Sending remittances through formal routes in the SADC region remains persistently expensive because the market has long been dominated by a small group of authorised dealers, banks and money transfer operators that have significant pricing power. However, the game-changer for customers looking for a better deal has been the expansion of mobile phone use. In economies like Zimbabwe and Swaziland – where access to mobile exceeds 85% – there are new opportunities for digital providers to lower the cost per transaction, particularly for low-value remittances. The reliance on bank branch networks accounts for nearly 98% of transaction costs, but diversifying the variety of payout options can help reduce the cost of sending money for consumers.
These tech-based solutions are particularly beneficial to rural populations. In remote areas, mobile money — and remittances to mobile money accounts — can act as a lifeline and be a stepping stone towards financial inclusion. The market is most developed in East Africa; in countries like Tanzania and Uganda, nearly 90% of WorldRemit’s rural customers receive funds directly to their phones. In Zimbabwe, two-thirds of the region’s population lives in rural areas and there are more than 12 million mobile subscriptions nationwide. This means sending a transfer directly to a phone from South Africa to Zimbabwe is not only fast and lower-cost but helps narrow the urban-rural divide within the region.
Technology is rapidly transforming African economies. At present, door-to-door remitted cash and goods remain the primary means of sending remittances within the SADC region. Imagine a world where money can reach loved ones with just a few taps from a phone – reducing not only transfer costs, but the complications of transporting hard-earned money to those who need it most. As electronic transactions in countries like Zimbabwe reach 80%, mobile technology can play a key role in bolstering the impact of remittances in Southern Africa and driving regional growth.
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