MoneyGram and Western Union merger would raise money transfer costs, says remittance company
WorldRemit fears that Africans abroad would pay more for sending money home.A global money transfer firm has warned against a merger between Western Union and Moneygram, after it emerged the two leading money transfer companies were in early-stage talks.
Ismail Ahmed, chief executive officer of WorldRemit, told CAJ News Africa that a merger between the two companies would mean that Africans abroad would pay more for sending money home.
The move "would reduce competition in the money transfer sector in many countries.This could mean that fees go up and the quality of service could go down," he said.
He stressed that while online services such as WorldRemit were increasingly popular, around 95 per cent of remittances globally were sent offline, primarily through Western Union and MoneyGram.
Remittances to Sub-Saharan Africa are expected to reach $34 billion (€30 billion) in 2015, according to a report from the World Bank (WB).
In Africa, the biggest beneficiaries are Nigeria ($21 billion), Egypt ($18 billion), Morocco ($6.8 billion), Tunisia ($2.4 billion), Algeria ($2.1 billion), Senegal ($1.7 billion), Kenya ($1.5 billion), South Africa, Uganda ($1 billion) and Mali ($800 million).
The World Bank notes that the significant increase in remittances comes in a context of increasing forced migration due to conflicts that have affected 51 million people, a level not seen since World War II.