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90% kyeyo money transfers go towards rural households

Catherine Wines

Catherine Wines

Payments from abroad to Ugandan families made up five per cent of GDP last year and Catherine Wines, WorldRemit co-founder, says they are helping reimagine many families’ lives, writes ALON MWESIGWA.

Uganda was among the top five recipients of money from people living abroad in sub-Saharan Africa last year and only second to Kenya in East Africa, according to a World Bank April 2018 publication on migration and remittances outlook.

The country received $1.4bn in 2017, almost the same amount as the reported figure of tourism receipts in the country. Kenya received $2bn. This means remittances tie with tourism as Uganda’s top foreign exchange earner. Remittances are larger than FDI, which reached about $1.2bn in 2017, mostly going to the oil and gas sector in Uganda, according to Bank of Uganda’s estimates.

Speaking to The Observer at the sidelines of the financial inclusion symposium in Kampala, Catherine Wines, the co-founder of WorldRemit, a London-headquartered digital money transfer firm, said they had noted the immense growth in money transfer on their platform to Uganda, registering a 150 per cent growth in the last three years, specifically going to mobile money. The symposium was organized by Financial Sector Deepening Uganda (FSDU).

“Remittances have supported families for their basic needs like food, rent, school fees and hospital bills. But what we are seeing is that for extended families or people who have been away for longer, they help families set up small businesses.”

More people are finding the traditional channels of sending money through banks a little slower and are taking on digital platforms like WorldRemit and Xpress Money.

Senders on WorldRemit can choose to send funds via bank transfer, cash pick-up, and mobile money services. According to Wines, it is because “We’ve been offering something different. We are a remitter but we are totally digital. A lot of Ugandan diaspora is professional and educated; so, they adopt digital services more quickly but also the most important is the fact that we are connected to mobile money.”

“About 90% of our transactions that went to mobile money in Uganda were for people in rural areas. It shows the benefits of mobile money for people far from the city,” she said.

Nigeria leads the pack of recipients of diaspora remittances in sub-Saharan Africa, topping $22bn last year. The digital platforms like WorldRemit have managed to cut on the cost of sending money, although Wines admits there is still a cost because working capital has to be there.

“We still have to have money on both ends for settlements to be effected swiftly,” she said. This means that if someone is sending money from London to Uganda, the money transfer firm must have money in London and Uganda as well. This is costly, says Wines.

“We [WorldRemit] are eight years old and have a good agent network in 50 countries but it takes a long time to get the network. This means we have to travel, we have to negotiate. So, there is a cost.”

According to the World Bank, between January and March 2018, the average cost of remittance services in sub-Saharan Africa declined compared to a year earlier, from 9.8 to 9.4 percent.

“This is a declining trend compared with previous years. Yet, in sub-Saharan Africa, remittance services remain the costliest in the world, at 29 per cent above the world average in 2017,” the World Bank says.

The United Nations wants the cost of sending money abroad to be brought down to at least 3 per cent by 2030. The cost of receiving and sending money has been also impacted by the policy choices by individual countries.

For instance, in July 2018, Uganda introduced a one per cent tax on mobile money transactions. Wines said they noted a dip in the transfers when Uganda introduced the tax on mobile money.


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