How difficult is it to enter the African money-transfer market?
Payments
Asked by Question Bot06/Jun/20131 answer
1 Answer
F
Faisal Khan
Answered 06/Jun/2013
Africa can best be summed up by a quote from Winston Churchill:
It has its fair set of challenges, but its a great place to work with. Its not that easy, and yet, not that difficult either.
Africa is a a very important remittance continent. Most MSBs and MTOs based in the West shun Africa due to preconceived notions about work ethics and risk that the continent poses. Needless to say, such preconceived notions are mostly biased and unfounded.
If you look at the diagram below, it will show you how remittances are being sectored for each country.
Countries in Africa, for years (and to date) are still one of the most expensive places to remit money into. This is due to the relatively weak banking and payment infrastructure across the continent than compared to say South Asia or South East Asia.
Most countries in Africa rely heavily on the incoming remittances to support their weak economie (as can be seen from the image date above).
Access to the African countries is particularly hard if you do not have on-ground presence and/or rock-solid partners. Sitting outside of Africa it is very difficult to determine which bank or MTO is the best one to work with. What are the legal and regulatory compliance issues? Who and Where offers the best settlement networks and payouts for remittances. How well entrenched are the AML/KYC systems of your partners.
There are fraudsters in Africa. Who will produce near authentic information and documentation on everything. You have to be very cautious of this. But if you research well, you should easily be able to find companies and or MTOs/MSBs who have work association in Africa and can help you in this regard. One of the best way to gain access to Africa, is to partner up or hire a banker (ex-pat), who has worked for a considerable time in Africa. He/She should easily be able to filter for you.
The other problem in Africa is the access to the latest software for MTOs/MSBs. What they primarily use there, has a lot of deficiencies in it (this is for most, not for all).
Payouts and settlement network costs are also what you have to look out for. Send side companies make a hefty sum on the remittances and get away with it, because they can. To be competitive, you need partners on both sides to agree to a decent profit margin and not fleece customers.
It is a riddle, wrapped in a mystery, inside an enigma; but perhaps there is a key.
It has its fair set of challenges, but its a great place to work with. Its not that easy, and yet, not that difficult either.
Africa is a a very important remittance continent. Most MSBs and MTOs based in the West shun Africa due to preconceived notions about work ethics and risk that the continent poses. Needless to say, such preconceived notions are mostly biased and unfounded.
If you look at the diagram below, it will show you how remittances are being sectored for each country.
Countries in Africa, for years (and to date) are still one of the most expensive places to remit money into. This is due to the relatively weak banking and payment infrastructure across the continent than compared to say South Asia or South East Asia.
Most countries in Africa rely heavily on the incoming remittances to support their weak economie (as can be seen from the image date above).
Access to the African countries is particularly hard if you do not have on-ground presence and/or rock-solid partners. Sitting outside of Africa it is very difficult to determine which bank or MTO is the best one to work with. What are the legal and regulatory compliance issues? Who and Where offers the best settlement networks and payouts for remittances. How well entrenched are the AML/KYC systems of your partners.
There are fraudsters in Africa. Who will produce near authentic information and documentation on everything. You have to be very cautious of this. But if you research well, you should easily be able to find companies and or MTOs/MSBs who have work association in Africa and can help you in this regard. One of the best way to gain access to Africa, is to partner up or hire a banker (ex-pat), who has worked for a considerable time in Africa. He/She should easily be able to filter for you.
The other problem in Africa is the access to the latest software for MTOs/MSBs. What they primarily use there, has a lot of deficiencies in it (this is for most, not for all).
Payouts and settlement network costs are also what you have to look out for. Send side companies make a hefty sum on the remittances and get away with it, because they can. To be competitive, you need partners on both sides to agree to a decent profit margin and not fleece customers.