The African remittances market is rapidly evolving, with the younger generation increasingly embracing digital payment methods like mobile wallets to make payments.
So said Cornelius Coetzee, country director for Verto South Africa, in an ITWeb TV interview.
Verto enables businesses payments, foreign exchange, and banking solutions through its platform and application programming interface.
Since its founding in 2017, the company now processes transactions across more than 49 currencies, with a growing presence in emerging markets like South Africa, Kenya and Nigeria.
Coetzee notes that previously, the majority of Africans hugely relied on informal ways to send money to other countries.
This usually involved sending money using bus drivers to deliver the cash beyond the borders. However, while cash is still king on the continent, technology is rapidly transforming the remittance processes.
According to Statista, transaction value in Africa’s digital remittances market is projected to reach $3.4 6 billion in 2025.
It notes that transaction value on the continent is expected to show an annual growth rate (2025-2029) of 12.08%, resulting in a projected total amount of $5.46 billion by 2029.
In the digital remittances market, Statista adds, the number of users is expected to amount to 0.84 million users by 2029.
Coetzee believes the informal ways of sending money in and out of countries, such as using bus drivers, will remain for some time in Africa.
“Financial inclusion doesn’t just mean helping countries or a certain few to have access to formalised remittances. From an informal remittance flow, that is something that will be very much present in Africa,” he said.
“This is predominantly because we’ve got illiquid markets. For example, if you look at the state of the Malawian kwacha, it is extremely difficult to get funds in and out of the country. So where there is illiquidity or instability, there is going to be a certain level of informal remittances.”
A lot of remittance companies are looking to formalise this by making use of platforms like USSD, he pointed out.
“USSD is the platform that started to formalise the remittance process. By simply dialling a USSD code, you can now instantly send money. So it’s a safe and secure remittance that is taking place.”
He added that the COVID-19 pandemic played a big role in revolutionising the remittance market across the continent.
“COVID helped speed up the process of digitisation where people needed to go as contactless as possible. We’ve all been through that period where you needed to be socially distant, and I think that’s when remittances evolved.
“We first started with bus drivers hoping to get money across the border and hoping it will get to the right recipient. We then moved to USSD, then into WhatsApp, which is now being used as a payment mechanism, and now into apps.”
He noted that the app ecosystem is being built to accommodate the younger generation.
“They want to have a one-size-fits-all solution, and that’s where remittances are going – where even if cash is still king in Africa, we now have a high demand for contactless and cashless payments.”
He said there is a huge uptick in payments solutions like Apple Pay and Google Pay among others.
“That’s where I see remittances going and the speed at which this is transforming is amazing. We are at a stage whereby with the click of five to six buttons, you have got a remittance paid into a different corridor.
“We are seeing a lot of movement away from cash and card payments; and I think in the remittance space – if you look at countries outside of South Africa like Kenya, which has got M-Pesa Switch, Uganda with MoMo Money – mobile money wallets are the predominant gateway for consumers. There are solutions now where those wallets are plugged into a remittance service.”
Share