Having fled an economic implosion in his native Zimbabwe, Brighton Takawira was able to provide for his mum back home with small earnings by a small perfume business he set up in South Africa.
Subsequently the pandemic struck. Borders closed. The buses he had used to ship his money stopped running.
“I had to send something, even a few dollars,” explained Takawira, although it meant sometimes going without bread. He tried out an internet remittance firm on a buddy’s recommendation.
He is among the several African migrants being pushed towards digital transport services, often for the very first time, throughout the pandemic.
This is fuelling a boom for Africa-focused money transfer businesses, despite forecasts by the World Bank of a historic 20% fall to $445 billion in remittances to weaker nations this year because of a pandemic-induced worldwide economic slump.
“We saw an increase of transfers as the diaspora wanted to help their family,” said Patrick Roussel, that heads cellular financial solutions for its Middle East and Africa at French telecom firm Orange – a more dominant player in French-speaking Africa.
Much like Takawira, many had to dip into savings or make other sacrifices to accomplish this, analysts and company officials say.
The pandemic gave remittance companies an advantage over their main competition in Africa: the sprawling informal networks of dealers, bus passengers and drivers used by a number of migrants to send cash.
“We’ve seen an influx of new customers, and we see them mainly coming to us from the informal market,” said Andy Jury, CEO of Mukuru, the company Takawira now utilizes.
Jury along with other business executives say that change is likely to continue as digital remittance services are typically cheaper, quicker and safer than informal networks, which can be difficult for governments to control.
Mukuru, which focuses mainly on African remittances and enables customers to send both money and groceries, has seen a roughly 75% increase in growth compared to previous year.
Remittances into sub-Saharan Africa officially totalled $48 billion last year, according to the World Bank. Experts, however, say that figure tells only a part of the narrative.
Much of the cash Africans ship home via informal networks is absent in official data.
As those networks ground to a stop during lockdowns, formal money transfer businesses – especially digital platforms – were suddenly the only game in town.
According to Kenyan central bank data, remittances into Kenya were up 6.5percent though August compared to the identical period last year. Remittance inflows into Zimbabwe were up 33% through July.
Online remittance firm WorldRemit reported last week which transports to Zimbabwe via its service had skyrocketed over the past six months.
Azimo, a UK-headquartered remittance company whose major African markets include Nigeria, Ghana and Kenya, saw a nearly 200% increase over the anticipated number of new customers in April, May and June.
“I’d swap it out for no pandemic any day of the week,” Azimo CEO Michael Kent told journalists at our partner news agency Reuters.
Remittance businesses got an additional boost early in the pandemic when African central banks decreased prices and loosened limitations on digital trades, to encourage people to use digital services to ease social distancing.
“I would probably agree with the World Bank that the total amount (of remittances) will go down,” said Dare Okoudjoufounder of MFS Africa. “But anyone who’s in digital would actually gain market share and see their volume go up.”
The organization, which runs networks around 36 African countries to channel remittances between mobile money accounts, has witnessed year-on-year transaction growth of over 90 percent in 2020.
The industry is now at an inflection point, analysts say.
That’s the silver lining,” said Timothy Ogden, managing director of the Financial Access Initiative in New York University.
Takawira, whose brother works in South Africa, says he’s currently using Mukuru per month to send cash and groceries to his 60-year-old mother in rural Zimbabwe, where inflation is topping 650 percent.
“My salary does not buy much… When the boys send me money, it does help a lot” his mother Gladys Muzira told journalists.
The team at Platform Executive hope you have enjoyed this news article. Initial reporting via our official content partners at Thomson Reuters. Reporting by Joe Bavier. Editing by Alexandra Zavis and Emelia Sithole-Matarise.
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