Money transfer firm WorldRemit is moving into East Africa. The founder and CEO Ismail Ahmed spoke to Maryanne Gicobi.
Most money sending transfers are from the West to Africa, but there does not seem to be similar, affordable and convenient ways of sending money intra-Africa. Why is this so?
There are a lot of challenges in intra Africa transfers for individuals and businesses sending money abroad. But it is an area we are exploring.
So far, 100 per cent of our transactions are inbound, being remittances coming to the region.
But there are a lot of Kenyan students who study abroad and their parents part with exorbitant fees when sending them money. They also suffer losses from the foreign exchange conversion.
But there are also many businesses trading across African borders as well as importing goods and services from Europe and North America and China.
We want to enable businesses and individuals, particularly in East Africa, to access that extensive network so they can send money to any bank account in India, Nigeria, China, etc.
The first trial was launched in Somaliland, to enable Somalis send money to the diaspora as well as ease transactions for those Kenyans, Rwandans and Ugandans in Somalia sending money home.
What kind of transactions are we seeing from Somaliland and what market were you trying to capture?
It is a very young market, considering we launched two weeks ago. We want to capture all kinds of transactions. But we are currently seeing transactions particularly to East Africa countries.
Research shows Tanzania and Rwanda are the most expensive countries in the region to send cash to from the UK, why is that so?
Historical reasons. One money transfer company dominated Africa and set up exclusive relationships with banks in the region and the cost of exclusivity somewhat became a monopoly in these markets, controlling as much as 80 per cent of remittances to these countries.
That situation dampened competition and led to the high remittance fees.
The Africa Partner Report of 2013 said that Africans were paying $2 billion in super tax because of those exclusive arrangements.
Things have changed recently because of mobile money services, which are disrupting and the cash remittance system very costly.
Tanzania is fast becoming a big market for us and as we now launch inter-regional transfers we expect the price to come down further.
What are you doing to ensure safe digital money transfers?
One advantage of digitisation is that transactions are more secure and recipients are not losing money as they did when they relied on cash networks.
It is safer because of the amount of data we capture in the digital transaction. It is easier to detect fraudulent transactions and identify money launderers as they are more likely to use cash transactions and informal methods.
Digital transactions leave an electronic trail, because we deal with someone who has a bank account. Their mobile number is also the account number and so a lot of people try hard to avoid their mobile number being blacklisted.
Therefore, as more customers move from cash transactions to mobile money, we have seen a drop in fraud attempts.
How different is WorldRemit?
We are heavily regulated in the US and UK and as digital players, we have invested heavily in being a secure platform.
Our customer data is safe compared with the Hawala and other informal networks.
WorldRemit is a digital money transfer company that is pioneering a mobile approach to sending money around the world.
It was founded on the principles of strong compliance procedures, recognising that the only way to meaningfully reduce risks in the money transfer industry was to bring the entire process into the digital world.