Africa's Development

Interview with Leon Isaacs and Alix Murphy

WorldRemit was also recently awarded the FT /IFC Transformational Business Award in recognition of its achievements in supporting the UN SDGs and driving financial inclusion.

The Exchange sat down with Alix Murphy, World Remit Director of Mobile Partnerships and Leon Isaacs, from the DMA, co-author of Reducing Costs and Scaling Up UK to Africa Remittances Through Technology for an interview during the GSMA Mobile 360 conference held in Dar es Salaam, Tanzania on the 13th July to discuss WorldRemit dominance and issues relating to fintech across Africa.

Questions to Alix Murphy, World Remit Director of Mobile Partnerships.

Qn. Briefly tell us about World Remit and its achievement to date.

Our CEO Ismail Ahmed founded WorldRemit to find a better way to transfer money internationally. Having personally seen the challenges of sending and receiving money: having to take time off work, travel long distances or entrust the job to someone else, he was convinced there was a better way. Having served as a compliance advisor to the United Nations, Ismail founded the company on the principles of strong compliance procedures, recognizing that the only way to meaningfully reduce the risks in the money transfer industry was to bring the entire process into the digital world.

Ismail founded the company in 2010 as a digital and mobile first solution to the challenge of sending and receiving money. Since then it has secured almost $200 million in funding and has been named the fastest growing technology company in the UK.

WorldRemit is a digital remittance service,  what that means is that members of the Tanzanian diaspora can come to WorldRemit online service or use our mobile app to send money back to Tanzania instantly and safely. Since 2010 we have grown to become the largest provider of remittance directly to mobile money accounts across the world, and we do that by establishing partnerships with mobile money providers such as Tigopesa in Tanzania and Vodacom Mpesa across Africa inorder to enable our customers to send directly from their mobile phone in somewhere like the UK straight to the mobile phone of their family member back home.

In terms of our achievement to date, We launched Tanzania as a receive country in January 2013, and have seen rapid growth. By August 2015 mobile money had overtaken cash pickup and bank transfer as the number one receive method. In the last year, we have seen a major uplift in the adoption of mobile money as a payout method and 85% of the money sent through our service is now sent as mobile money – but with around 90% of the global remittance market being cash based there is still a long way to go.

WorldRemit received a $40m Series A investment from Accel Partners in 2014 and a $100m Series B led by Technology Crossover Ventures (TCV) in 2015, early investors of Facebook, Spotify, Netflix and Slack. In 2016, the company also raised $45m of working capital facilities from TriplePoint Venture Growth and Silicon Valley Bank to drive the next phase of its growth.

WorldRemit was also recently awarded the FT /IFC Transformational Business Award in recognition of its achievements in supporting the UN SDGs and driving financial inclusion.


Qn. What challenges have you faced in East Africa in getting mobile partnerships and how are  you addressing this challenge.

One of the biggest barriers to entry of a mobile money provider is regulation. In most countries it takes time before mobile money providers are allowed by regulators to receive remittance directly into their mobile money account, actually Tanzania has been the most progressive country in terms of regulation around mobile money and the country has benefited greatly from this in terms of financial inclusion. The second barrier is on the technical side that mobile operators have a limited number of resources that they can spend on doing technical integration with different partners and one of the ways we have started to address that is by making partnerships like the one we did with Huawei most recently to make that technical connection with the technology provider.  This means  mobile money provider who uses Huawei technology can just switch on the international remittances directly once they have gone through the compliance procedures with WorldRemit.

Qn. In East Africa, which is the most profitable region for WorldRemit and what is the reason for this success.

East Africa has been an important part of our growth particularly because mobile money is very strong in East Africa, already today over 50 per cent of our transfer into Africa are going into mobile money account. So East Africa has been hugely important for us from the beginning, having said that we are also starting to see growth in West Africa in countries like Ghana and ivory coast and also countries like Zimbabwe in which mobile money has been strong and again the growth of this has been due to the influence of the diaspora abroad who seek more convenient ways to send money back home.

Qn. Most of the money senders to Tanzania are from Britain, with the Brexit that has happened, how do you see it affecting WorldRemit transactions in Africa.

We don’t see a lot of change once it comes to the Brexit decision, because when you look at remittances its about people sending money home to support their family members, typically the money is going to support their education, medical bills, utilities and things like that. So that means money regardless of the political climate is still sent back home, the challenge is how easy is it to send that money back home and when you consider all the challenges of sending money in cash that’s the bigger issue.

Qn. What has been your competitive advantage and how are you able to attract global partnerships in terms of mobile operators such as Huawei and benefactors the likes of Triple Point Venture Growth BDC Corp and Silicon Valley Bank.

Mobile is absolutely our competitive advantage, not just being mobile on the sending side where more than 56 per cent of our transaction takes place on a mobile phone. In addition to that more than 70 per cent of all transactions takes place on a mobile devices. Also our partnership with mobile service providers is also helping to increase the interest of other mobile money providers indirectly with WorldRemit  because we have proven we are the largest provider of remittance of mobile money accounts. In 2016 for example we were responsible for over 70 per cent of remittance of the international remittance from  money transfer operators going into mobile money account globally. So  It’s our proven track record in mobile and the ability  to send from a mobile phone to a mobile phone instantly and safely.

Qn. Where do you see Africa in ten years in terms of mobile money transfer patterns and how do you see the growth of fintech on the continent?  Do you believe this may impede banks, especially if other financial entities such as the Saccos or perhaps the Chamas get involved.

In terms of mobile transfer patterns, we have seen huge investments in mobile money in Africa and other regions across the world who have looked at the success that is happening in East Africa and other parts and said we actually want to be a part of this.

Qn: Numerous other platforms for mobile money are being created and now we see mobile banking and we even see the advent of pesalink in Kenya, soon to perhaps grow into other East African countries. Do you feel that this may impact your business, if foreign banks can get into this unique space of remittance into Africa.

We see these initiatives as an advantage in the industry because the more that you are able to keep funds and keep  money flowing around in the electronic system and keep payments electronic regardless of the operators the better, when money is coming as a remittance payment from abroad  having the ability to keep that money , transferring around the system, using it to pay bills, school fees, medical expenses etc and removing the need for cash that’s a hugely advantageous situation to be in so we encourage greater usage of electronic transfers across the system.

Qn. Lastly, why should people look to World Remit as the key to remittance into Africa and not any other platform such as Western Union or even bank to bank.

We are the largest provider of remittance of mobile money accounts globally and as I mentioned we are responsible for 74 per cent of remittance going into mobile money accounts from money transfer operators. Part of the reason that it is the case is that its mobile. If you look at the competitors more than 90 per cent of their transactions follows a long process of standing in line, filling out paper forms and taking time off work to do that. This is  hugely an inconvenient way of sending money and it is not changing particularly in  sending money to Africa, its still predominantly cash based, WorldRemit on the other hand is entirely digital on your mobile phone and on your laptop and its as simple as that.


Questions to Leon Isaacs, from the DMA, co-author of Reducing Costs and Scaling Up UK to Africa Remittances Through Technology.

Qn. Leon you mentioned in your report that Tanzania is most expensive country to send remittance could you explain what do you mean by this?

So we looked at how much it would cost someone to send 120 British pounds from the UK to a number of different African countries and the cost actually comprises of fee charged by the money transfer operator and then there is the foreign exchange margin and when we compared the different cost of sending to the different countries, Tanzania come in at 14%, that means for 120 British pounds I would paying 16 pounds just to transfer that money to Tanzania compared to half that to sending money in Zimbabwe and other countries. So it s an unfortunate situation, you are a Tanzanian in the UK and it costs you more to send money home than anywhere else and you probably don’t understand why. This also doesn’t take in account any indirect cost like the cost of travelling to an agent or the cost of the receiver to travel somewhere just to collect the money and the time they have to take to do so, so there would  probably be some other informal cost particularly using cash based services.


Qn. What do you think should be done to improve the remittance market in Africa .

There are actually quite a number of different ways, and I think the most obvious way is to use the technology that’s available right now, mobile being the obvious example of that. 90 percent of the money that is sent is sent using cash and to do that someone has to visit an agent and on the receiving side the receiver has to go visit an agent to receive the cash, now those agents need to earn some money out of that transaction, so if we can introduce services that are already there-technology driven services to get money from somebody’s bank account , mobile account or digital account in the UK to a mobile wallet here in Tanzania then there is no need to have an agent either on the sending side or the receiving side which means we should be able to reduce the cost by 50 per cent almost overnight. There are other things we need to do as well probably more complex but I think even if we did that it would be a great start, and the key challenge is educating people who are sending money in particular that these options do exist

Qn. What does the future hold for mobile money operators. Do you see them playing a bigger role than the banks in terms of facilitating transaction and do you think this has the potential to  weaken the banking sector.

There is a bigger role for mobile operators, I don’t actually see it weakening the banking sector, the two are working in partnership. They way the regulation are, mobile money operators need to work with banks for processing of the settlement of transaction and providing the back office functionality. Mobile money operators are strong in dealing with consumers, they have big customers bases particularly of the people who receive remittances and I see that is going to grow but mobile money operators are not financial service experts they need to work in partnership with the banks. The banks provide the financial acumen, the security around the product, safekeeping of the funds and so on. So it’s just different roles, the problem with the banks is that there are not in the rural areas where the customers need to be and they are not ever likely to be, so this makes them work in partnership with the mobile money operators.

Q; What are your thoughts regarding the potential of fintech growth in East Africa, leaving aside the success of what we see with Mpesa in Kenya.

There a lot of interest in Fintech particularly in Kenya, the challenge with fintech is that there is a lot of good ideas and the whole aim is to prove your idea really works, and most people who develop fintech look into selling it to someone else and part of the challenge there is who is going to buy these products, who is going to invest long term into these products, The advantage that Africa as a whole has is that there is a lot of untouched territory, there a lot development problem and social challenges that if fintech can probably be the most sufficient way of addressing that can make fundamental changes to people’s lives and therefore there is a lot of interest in those solutions that actually get delivered.

So I think there is a good opportunity for fintech since there is a lot of competition for people competing for ideas and there has to be a fine way to scale them up, and I think the question is how can Africa compete with what is coming out of China or what’s happening in Europe or America in terms of really driving the financial benefits.

For fintech to develop there needs to be a lot of support from governments and inter governmental bodies and benefactors to kick start it and get the private investors involved to actually really support it. I think one thing that Africa can look to tap into is investment potential of the African diaspora in the rest of the world. For fintech to succeed it needs to reach out to African diaspora with good prepositions, but if I am in the diaspora the challenge is how do I know that initiave is legitimate and has a good chance of succeeding compared to another one.

Crowd funding is also an exciting and fast growing opportunity in Africa

In 2015, the African crowd funding market amounted to about $70 million, accounting for less than one percent of the global crowd funding market. However, a 2013 World Bank report estimated that by 2025, crowd funding will be a $96 billion industry growing at a rate of 300% per year.

We are seeing companies like Blue Moon in Ethiopia are emerging which help to provide training to aspiring entrepreneurs. In Kenya (and now in Tanzania), institutions like the Moringa school and Dar Teknohama Business Incubator (DTBi)  are starting up to help provide training to tech developers and support for aspiring entrepreneurs.

Generally I think we are going to see a lot success stories coming out of the continent.

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