Much of the conversation about migration, particularly when it comes to Africans, is dominated by the terrible scenes we see reported from Libya and deadly Mediterranean crossings. The narrative is still largely the same—people are seeking a better life in new surroundings.

From an economic point of view, the rapid growth in the numbers from Africa is of great interest. This is especially true for the money transfer industry. Remittances to sub-Saharan Africa grew to $37.8 billion in 2017, according to the World Bank and are forecast to hit around $39.2 billion this year and $39.6 billion in 2019. Perhaps unsurprisingly, as the largest population and economy, Nigeria topped African recipients with $22.3 billion in 2017. Liberia was the African country for whom remittances accounted for the highest share of GDP at 25.9%.

Even as those numbers grow, it’s clear the nature of migration and the migrant experience is changing. Technology is making this even more true. Ismail Ahmed, founder of WorldRemit, a London-based remittances business, is very clear about the impact of innovation on his business. WorldRemit, which opened an office in New York this week, has operations in 50 countries around the world and completes nearly a million transactions a month. It took around £60 million (~$80 million) in revenue last year and has a current annualized run rate of around $100 million.

Ahmed, who is originally from Somaliland, says innovation has played a crucial role in changing the way companies like his are able to connect migrants in Western countries to their homes in Africa, Asia or Latin America for example. Needless to say, the mobile phone has been vital in enabling the ease of connection, more migrants send smaller amounts more frequently now, with apps, mobile money and traditional bank accounts all playing their role.

But while much focus is often on migrants in Western countries, the largest amount of people moving to new countries is within Africa. One of the biggest challenges that face those who have moved to African countries is the lack of infrastructure that makes it easy for them and citizens to move money between neighboring countries. Indeed, Africa has the highest remittances costs in the world. The World Bank typically measures the cost of sending $200 and in the third quarter it was $9.10, compared to the global average of $7.20.

Ahmed sees this as an important opportunity for his company to fix a multi-billion dollar money transfer problem between neighboring African countries. This wouldn’t just have a significant impact on the hundreds of thousands of Africans moving between  countries in search of a decent living, but also even those traveling on short business trips. Not only does technology add a convenience to the process but in Africa it brings a layer of transparency to things like exchange rates which should have significant impact and encourage more economically beneficial movement between countries.

By Yinka Adegoke

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Billions of dollars in remittances flowed to Africa in 2017. The money could go further if it wasn’t more expensive to send money to Africa than anywhere else in the world, a new World Bank study finds.

Immigrants sent a $38 billion (€31.1 billion) back home to Africa in 2017, according to a new World Bank briefing paper.

Nigeria accounts for the lion’s share of this with $21.9 billion, followed by Senegal with $2.2 billion and Ghana with $2.2 billion.

“The [African] diaspora … are making a lot of money and they are willing to share that money with the countries which they first came from,” said Africa commentator Ayo Johnson, who hails from Sierra Leone but is based in the UK. “Remittances are going back to their host countries in huge, huge volumes.”

Although the total amount of remittances sent worldwide hit record levels last year, the World Bank found this wasn’t the case in Africa. However, more money was sent to the continent in 2017 than in 2016 when migrants remitted $34 billion.

The real sums sent to Africa are assumed to be much higher. Not only is official data unreliable (or, at times, unavailable), remittances often flow through informal channels carried by trusted friends or bus drivers across borders instead of Western Union and MoneyGram.

An alternative source of income

Remittances have now become one of the most important external sources of finance for Africa.

“Remittances are a lifeblood,” said Nikki Kettles from Finmark Trust, a South African-based organization working to make financial services more accessible to the poor. She said it was families, especially to women and children, who benefited from remittances in southern Africa where her organization worked.

“People working in South Africa send money home, for example, to Zimbabwe, DR Congo and Malawi. People are using [the payments] to feed or educate, not for other reasons,” she said.

Numerous studies have found that remittances directly benefit the welfare of those receiving the money. In poorer regions and countries, such payments can often buffer the vagaries of poverty or instability by covering basic necessities such as food, school fees, rent and health care.

Remittances are also often used to start a business, build a house or buy a vehicle.

Less opportunity for corruption

One of the big benefits of remittances is that, unlike development aid, they flow directly into the pockets of the intended person.

“The strength of remittances is how they are dispersed,” said Mathieu Jacques, manager of the EU-funded ACP-EU Migration Action Programme (ACP stands for African, Caribbean and Pacific countries).

“There are project management cost savings in the way they reach the community,” he told DW. “And there is less opportunity for [payments] to be siphoned off or change direction.”

In some of Africa’s smaller or impoverished nations, remittances are literally keeping their economies afloat. According to the World Bank’s Migration and Remittances briefing,money sent by immigrants make up a significant share of gross domestic product in African countries such as Liberia (27 percent), The Gambia (21 percent) and Comoros (21 percent).

But even if remittances have the power to lift individual families out of poverty, their effect on a country’s economy as a whole is unclear. Some studies suggest remittances help fuel economic growth; other are less conclusive.

“One of the problems is that because [remittances] go into the community in a diversified fashion, there is no targeted investment,” said Jacques. “And without the targeted investment you can’t see incremental change from an economic perspective.”

Fees eat up nearly ten percent of payments

It costs more to send money to Africa – the world’s poorest region – than anywhere else in the world. This means expensive fees eat up a chunk of cash that could otherwise help the receiving families.

The average fees for transferring remittances to Africa was 9.4 percent in 2017, the World Bank found. This is a slight drop from 2016 (when it was 9.8 percent) but it’s still a far cry from the Sustainable Development Goal of slashing transaction costs to 3 percent by 2030.

“Countries, institutions, and development agencies must continue to chip away at high costs of remitting so that families receive more of the money,” said Dilip Ratha, lead author of the report, in a press release.

Companies like WorldRemit that offer cheaper transaction fees below 4 percent have limited resources compared to their much larger competitors to reach out to people in rural parts of the African continent.

It’s not just the cost of transferring money that is a stumbling block. Sending cash via money transfer companies also usually requires showing a passport or identity card which migrant workers might not have, or might not want to show because they lack work permits or visas.

Many are putting their hopes in mobile money transfers as a way of cutting fees and making it easier for people to send and receive money across Africa’s borders. Some services are already offering cross-border mobile payments – although there are still issues such as compatibility and regulatory differences between countries that need to be ironed out.

By DW

Join MTOs, MNOs, Fintechs, Banks, Post Offices, MFIs, Forex Bureaus, Institutional Investors, Regulators, Development Partners, African Diaspora Professionals & Businesses and your colleagues at the Remittances Africa Conference & Exhibition. REGISTER INTEREST >>>

As valuations flounder for Silicon Valley startups once worth billions of dollars, investor interest is on the rise in startups with both financial and social benefits, such as healthcare software for poor communities or low cost solar panels for homes.

So-called “impact investing” rose to $15.2 billion globally last year from $10.6 billion in 2014, according to a recent report by the Global Impact Investing Network. The figure includes several types of investment, from funds to foundations, which intend to generate social and financial returns.

The group expects a 16% rise in 2016. The change reflects investor concern with current valuations of more mainstream technology startups, a desire to help by some investors and a broadening definition of social-good startups. There is also growing sentiment that the rise of mobile technology will allow for profitable upstarts in parts of the world relatively untouched by Silicon Valley.

Earlier this year Union Square Ventures Partner Fred Wilson called the developing world “the next whitespace” for venture capital, pointing to 2.5 billion people poised to adopt smartphones.

Altruism and Profits for Kickstarter the Public Benefit Corporation

Big financial institutions such as Bank of America  BAC -7.34%  and JPMorgan Chase  JPM -6.95%  are investing, seeing rural communities and emerging markets as potential customers for financial services.

The drop in valuations for tech industry darlings that do “things my mom used to do for me” was a “pivotal wake up” for investors, said Doug Galen, chief executive of RippleWorks, which provides advisers for entrepreneurs in the developing world.

Speaking on the sidelines of the Global Entrepreneurship Summit, put on by the U.S. State Department this week at Stanford University for entrepreneurs from around the world, he and others poked fun at businesses made by and for well-off Americans.

“Uber for pets or overnight underwear delivery—those things definitely aren’t getting the same traction they were six months ago,” Andrew Beebe, managing director at Obvious Ventures, a venture firm for ‘world-positive’ investing, said in an interview with Reuters. “But take water (shortages) —on the other side of that solution is a massive pot of gold,” he said.

How Companies Can Enrich Shareholders—and the Planet

The case for investing in social impact startups is the sheer size of the market; millions of people lack access to clean water, for instance. But, with companies serving customers living on $2 a day, profits can at times be slim.

“Maybe 2% is a fabulous return in some cases,” said Matthew Bannick, managing partner at Omidyar Network.

By comparison, traditional venture capitalists might seek a return 10 times their investment.

Some impact investors such as DBL Partners have had strong returns by using a broader definition of ‘social impact.’ DBL considers its investments in electric car company Tesla Motors and Juicero, a juice company that raised $70 million in March, as having both financial gain and social impact.

“You can walk and chew gum at the same time,” said Nancy Pfund, founder of DBL, which raised a $400 million fund last year.

Still, many of the high-profile Silicon Valley venture firms have steered clear of investing outside their comfort zone.

“Your impact could be bigger. Stop looking at the 60 mile (area)” of Silicon Valley, Youssef Chaqor, founder and general manager of Kilimanjaro Environment, which recycles used cooking oil into biodiesel, told an audience of investors and entrepreneurs.

Some venture capitalists are worried about emerging market risks, such as fluctuating currencies, military coups, disease and corruption. Others don’t see enough profit.

Andrea Carafa, founder and CEO of art and music event coordinator ArtsUp, says he does not bother to tell Silicon Valley venture capitalists about the societal benefits of his startup.

“They don’t care if you’re a social impact company,” he said. “They care about your profitability.”

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Pan-African Ecobank is partnering with Orange Cameroon to allow the telco’s customers with accounts at the bank to transfer cash between the two services. The two firms are already working together in Mali and plan to introduce the service in four other African countries.

Banks partnering with mobile companies is the latest attempt by financial firms to tap into the continent’s large populace of the “unbanked.”

In sub-Saharan Africa, only a third of adults have access to bank accounts. Compare this to Latin America, another emerging market, the figure stands at 51%, according to the World Bank. There are a lot of people whose money simply never touches the region’s financial systems.

The mobile phone revolution and the rise of mobile money, especially in east Africa with platforms such as M-Pesa, has changed this.

Mobile money is now big business in Africa. Last year, the market generated $656m in revenue and in the next four years this is expected to double to $1.3 billion, analysts say.

Until recently, financial firms ceded this space to telecom companies. But the clear growth of the sector has compelled a re-evaluation. Now banks are not only trying to compete in this space but also offer new products that promise access to banking services to those who up until this point were excluded.

So in Nigeria, for example, GT Bank are getting in business with Etisalat Nigeria, the country’s third biggest mobile operator, to create GTEasySavers, a savings account that can be opened via mobile phones. For the 57% of the country with no access to formal financial services, that’s a small step in the right direction.

And in Kenya, in 2011, only 42% of people had bank accounts. That has risen dramatically, driven by mobile money platforms.

A battle for supremacy

New mobile products coming into the market promise to deepen financial inclusion even further. Equity Bank are introducing Equitel, its telecoms unit, that will allow customers to access credit loans, perform cross border money transfers and send and receive money from other commercial banks, reports Reuters.

Equity is one of the biggest banks in east Africa and since the soft launch of Equitel in October of last year, the service has attracted a millions subscribers. The bank aims to increase that figure to 5 million by year’s end.

And the market is there. Mobile money transfers claim 85% penetrationin Kenya and $23 billion passed through the platforms in 2014 alone, according to Kenya’s central bank–equivalent to 42% of the country’s GDP.

And the dominant player in this space is Safaricom, controlling two-third market share with over 20 million subscribers generating $318 million of revenue. But with the launch of Equitel, powered by its rival Airtel Kenya, Safaricom’s number one status may finally start to get challenged.

“Competition between Equitel (banks) and Safaricom ?(telcos) will benefit end consumers and financial inclusion in general as mobile money has a platform to reach those who are not included,” Martin Warioba, a tech consultant with the World Bank, told Quartz. “As long as pricing is low enough to include the unbanked, mobile money services and healthy competition will benefit consumers and increase financial inclusion.”

With Equitel being free of charge and interoperable across banks and other mobile money services, Equity Bank could challenge Safaricom’s dominance in the market, especially since they charge a fee for the use of M-Pesa.

But the company’s CEO is not worried. “We welcome competition; it is a true indicator of the free and robust operating environment we have in Kenya,” Bob Collymore said in a statement.

Safaricom has its own partnerships, with Commercial Bank of Africa (CBA) providing M-Shwari, a platform whereby people can access banking services such as saving accounts and small loans via their mobile phones. And in March they launched KCB M-Pesa with Kenya Commercial Bank, a mobile phone-based loan repayable platform.

By Omar of Quartz Africa