M-Pesa now ventures abroad to tap into diaspora cash
Posted Monday, October 19 2009 at 00:00
With the recent expansion of Safaricom’s M-pesa money transfer service to the UK, Kenyans in the diaspora now have an additional cash remittance avenue besides the well-known Western Union and MoneyGram.
Speaking at the M-pesa expansion launch, Safaricom chief executive Michael Joseph said that the firm plans to run the Kenya-UK service for three months before expanding to other markets.
“We would like to introduce the service to Uganda, the United Arab Emirates and US, but only after we comply with regulatory issues in those countries,” said Mr Joseph.
To send money to Kenya using the service, one will be required to identify themselves, provide the recipient’s name, Kenyan mobile number and the amount being sent in pound Sterling.
With transaction fees ranging from $5.6 to $9.6, the transfer is converted to Kenya shillings at the day’s prevailing exchange rate, thereby guarding against exchange fluctuations as it is an instant transfer.
Currently, the maximum amount that can be transferred internationally through M-Pesa is $350 with the amount allowed per month from a single sender in the UK capped at $14,000.
M-pesa, launched in Kenya in 2007, had a subscriber base of 7.3 million by end of July, served by an agent network of over 12,000, with cumulative person-to-person transfers of $2.7 billion. The volume of monthly transfers is $2.5 million.
The move to launch the service in the UK is seen as one meant to tap into the international remittances market especially from Kenyans in the diaspora.
The market is currently controlled by Western Union and MoneyGram.
The World Bank estimates that recorded remittances by about 200 million migrants from developing countries reached $283 billion in 2008, up from $265 billion in 2007, adding that unrecorded flows could even be higher.
“For Kenya, the diaspora remits an average of $50 million each month through the formal channels such as commercial banks and authorised international money transfer avenues,” said Prof Njuguna Ndung’u, the Central Bank of Kenya governor.
Current CBK statistics indicate that the value of remittances from abroad to the country totalled $ 611 million in 2008 up from $ 573 million in 2007.
Statistics from CBK further indicate that a huge portion of the remittances to Kenya have come from North America and Europe in the past five years.
Prof Ndung’u praised the move to launch M-Pesa internationally, saying that even though remittances to the country were previously done informally, M-pesa would provide a formal channel to help in monitoring remittances from the diaspora to the country.
In line with payment systems and forex market oversight objectives, Prof Ndung’u said that CBK evaluated the safety, soundness and efficiency aspects of the pilot to ensure that it met internationally accepted standards for international remittances.