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Africa/Global: Cutting the Costs on Remittances

AfricaFocus Bulletin
May 13, 2019 (2019-05-13)
Reposted from sources cited below)

Editor's Note

“Some people use their savings to start a business, while others turn to family and friends to borrow cash. But Ismail Ahmed’s case was more unusual. He launched WorldRemit, a money transfer business, with compensation cash he received after uncovering alleged corruption at the UN. … Ahmed had waited four years since he’d submitted the dossier alleging corruption to the UN. But the wait proved worthwhile when in February 2010 he received £200,000 in compensation for the way he had been treated after making allegations, the money he used to fund the launch of WorldRemit.” - Guardian, January 20, 2017

WorldRemit grew slowly in the first few years, but since 2014 it has attracted significant investment. And, more important, it has built one of the most flexible and cost-effective platforms for money transfer, particularly to African countries, and, most recently, between African countries as well. By focusing on digital transactions, it has provided both greater security and efficiency, allowing senders to use credit and debit cards as well as links to bank accounts and mobile phone apps, and receivers, depending on the country, to get bank transfers, cash, mobile money such as m-pesa, and mobile phone airtime payments.

I first learned of WorldRemit when trying to find a way to contribute to a local volunteer group in Maputo, Mozambique, that was mobilizing support for relief from the cyclone in Beira (and now, as well, in Cabo Delgado). Using my local bank in Washington, DC, was, I knew by experience, both very time-consuming and costly. But signing up for WorldRemit was easy and the process quick and not costly. I was further impressed when WorldRemit announced that the company itself was contributing $25,000 to the Mozambican Red Cross.

Remittances, I already knew, were rapidly growing in Africa and around the world, surpassing official development assistance in amounts received by development countries. But in researching this story, I also learned, for example, that among the highest rates in the world were between South Africa and many of its neighbors, and was told by a friend in Johannesburg that WorldRemit was really the only practical way she had found to send funds home to Mozambique.

[For earlier AfricaFocus Bulletins on remittances, see and]

Thus, this Bulletin, which includes an email interview with a South-Africa-based representative of WorldRemit, as well as additional background and excerpts from the most recent World Bank report on remittances. The most striking statistic is that average costs for remittances worldwide are at 7%, and for sub-Saharan Africa 9%. Targets for supporting development are 3%, but costly and inconvenient transfers through banks, Western Union, and other transfer agents keep the price up. In country after country, World Remit shows up with the lowest or next-to-lowest rates among providers, as one can check in on-line databases such as or, for a smaller number of countries,

Review of WorldRemit

WorldRemit is also aggressively pursuing new customers. And if you use this link ( to sign up, and send an initial transfer of $100 or more, both you and AfricaFocus get a discount of $20 on a future transfer. For my part, I will use my discounts for future contributions to local recovery efforts in Mozambique.

If you do use WorldRemit, or have experiences with other companies that you think are as good or even better for transferring funds to family or friends in African countries, please share your thoughts with me by email at

For previous AfricaFocus Bulletins on the economy and development, visit For previous AfricaFocus Bulletins on migration and related issues, visit

++++++++++++++++++++++end editor's note+++++++++++++++++

Interview by Email with WorldRemit

May 2, 2019

Many thanks to Akinyi Ochieng, Corporate Communications Manager for WorldRemit, based in London, for arranging this interview. Ms. Ochieng is also a prolific writer on a wide range of Africa-related topics ( The questions below were answered by Andrew Stewart, Managing Director, Middle East and Africa, based in WorldRemit´s Johannesburg office.

AF (AfricaFocus): Can you tell me in a few paragraphs what are the main reasons WorldRemit was needed as an alternative to Western Union and other large companies, and why you think it is making a contribution to African development?

WR (WorldRemit): WorldRemit is a leader in the move from offline to digital money transfers. Along with the convenience this brings, our cashless model on the sending side makes us more secure and provides a digital footprint to deal with global compliance requirements.

Africa is WorldRemit’s largest market, and we are currently present in over 40 African markets and are expanding rapidly, driven by key partnerships with local correspondents, our low fees, and our mobile-first approach. We have regional offices in Senegal, Egypt, Kenya, Tanzania, Uganda, Ethiopia, and South Africa. As Africa is our largest market globally we are keen to continue expanding our operations across the region.

According to the World Bank, remittances to sub-Saharan Africa grew to $37.8 billion in 2017, according to the World Bank and are forecast to hit around $39.2 billion for 2018 and $39.6 billion in 2019. WorldRemit is ensuring that Africans in the diaspora can make the most of the opportunities they have and send a greater share of their money home. Our recent research ( shows that if all remittances globally were sent digitally, it could unlock $825m for education worldwide--a shift that would have an outsize effect in Africa, which is home to large numbers of out-of-school children.

AF: Can you expand on the obstacles to lowering the high cost of remittances to Africa, and how WorldRemit can afford to offer lower rates?

WR: The vast majority of remittances today are still sent offline at corner shops and bricks-and-mortar money transfer agents. People in the diaspora have to find the time in their busy lives (many working multiple jobs), to visit a money transfer agent during business hours and then pay extortionate fees to send money home. However our cashless model significantly reduces cost on the sending/pay-in side as well as providing convenience.

For example, South Africa is the most expensive G20 country to send money from with an average cost of over 15% for sending $200 - more than double the global average ( - direct URL: In Zimbabwe and Mozambique, two of the top remittance destinations from South Africa, however, WorldRemit fees are below 4% of the transaction cost on average.

AF: How many countries in Africa can one send remittances to through WorldRemit?

WR: You can reach over 40 countries across the continent, including Ghana, Kenya, Nigeria, Zimbabwe, and more. Most of our customers choose to send via smartphone, and over 90% of all transactions are authorized in less than 10 minutes.

Sunday morning in Nairobi Credit: Fiona Graham / WorldRemit.

AF: I first learned of WorldRemit through trying to find a way to send funds to Mozambique for Cyclone Idai, and I later saw that WorldRemit itself contributed $25,000. Do you have statistics on how many people sent funds to people or organizations in the affected countries through WorldRemit in the weeks after the Cyclone hit Mozambique, Zimbabwe, and Malawi?

WR: The flow of remittances is 3 times bigger than official development aid, but in the West we often only talk about the aid given by donor countries. When a natural disaster occurs, or in times of economic or political upheaval, remittances - the money sent by a resident of one country to a person elsewhere in the world - can provide immediate financial assistance to those who need it most. Remittance flows are a significant source of income flowing directly into people’s household incomes, while also supporting broader development goals.

Unfortunately we don’t have statistics on this as relates to Cyclone Idai, but to maximise the diaspora’s contributions to their communities back home in times of urgent need, we have set up donation matching schemes to the Red Cross. In September 2018, in the wake of Typhoon Mangkhut, we matched donations made through our service to the Philippines Red Cross. In October, we matched donations to the Indonesian Red Cross after the devastating earthquake and tsunami.

AF: What are your projections of growth for WorldRemit in terms of market percentage compared to companies such as Western Union?

WR: Of the $700 billion dollars that are sent by migrants every year, the majority are still sent in cash over the counter or at high street agents. Western Union and MoneyGram – two of the biggest names in the industry – account for less than 20% of market share and a growing share is moving online. The arrival of digital technology means more people are sending large sums of money through cheaper and more secure methods such as WorldRemit, and the number of people sending is also projected to grow due to the rapid rise in the number of migrants from 173 million ( to nearly 250 million ( in the last 20 years.

AF: Given how much cheaper World Remit seems to be over other transfer mechanisms, what are some of the barriers you have to overcome to reach more people?

WR: WorldRemit has launched inter-African payments, enabling customers in Africa to send as well as receive money transfers to 145 markets. To do this, we are getting licenses for receive countries to become send countries: we recently launched Somaliland and South Africa as send countries. This is especially important from the point of view of customers sending within Africa, because Sub-Saharan Africa remains the most expensive regions to send remittances to, with an average cost of 9.4 percent ( for sending $200, according to the World Bank. This is part of our vision to stimulate growth and trade within the continent, led by a cashless model. In each new sending country, WorldRemit must secure local licenses but as we secure these in more African countries we’ll be poised to tap into the future of growth across the Global South.

AF: What measures do you take to avoid the use of WorldRemit for money laundering, and to identify and screen out suspicious transactions?

WR: The need for alternatives to offline, agent-based money transfers is growing in large part due to fraud risks, high costs and inconvenience. Consider the challenges in this process – you stand in line at an agent store, fill out paper forms and hand over your payment in cash. The potential for human error is vast and it takes months before the paper trail is put together and potential fraud can be investigated. Online money transfers can mitigate against some of the risks involved with cash-based remittances. The electronic footprint online transfers leave acts as a strong deterrent to criminal groups. Beyond fraud, online money transfers can improve speed and convenience for users, as well as lowering costs.

When we started back in 2010, we were one of the first businesses to set up an entirely online remittance service. We determined that the only way to meaningfully reduce the challenges of money laundering and terrorist financing was to bring remittances out of the traditional cash and paper-based models and into the online world.

As compliance is an inherent part of our platform, we have spent time and capital building our digital compliance system. We have developed a sophisticated model supported by machine learning with multiple stages of identity checks.

Emma Featherstone, Interview with WorldRemit founder Ismail Ahmed

Guardian, Jan. 20, 2017

[Excerpt only. Full article at]

Some people use their savings to start a business, while others turn to family and friends to borrow cash. But Ismail Ahmed’s case was more unusual. He launched WorldRemit, a money transfer business, with compensation cash he received after uncovering alleged corruption at the UN.

Ahmed, who grew up in Somaliland, a breakaway part-desert territory that declared independence from Somalia in 1991, became interested in the money transfer industry after realising how many people relied on it. Studying economics in the UK he learned the industry’s nuances.

He then helped to run a money transfer project as part of the United Nations Development Programme (UNDP), aiming to make a positive difference in a sector that’s vulnerable to crime. But Ahmed discovered alleged corruption in the UN’s Somalia remittance programme and confronted his boss. “My boss said if I went and submitted the dossier, I would never be able to work in remittances again, and I took that threat very seriously. I lost my job to uncover the fraud.”

Undeterred by the spectre of a ruined professional reputation, and having left the UN, Ahmed set about realising his ambition to start a mobile money transfer business. “While I was fighting for [my case] at the UN, I was also studying at the London Business School.”

During this time, he came up with a business plan for WorldRemit, which was first launched as AfricaRemit. It would offer a service for migrant workers to send money to countries across the world using just a smartphone and app. The service would cut out the middleman – the agents needed to deal out the money.

By December 2009 Ahmed was ready to register the business. So it was timely that in the same month he was notified of the UN’s decision: “I received the letter from the UN ethics committee mid-December and a few days later I incorporated the company.”

Ahmed had waited four years since he’d submitted the dossier alleging corruption to the UN. But the wait proved worthwhile when in February 2010 he received £200,000 in compensation for the way he had been treated after making allegations, the money he used to fund the launch of WorldRemit.

More at

Migration and Remittances: Recent Developments and Outlook

Migration and Development Brief 31

World Bank, April 2019


This Migration and Development Brief provides updates on global trends in migration and remittances and validates the projections made in the previous Brief in December 2018. It highlights developments related to migration-related Sustainable Development Goal (SDG) indicators for which the World Bank is a custodian: increasing the volume of remittances as a percentage of gross domestic product (GDP) (SDG indicator 17.3.2), reducing remittance costs (SDG indicator 10.c.1), and reducing recruitment costs for migrant workers (SDG indicator 10.7.1). It also presents recent developments on the Global Compact on Migration (GCM).

Remittance trends.

In 2019, annual remittance flows to low- and middle-income countries (LMICs) are likely to reach $550 billion. That would make remittance flows larger than foreign direct investment (FDI) and official development assistance (ODA) flows to LMICs. In 2018, remittance flows to LMICs reached $529 billion, an increase of 9.6 percent over 2017. Remittance flows grew in all six regions, particularly in South Asia (12.3 percent) and Europe and Central Asia (11.2 percent). Growth was driven by a stronger economy and employment situation in the United States and a rebound in outward flows from some Gulf Cooperation Council (GCC) countries and the Russian Federation.

Remittance costs.

The global average cost of sending remittances remained at about 7 percent in the first quarter of 2019, roughly the same level as in recent quarters, according to the World Bank’s Remittance Prices Worldwide database. The cost of sending money to Sub-Saharan Africa was 9.3 percent, significantly higher than the SDG target of 3 percent. Banks were the costliest channel for transferring remittances, at an average cost of 10.9 percent. De-risking by international correspondent banks—that is, the closing of bank accounts of money transfer operators (MTOs) to avoid rather than manage the risk in their efforts to comply with anti–money laundering and countering financing of terrorism (AML/CFT) norms—has affected remittance services and may have prevented further reduction in costs.

Also, in an apparent example of policy incoherence, remittance costs tend to include a premium, that is a cost mark-up, when national post offices have exclusive partnership arrangements with a dominant MTO. This premium averages 1.5 percent of the cost of transferring remittances worldwide and is as high as 4.4 percent in the case of India, the largest recipient of remittances. Opening up national post offices, national banks, and telecommunications companies to partnerships with other MTOs could remove entry barriers and increase competition in remittance markets.

1.Global Remittance Flows and Migration-Related Sustainable Development Goals

1.1 Remittances Accelerated in 2018

Remittance flows to low- and middle-income countries (LMICs) grew by 9.6 percent in 2018 (up from the 8.8 percent rise in 2017), to reach a record $529 billion (table 1.1 and figure 1.1a). The rise in remittances was driven by higher growth in the United States and a rebound in remittances outflows from some Gulf Cooperation Council (GCC) countries and the Russian Federation.

Remittances are now the largest source of foreign exchange earnings in the LMICs excluding China. They are more than three times the size of official development assistance (ODA). Moreover, since foreign direct investment (FDI) has been on a downward trend in recent years, remittances reached close to the level of FDI flows in 2018. Excluding China, remittances were significantly larger than FDI flows (figure 1.1b).

3.6 Remittances to Sub-Saharan Africa Continued to Accelerate in 2018

Remittance trends.

Remittances to Sub-Saharan Africa were estimated to grow by 9.6 percent from $42 billion in 2017 to $46 billion in 2018. Projections indicate that remittances to the region will keep increasing, but at a lower rate, to $48 billion by 2019 and to $51 billion by 2020. The upward trend observed since 2016 is explained by strong economic conditions in the high-income economies where many Sub-Saharan African migrants earn their income.

Nigeria, the largest remittance-recipient country in Sub-Saharan Africa and the sixth largest among LMICs, received more than $24.3 billion in official remittances in 2018, an increase of more than $2 billion compared with the previous year (figure 3.11). Looking at remittances as a share of GDP, Comoros has the largest share, followed by the Gambia, Lesotho, Cabo Verde, Liberia, Zimbabwe, Senegal, Togo, Ghana, and Nigeria.

Remittance costs.

The cost of sending $200 to the Sub-Saharan African region averaged 9 percent in 2018 Q4, almost the same as in 2018 Q3. A slight declining trend has been observed in remittance costs in the region since the beginning of 2018, but this remains far above the global average of 7 percent and the SDG target of 3 percent to be achieved by 2030.

Moreover, the regional average hides country-level variations. For instance, in 2018, for the cheapest corridors it costs on average 3.5 percent, an amount close to the SDG 3 percent target (figure 3.12). On the other hand, for the five most expensive corridors, mainly in the southern African subregion, the average cost was 18.7 percent, almost three times higher than the global average and six times higher than the SDG target. The most expensive corridor (Angola-Namibia), saw significant variation in fees from 15.8 to 22.4 percent between 2018 Q3 and 2018 Q4. This indicates that efforts are needed to address high intraregional transaction costs in the remittance-transmission industry.

AfricaFocus Bulletin is an independent electronic publication providing reposted commentary and analysis on African issues, with a particular focus on U.S. and international policies. AfricaFocus Bulletin is edited by William Minter.

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