Companies

MoneyGram, M-Pesa tie up for diaspora cash transfers

DnMoneyGramCEO

President Uhuru Kenyatta with the MoneyGram CEO Pamela Patsley. The MoneyGram, Safaricom partnership was brokered by President Kenyatta when he met Ms Patsley in August on the sidelines of the US-Africa Leaders’ Summit hosted by US President Barack Obama. PHOTO | PSCU

Summary

  • The multinational has also appointed a Kenyan to head its regional operations after making Nairobi its Eastern Africa hub ahead of Wednesday’s tie-up with the country’s largest telco.
  • The deal to partner with Safaricom and set up shop in Nairobi was brokered by President Uhuru Kenyatta when he met MoneyGram CEO Pamela Patsley in August on the sidelines of the US-Africa Leaders’ Summit hosted by US President Barack Obama.
  • The deal with Safaricom will allow Kenyans living, working and studying in over 200 countries to send money directly to Safaricom’s M-Pesa accounts.

Texas-based money transfer firm MoneyGram will Wednesday sign a deal with Safaricom that will allow Kenyans in the diaspora and anyone in their markets abroad to send money directly to M-Pesa accounts.

MoneyGram, the world’s second-largest money transfer company, is banking on the partnership with Safaricom to increase its agent footprint beyond commercial banks and win a bigger share of Kenya’s lucrative diaspora remittances market.

READ: M-Pesa beats 34 banks in global cash transfers list

The multinational has also appointed a Kenyan to head its regional operations after making Nairobi its Eastern Africa hub ahead of Wednesday’s tie-up with the country’s largest telco.

MoneyGram has tapped Erick Njuguna, a former executive at Japanese electronics giant Toshiba, as its first regional manager based in Nairobi.

Mr Njuguna, 35, previously served as regional sales manager in charge of East Africa at Toshiba where he worked for about four years.

The deal to partner with Safaricom and set up shop in Nairobi was brokered by President Uhuru Kenyatta when he met MoneyGram CEO Pamela Patsley in August on the sidelines of the US-Africa Leaders’ Summit hosted by US President Barack Obama.

Ms Patsley is expected at the launch Wednesday and is betting on frontier markets such as Africa to grow earnings and reverse a loss of Sh268.8 million ($3 million) MoneyGram posted in the nine months ended in September compared to a profit of Sh2.01 billion ($22.5 million) a year earlier.

The new MoneyGram office cements Kenya’s position as the region’s financial services hub, given that Nairobi already hosts firms such as Visa, MasterCard, World Bank and representative offices of global lenders such as Bank of China, Rabobank Nederland, HDFC Bank and Central Bank of India.

The deal with Safaricom will allow Kenyans living, working and studying in over 200 countries to send money directly to Safaricom’s M-Pesa accounts.

MoneyGram is seeking to ride on the popularity and vast agent network of M-Pesa to woo consumers to use its money transfer service to send cash to Kenya.

Kenya’s diaspora inflows have been growing at a compounded annual rate of 26.2 per cent in the last three years, reaching Sh115.5 billion ($1.29 billion) in 2013, data from the Central Bank of Kenya shows.

The inward remittances grew 11 per cent to top Sh83.5 billion ($936.03 million) as at August 2014, according to CBK statistics.

The growing diaspora remittances market has sparked intense competition among commercial banks, Saccos and service providers such as Western Union, MoneyGram and Xpress Money. The rivals earn remittance fees and charges for other related services including cash withdrawal.

READ: Safaricom targets diaspora cash in deal with UK firm

M-Pesa handled a total of Sh3.39 billion ($38.03 million) in diaspora remittances in the eight months to August, ranking the mobile cash platform 11th, with a market share of 4.06 per cent that saw it beat 34 banks.