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How can post offices in Africa better service migrant remittances?

How can post offices in Africa better service migrant remittances?

In the latest News & Views, WSBI's Ian Radcliffe explores how migrant remittances present a big opportunity for postal networks to adapt to mobile, digital world.

BRUSSELS21 January 2015

​According to the International Fund for Agricultural Development (IFAD), at least 30 million Africans live outside their native country. In 2013, these migrants sent home some US$60 billion, making international remittances vitally important to the continent. 

Africa is home to almost a quarter of the 40 countries worldwide that receive 10 per cent or more of their gross domestic product ​from compatriots living abroad, yet Africa hosts some of the most expensive remittance corridors in the world.

The IFAD African Postal Financial Services Initiative (APFSI) aims to enhance competition in the African remittance marketplace by reducing the cost of remittances, shortening transaction times, broadening the network of rural locations, and deepening the range of financial services provided in rural areas. The first phase of the initiative has already begun, with technical assistance and training being provided to postal financial institutions in Benin, Ghana, Madagascar, and Senegal, including WSBI members la Poste du Benin and Postefinances Senegal. WSBI has been active in Benin and Senegal since December 2014, and has so far completed two missions to each country.

WSBI, the Universal Postal Union (UPU), the United Nations Capital Development Fund (UNCDF), and the World Bank APFSI have partnered with IFAD to help implement the initiative, and the European Commission provides funding.

The African Conference on Remittances and Postal Networks was held in Cape Town, South Africa, on 4–5 March as part of the APFSI programme. This brought together some 90 participants, including WSBI members from Benin, Kenya, Senegal, Tanzania, Uganda, and Zimbabwe. The conference covered developments in the remittances environment, the market positioning of postal operators, experiences on the ground, and the legal and institutional environment surrounding post offices and remittances.

Discussions focused on the huge potential for postal networks to deliver a broad suite of financial services to meet the financial needs of rural households, and on the challenges postal networks face in adjusting to the competitive pressures of rapidly changing environments. Post offices need to conduct surveys and other initiatives to better understand the needs of customers and the barriers to access, and ultimately determine the core set of services that they should deliver.

Postal banks need to adapt their institutional cultures to put customers at the centre of their operations and to implement well-crafted business models. Surprisingly, although some 80 per cent of post offices in Africa are located in rural areas, the quick wins are probably in urban and peri-urban areas. To achieve real penetration among rural populations, postal banks are likely to need some sort of tie-up with mobile money.

Migrant remittances also provide a tremendous opportunity for postal networks to adapt to the mobile and digital world – to which other financial service providers are already rapidly adjusting.

Remittances; Financial inclusion; Postal savings banks