The battle for a slice of Zimbabwe’s billion-dollar remittance industry — Quartz Africa


The scramble is on for Zimbabwe’s billion-dollar remittance industry, with local and international fintech institutions vying for a slice of the pie against traditional banks and traditional money transfer agencies.

Diaspora remittances to Zimbabwe have increased from $1 billion in 2020 to $1.4 billion last year. This reflects the continent-wide importance of the contributions of Africans in the Diaspora to national development and the support of family and friends back home. World Bank data shows remittances to sub-Saharan Africa grew 6.2% in 2021 to $45 billion from an expected 5.5% this year due to the economic recovery in the United States and in Europe.

In Zimbabwe, remittances are a lifeline

The increase in remittances to Africa coincides with the decline in foreign direct investment in countries like Zimbabwe, where FDI fell from $194 million in 2020 to $166 million last year. At the same time, some large traditional banking institutions such as Barclays and Standard Chartered are divesting from Zimbabwe, leaving a big opportunity for fintech players to tap into the remittance market through partnerships and alliances or with local banks.

Zimbabwean mobile money platform, EcoCash is the latest player to join the remittance market after forming a partnership to allow remittances to be received from international PayPal accounts directly into US dollar mobile wallets recipients in Zimbabwe.

It is a bet on the African appeal of mobile money and almost all financial institutions in Zimbabwe offer remittance centers, where they offer a boutique service for several remittance services. The country’s largest bank, CBZ, has just launched a CBZ Remittance unit to tap into this market.

The market is taking a hybrid approach with other fundraising players such as Mama Money, Sendittoo and WorldRemit – which however cut off international transfers to bank accounts last week – already active in Zimbabwe.

M-Pesa, Airtel, Nala, MFS Africa, Selcom, Innbucks and EcoCash

Elsewhere in Africa, Kenya’s M-Pesa and pan-African operator, Airtel Money, among others, all allow funds to be received directly into mobile wallets in various African markets.

This is facilitated by borderless payment gateways such as MFS Africa. Data from the Central Bank of Kenya shows that most Kenyans prefer mobile money channels for remittances. This is at a time when African economies are being hit by rising inflation and global supply chain bottlenecks.

A careful and competitive coexistence between fintech and traditional money transfer agencies is also taking root in some African cities. Digital finance research and advisory firm, Mondato, has published a case study on the composition of the remittance market for the Democratic Republic of Congo, where in the cities of Beni and Buthembo in the DRC, as elsewhere in Africa, “locals use Airtel for single Cash-In/Cash-out (CICO) and Western Union for larger amounts where liquidity can become an issue.

In Tanzania, cross-border payments company Nala and pan-African fintech company Selcom have a partnership that allows receipts of funds to be sent to mobile wallets in the country. All this means that links between fintechs and financial institutions are becoming popular in the regional remittance sector.

Intra-country remittances from one city to another are also becoming hybrid and mobile. In Zimbabwe, however, the central bank shut down the Innbucks mobile app that allowed residents to send US dollars across towns, saying it was not properly registered.

EcoCash allows the sending of foreign currencies from one wallet to another, but it is strictly regulated and is not allowed to offer the service through agencies, a situation which means that it cannot offer the service. service only through its own managed outlets with limited geographical distribution.

There are, however, barriers to seamless mobile reception of remittances in Africa, with a new study from MFS Africa and the International Association of Money Transfer Networks noting that “different infrastructures are not interoperable, which means that ‘they don’t work together’ effectively.


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