Europe-Africa: Leaders pledge to lower the cost of remittances
They are looking to reduce transaction costs to "less than three per cent".European and African leaders will this week pledge to lower the cost of remittances during a migration summit between the EU and more than 30 African countries.
Leaders will promise to reduce transaction costs by an average fee of eight per cent to “less than three per cent” of the total sent by 2030 in a bid to reduce the uncontrolled flow of people heading from Africa to the EU, the Financial Times reports.
The remittance market is dominated by large groups, with around 95 per cent of remittances globally sent primarily through Western Union and MoneyGram.
However, the market for remittances has been opened up in recent years by smaller companies such as WorldRemit.
It told reporters earlier this year that remittances to Sub-Saharan Africa are expected to reach $33 billion (€31.5 billion) in 2015, as the remittance market is fast adopting mobile money as an effective means of money transfer, adding that half of the 261 mobile money service providers across the globe are in sub-Saharan Africa.
Average mobile banking penetration across the continent hovers around 33 per cent according to the African Development Bank (AfDB), with countries such as South Africa boasting an 88 per cent mobile banking penetration.
These figures are expected to increase as the necessary key drivers, including internet penetration and financial inclusion, continue to appreciate, said WorldRemit.