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Remittances, Commerce and the Power of Stored Value

August 6, 2013 8:20 AM | Category: Better Services,  | by Jim DeMarco

According to a World Bank study1 announced in June 2013, remittances to Africa from the African Diaspora in 2012 amounted to $60 billion, supporting 120 million people.

This means nearly 3% of African GDP came from remittances in an economy that is growing faster than the rest of the world. While it’s foolish to make a broad sweeping statement about a continent that covers a vast array of economic and social conditions, it is nonetheless telling that more than one in ten Africans received the benefit of family members sending them money, with a large portion of that money being transferred via non-banking systems. Moreover, it means that an increasing number of the unbanked in Africa are engaging in international finance.

Also telling is that M-Pesa2 has reached critical mass, exceeding 35 million subscribers in just three of the six countries it serves, and is growing at a rate of more than 200,000 subscribers per month in Kenya alone. Mobile money transfer for goods is a real and vibrant element of many economies in Africa and South Asia. This trend can only accelerate with the advent of smart phones and trusted mobile devices in places where cash is dangerous to hold and wired commerce infrastructure is less viable economically in the long term than wireless. 

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