Kenyans in the diaspora, who are estimated to be 3 million in number according to data from the Ministry of Foreign Affairs, are today the country’s leading source of forex.
The money they send back home surpasses what the country earns from tea, tourism and other key export sectors, with Central Bank of Kenya data indicating that diaspora remittances more than doubled from $1.29 billion (approximately Sh129 billion) in 2013 to $2.69 billion (approximately Sh269 billion) in 2018. One of the key factors that has driven the rapid growth in diaspora remittances to Kenya over the past decade is the emergence of digital alternatives to traditional remittance services.
With traditional remittance services, a migrant living abroad has to physically go to an agent and fill out paperwork before sending money back home.
Likewise, the recipient of the money has to go through the same lengthy process before accessing the funds, making transactions complex, time-consuming and costly, due to the 100 percent reliance on physical agents in both the “send” side and “receive” side.
In contrast, digital remittance services cut reliance on agents by bringing key aspects of the transaction to mobile apps or web-based platforms.
With WorldRemit, senders in the 50 countries where we support outbound transactions, including all states in the US, simply need to open our website or the mobile app to link their bank accounts or cards and instantly send money back home – no more taking time off work to queue for an agent. Moreover, everything happens online, meaning the cost associated with physical agents are saved and passed on to our customers, who enjoy lower fees than the industry-average.
We pioneered the online remittance model, which is now mainstream. This model has been instrumental in our rapid growth since our founding in 2010, particularly in Africa where the cost advantages presented by our digital model have allowed us to emerge as a formidable alternative to larger and more expensive traditional remittance services.
At WorldRemit, we believe in making remittances convenient for both receivers and senders. Today, most recipients have limited options with regards to accessing their money. Most remittance services focus almost exclusively on the sender’s experience, forgetting the receiver and their needs.
Interestingly, receivers – unlike senders – don’t need a fully digital service. Instead, they need a variety of options tailored to their individual circumstances. Some may prefer walking to an agent to receive their cash while others may want it directly into their bank account.
This is something we realized early on and that continues to differentiate us to this day. Recipients in the 150 countries where we support inbound transactions have options to receive cash directly into their bank account, on a mobile wallet like M-Pesa, as airtime top up or as a cash pick up at a wide-range of partner financial institutions.
Here in Kenya, we have partnered with some of the leading banks.
A key trend worth mentioning is the increased financial literacy of members of the diaspora.
The writer is Head of East and Central Africa at WorldRemit.