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FSD tips Blockchain to lower remittance cost


In 2016, Kenya, Uganda and Tanzania received in excess of Sh400 billion. FILE PHOTO | NMG

A financial and private sector development firm, FSD Africa, has said use of a cash-transfer accounting technology for diaspora remittances could drastically reduce transaction charges.

FSD Africa’s report has vouched for use of Blockchain and Distributed Ledger (DLT) technologies—a public ledger connecting several deal levels—saying use of a shared but secure global platform reduced money-handling intermediaries.

FSD Africa that commissioned the study undertaken by Consult Hyperion lamented the high remittance charges, saying use of the technology enhanced transparency in funds transfer thereby eliminating fraud and money laundering.

The report hailed M-Pesa’s nationwide platform, saying it creates an access for a majority of Kenyans without the need of a bank account.

Consult Hyperion study author Salome Parulava said Blockchain and DLT provided a much needed infrastructural foundation changes that eliminated expensive and inflexible remittance models.

READ: Diaspora remittances rise to Sh44.7bn in Q1

In the current set up, anyone sending money has to instruct banks or mobile money provider who in turn relies on a foreign bank to effect the transfer via a mobile money provider in the host country.

In 2016, Kenya, Uganda and Tanzania received in excess of Sh400 billion with Kenya leading with Sh178 billion where only one person out of nine people sent money digitally.