Digital remittances in a (post) Covid-19 Africa.

The Economist recently published an article on how international remittances have been falling as the Covid-19 pandemic sweeps through the world’s economies. Among the awful human suffering and continued economic downturn wrought by the crisis, it is clear many people are indeed finding it very difficult to send money to loved ones and businesses that quite understandably rely on these transactions as a lifeline. But The Economist didn’t quite capture the full story.

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The challenges to the remittances industry covered in the article mainly apply to the ‘traditional’ high-street retail model of international money transfer. In contrast, digital channels aren’t affected by the pandemic in the same way that conventional, physical payments are.

Digital payments in fact play a crucial role in mitigating the ongoing economic impact of the pandemic. Indeed, our own digital payments platform — which connects to nearly 200 million mobile money users across Africa — has seen an accelerated growth in the total value of payments processed daily since mid-March this year.

While Covid-19 will certainly slow remittance flows in aggregate, it will also make these transfers critical to the health of individuals, businesses and governments. As lockdown measures are incrementally enforced and then eased along varying timelines in different regions, remittance activity will play a central role in redistributing resources to where they are needed most.

For example, a Ghanaian technology worker living in Berlin who has already returned to work will be able to share a greater portion of his or her income with their family in Accra. As lockdown measures — and their economic impacts — come into play across Africa, digital remittances into and within Africa will be relied upon by hundreds of millions to stay afloat. Beyond this redistribution, digital payments are also vital when it comes to providing support for the most economically affected people and areas. Physically distributing cash is now a potential health risk for many countries, so being able to channel social relief through mobile phones is becoming increasingly cherished; hardly a surprise, since mobile money is far more accessible to most Africans than traditional banking.

Regulators in respective countries can therefore play an invaluable role in the accessibility of cross-border digital payments by lowering the requirements for use, based on the different thresholds to register for such services. In countries where regulatory approvals for digital remittance from/to mobile are still subject to lengthy and convoluted processes, policymakers should urgently review and shorten these processes from months to weeks. And as they review these policies, African regulators and policymakers should remember that 70% of African immigration is within Africa; and while the spotlight is usually on remittances from global North, intra Africa remittance is equally important: of the US$25bn that Nigeria receives annually, US$2.3bn come from neighbouring Cameroon alone. Making it possible for these funds to flow over digital channels is now an imperative, more than ever.

This global pandemic has once again highlighted the importance and truly human nature of international cooperation. We are reminded daily how much we rely on others for our wellbeing and I take comfort in seeing that many around the world are responding by returning kindness and compassion. At MFS Africa, we are proud to offer what help we can, by making digital remittances more accessible to a wider network of people. While we are not in the front line of the health crisis, we are certainly playing our part in ensuring that individuals and businesses across Africa are able to weather the looming economical crisis. The progress we will make on the policy front, in establishing digital remittance as the norm, will not only help communities to get back on their feet post Covid-19, but will also make them more resilient for future challenges.