Mobile remittances, the money that migrant workers sent home through digital channels using mobile technology, can play a catalytic role linking individuals and businesses to the formal economy, while providing access to key financial products and services such as transactions, credit, insurance, payments or savings that can boost their own social and economic wellbeing.

This €1.2 million two-year grant is funded by the European Union through the IFAD-managed PRIME programme. This public-private partnership will help MFS Africa and its partners unleash new and untapped markets in marginalized rural communities where mobile remittances can provide significant social and economic benefits to some of the poorest people thanks to lower transaction costs coupled with safer and more easily accessible remittance services. MFS Africa and its partners are co-funding the grant with €0.64 million.

Jyostna Puri, Associate Vice-President of the Strategy and Knowledge Department, IFAD: ''MFS Africa is a great partner in our efforts to serve marginalized rural areas and leaving no one behind. What MFS Africa is doing is scalable. This grant is an investment to develop a model linking mobile remittances and financial inclusion that can be scaled up across Africa, and benefit not only remittance families but also their communities.''

Despite its staggering growth since the start of the pandemic, mobile remittances only represent 3% (US$16 billion) of the total remittances sent home by migrants to their families living in low- and middle-income countries.

Pedro de Vasconcelos, Manager of the Financing Facility for Remittances, IFAD: ''In order to change habits and attract people to digital and formal sending channels, it is vital to provide consumer awareness and education on both sending and receiving sides, particularly in rural areas. But these activities do not offer immediate financial returns and are very resource intensive for service providers.''

Nika Naghavi, Executive Director, MFS Africa: ''Transferring money internationally should be as easy and as affordable as making a phone call. We look forward to growing the digital remittances market by increasing the diversity of actors and competition. This will ensure that African consumers have access to cost-effective and sustainable means of sending money. IFAD support will help us enhance the financial resilience of the African diaspora and their families back home by unlocking the challenges in the remittance value chain, covering both the sending and receiving sides.''

While the average remittance transfer cost to low- and middle-income countries is 6%, the average to African countries is 7.8%, far from the specific SDG target 10.c of reducing the cost of migrants’ remittances to less than 3% by 2030. Mobile transfer costs are already in line with this target. Mobile remittances are expected to grow in the coming years and promise to lead a much bigger and impactful digital revolution in Africa as long as women and rural people are part of it.

Through this IFAD grant, MFS Africa will enable their payments hub partners [money transfer operators in European ‘sending’ countries, and mobile network operators in African ‘receiving’ countries] to directly send money through mobile wallets in selected African receiving countries, focusing on rural beneficiaries. MFS Africa will also test and scale micro-insurance products linked with remittances and distributed through selected partners.

This is the first partnership announced as part of IFAD’s involvement with the Evolve Programme, an initiative that includes the African Export-Import Bank (Afreximbank) and CNN International Commercial aimed at empowering and telling impactful stories, through a series of branded content, about emerging and expanding scale-ups across Africa.

The grant will benefit all those individuals and businesses along the remittance value chain and increase transparency and encourage competition, especially in corridors often overlooked by traditional money transfer operators due to low volume.