On June 11, 2014, Econet Wireless Zimbabwe partnered with international money transfer service WorldRemit to launch EcoCash Diaspora, a digital money transfer service that enables Zimbabweans in the Diaspora to send money home online through devices such as smartphones, tablets and computers direct to an EcoCash mobile wallet.
Financial Sector Spotlight with with Omen Muza
The WorldRemit – EcoCash remittance service, touted as convenient, flexible, speedy and secure — opened market access for Econet to more than 35 countries where WorldRemit has a presence. Shortly after the partnership celebrated its first anniversary, NewsDay financial columnist and Monthly Financial Sector Bulletin (MFSB) editor Omen Nyevero Muza (ONM) engaged Ismail Ahmed (IA), Founder & CEO of World Remit to find out why Zimbabwe is one of WorldRemit’s most important markets and how well the partnership has performed to date.
Ahmed also spoke about the future of mainstream banking in the remittance space, the distinction between offline and online money transfer services as well as the industry’s key challenges and opportunities. Originally from Somaliland, Ahmed has over 20 years’ experience in remittances and served as a compliance adviser to the United Nations before founding WorldRemit.
ONM: Ismail, can you describe WorldRemit’s business model in a nutshell? IA: WorldRemit is revolutionising international money transfers — an industry long overdue to come online. Migrants around the world send home more than half a trillion dollars every year, and well over 90% of this staggering sum is still sent by paying in cash at a high-street agent or convenience store. WorldRemit is offering a digital remittance service fit for the 21st century — by allowing customers to send money through our website or mobile apps, anytime, anywhere.
ONM: How many countries do you operate in on the African continent? IA: Today, WorldRemit customers in more than 50 countries in the world can send money to over 35 countries across Africa — from Benin to Zimbabwe, so to speak. We are hoping to add many more in the future.
ONM: Explain in what way Zimbabwe is one of your most important markets? IA: It’s no secret that Zimbabwe has a large, vibrant, and active Diaspora community across the globe. Beyond that, at WorldRemit, we have found that Zimbabweans are keen adopters of new technologies and particularly avid users of new mobile services: Globally, more than half of all transfers with WorldRemit are sent from a smartphone rather than from a computer. That percentage is much higher for our Zimbabwean customers, making them true pioneers of mobile-to-mobile remittances. People around the world now use WorldRemit to send tens of thousands of transfers to Zimbabwe every month.
ONM: Your partnership with Econet/EcoCash has just turned one year. What has the experience been like working with this Zimbabwean company? IA: Customers love the mobile-to-mobile experience. Since launching our partnership with EcoCash, our transaction volumes have increased five-fold and transfers to EcoCash have rapidly overtaken cash pickup as the preferred option for money transfers.
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ONM: During this period, have you noticed any changes — however subtle — in the transacting behaviour of your Zimbabwean customers? IA: Yes, we’ve seen some changing behaviour among our customers: Rather than sending monthly lump-sums, people are sending smaller amounts, more often. In an age of constant connectivity and instant messaging, it’s only logical that trends in remittances should also reflect these developments. Transfers to Mobile Money are instant, and WorldRemit’s low minimum fees also allow customers to send smaller amounts, more regularly.
ONM: What stereotypes — if any — about operating in Zimbabwe have been dispelled by your working closely with a Zimbabwean company in the mould of Econet Wireless? IA: We don’t work on the basis of stereotypes. Econet’s commitment to pioneering new products for its EcoCash service has resulted in strong customer loyalty and is exemplary for Zimbabwean entrepreneurship and innovation.
ONM: Do you see mainstream banking featuring prominently in the future of remittances, given the inexorable march of MNOs and other non-bank fin-tech companies into the remittances space? IA: Banks still have a role to play, but that role will vary strongly from country to country. In markets where a developed banking infrastructure exists and banks are willing to deliver more customer-centric services, we should expect their prominence to continue. Elsewhere, especially for people in most sub-Saharan African countries, mobile financial services will be their first and only means of accessing financial services. At WorldRemit, we expect that international remittances to Mobile Money accounts will dominate in the coming years.
ONM: Can you draw a distinction between online and offline services in the money transfer business as well as their implications on the cost of service delivery? IA: There is no question that sending money offline is inflicting extortionate costs on customers. First, the offline money transfer model lacks transparency, and subsequently, competitiveness. Second, cash lacks a clear audit trail, which makes it difficult for cash-based operators in an era of strict anti-money laundering and counter-terrorism financing regulation. Several traditional offline MTOs and banks that serve them have repeatedly incurred heavy fines for inadequate compliance standards, ultimately resulting in higher costs for the customers
ONM: What do you see as the single biggest challenge for the remittances industry at the moment? IA: The traditional offline remittance companies like Western Union or MoneyGram have for too long dominated this market with their duopolistic advantages and anticompetitive practices. The Africa Progress Panel, chaired by former UN Secretary-General Kofi Annan, condemned these companies for forming a “remittance super racket” and costing Africans around $1,8bn in excessive charges every year. Eliminating exclusivity arrangements will be key to unlocking competition in new markets and ultimately bringing down the cost of remittances.
ONM: What about opportunity . . . what’s the industry’s single biggest opportunity? IA: Digitising money transfers remains the single biggest opportunity in international remittances.Innovative online and mobile services like EcoNet and WorldRemit are taking the world by storm. The case for eliminating cash — both in remittances and ultimately in domestic transactions — could not be made more strongly. Digitising money brings more safety, convenience, and ultimately, lower costs for the customer.
ONM: Given recent developments whereby the Reserve Bank of Zimbabwe issued 30 licences to Authorised Dealers with Limited Authority to allow them to not only receive but also remit money, are outward remittances a business you are also involved in and one you might consider partaking in for the Zimbabwean market? IA: Yes, we are always looking to open up new corridors. We already enable outbound remittances from traditional “receive” countries such as the Philippines and plan to further expand our list of locations from which you can send money.
Feedback: [email protected]. Omen N. Muza writes in his personal capacity. You can view his LinkedIn profile at zw.linkedin.com/pub/omen-n-muza/30/641/3b8
