of the largest mobile operators do not allow instant transfer of money from one country to another. More recently, Orange Money tried to introduce international money transfers into its system, but immediately encountered a ban on the part of regulators. BCEAO (Central Bank of West African States) does not allow international money transfers because mobile operators — are not banks and they do not have a license for it.
It turns out that the process was stalled only because of bureaucracy. On the other hand, if the largest mobile operators establish a monopoly on both domestic and international money transfers, this can negatively affect the economies of many countries. In many countries, a huge percentage of finance is already concentrated in the hands of private corporations.