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Money transfer firm set for Sh2.6bn IFC cash for expansion
In Kenya, inward remittances for the eight months to August 2024 rose by 16.4 percent to $3.22 billion (Sh416 billion) compared to the corresponding period last year.
Digital money transfer service provider Zepz, the operator of remittance platforms WorldRemit and Sendwave, is set for a $20 million (Sh2.6 billion) equity investment from the International Finance Corporation (IFC) to fund expansion into new markets.
The company, which has offices in Kenya through both the WorldRemit and Sendwave brands, is raising a total of $267 million (Sh34.5bn) in the equity funding drive, disclosures from the IFC show.
UK-based WorldRemit Group rebranded to Zepz in 2021 after completing the acquisition of Sendwave, in a deal that was valued at about $500 million, with the combined entity offering remittance services in 130 countries.
Zepz also operates in Kenya through partnerships with local banks. In July, the firm renewed its six-year partnership with Equity Group allowing transfers between its platforms and the bank’s mobile wallets and accounts across the lender’s Kenya unit and regional subsidiaries.
“The proposed investment is an equity investment of $20 million to WorldRemit Group Limited (Zepz) as part of its $267 million Series X equity round. IFC’s proposed equity investment will finance the company’s permanent working capital,” said IFC.
The company’s expansion push comes at a time when remittance volumes are going up as falling inflation in Western economies frees up disposable income, allowing Kenyans and other Africans living abroad to send more money home.
In Kenya, inward remittances for the eight months to August 2024 rose by 16.4 percent to $3.22 billion (Sh416 billion) compared to the corresponding period last year.
The US is the biggest source market for Kenyan remittances, accounting for 53 percent of the total value sent home this year, followed by Saudi Arabia at 8.4 percent and the UK at 7.5 percent.
Banks have dominated the remittance segment, but standalone digital platforms are increasingly taking a share of the market by offering lower charges and better conversion rates compared to lenders.
A periodic World Bank report on the cost of sending money across borders—covering the first quarter of 2024—showed that banks on average levied fees equivalent to 12.66 percent when sending $200, equating to a charge of $25.32 per transaction.
The charges are inclusive of fees and transfer fees and foreign exchange margin.
Money transfer operators meanwhile charged an average of 5.35 percent to remit $200, post offices 6.63 percent, while mobile operators were the cheapest at 3.87 percent.
The average fee for inward remittances into sub-Saharan Africa stood at 7.73 percent ($15.46) in the period across all remittance channels, which was higher than the global average of 6.35 percent.
South Asia was the cheapest region into which to send money at 5.16 percent or $10.32 per $200 remitted, as per the World Bank report.
