Ria discusses Financial Inclusion at Remittance Gateway to Africa Forum

Currently Ria has almost 15,000 locations in Africa.

We’re very proud of what we’re achieving there and are actively seeking ways to be even more effective in the area of Financial Inclusion.

In May, five members from Ria including two from our African hub in Dakar, Senegal, attended the inaugural Remittance Gateway to Africa Forum in Marrakesh, Morocco. The event, organised by the International Association of Money Transfer Networks (IAMTN), attracted payment specialists from across Africa, Europe and the Middle East.

Ria’s Managing Director for Africa, El Hadji Malick Seck was involved in a panel discussion on the Regional Remittance Market, while Ria’s Operations Director for Africa, Robert Kotei, gave Ria’s perspective on Financial Inclusion and the Role of Remittances in Africa.


L-R: Ria’s Robert Kotei, Emmanuel Bampoe, Adolfo Galvez and Manuel Villena attended the Remittance Gateway to Africa Forum in Marrakesh, Morocco in May. 


What is Financial Inclusion?

According to this definition: “financial inclusion or inclusive financing is the delivery of financial services at affordable costs to sections of disadvantaged and low-income segments of society, in contrast to financial exclusion where those services are not available or affordable.”

At the forum, Robert Kotei discussed three pillars in relation to Africa, which support this objectivePricing – reducing fees by way of low-cost remittances; Postal Networks – and their role in reaching those in rural or hard to reach places; and Cashless Payments, or direct-to-account money transfer.

The Real Cost of Remittances in Africa

According to World Bank Data, in 2014, remittances received in Africa totalled around $63 billion dollars.

Today the global average cost to send to Africa is 12 percent; for transfers made within Africa, the average cost is around 20 percent. These are the highest average prices in the world.

Ria’s current global average cost is 3.8 percent, while transfers to Africa cost around five percent. The latter cost is higher than we’d like it to be, but we’re working hard to see it reduced further.

Based on data to 2013, we identified 11 countries in Africa that received remittances which accounted for five percent or more of a country’s GDP. These figures paint a picture as to how important remittances are for many African families.

Remittances as a percentage of GDP Africa 2013

In 2013, 11 countries in Africa received remittances that accounted for 5 percent or more of GDP. Click to enlarge image. Source: World Bank Remittance Data Inflows, April 2015.


The Postal Network in Africa

The Postal Network plays a large role in ensuring remittances reach those living in rural locations. Research carried out by the Universal Postal Union (UPU) shows that more than 80 percent of post offices in sub-Saharan Africa are located outside of the three major cities in each country; these are often areas where bank branches are not usually present.

Ria is already working directly with some Postal Operators in Africa, although people living in rural locations can also be impacted by a lack of competition and may be forced to use just one (often more expensive) service provider.

The African Postal Services Financial Initiative, led by IFAD’s Financing Facility for Remittances (FFR) along with the World Bank, UNCDF, Universal Postal Union (UPU) and the World Savings Banks Institute/European Savings Banks Group (WSBI/ESBG), believe that cashless payments hold the key, stating: “While the cost of transfers offers the largest direct savings impact, it is the provision of cashless payments that links to a range of financial services that will ultimately improve the financial independence of families and communities.”

Under this initiative, investment is being made to improve the infrastructure in Africa, reduce transaction times and deepen the range of financial services available in certain countries.

Mini Case Study: Ria’s Nigerian Direct-to-Account Service (Cashless Payments)

On May 7, 2010 the Central Bank of Nigeria (CBN) passed a law that money transfers must be paid to bank accounts. So Ria took the opportunity to develop and promote a bank deposit service.

Despite the limited number of account holders, Ria was able to convince senders to patronise this service; our partner banks also agreed to promote the service to beneficiaries in Nigeria and worked constructively with Ria to offer a seamless straight-to-account service.

In 2011 direct-to-account transfers accounted for just 10 percent of total transfers. After making this change, they increased five times and now account for over 50 percent of transfers made to Nigeria.

While the topic of Financial Inclusion goes beyond the scope of this blog post, we believe that Ria is on the right path. We’re committed to improving Financial Inclusion through providing low-cost remittances, while partnering with businesses that allow us to reach more people.

In the Postal Sector, we are still seeing challenges around exclusivity deals which do not allow responsible remittance players to enter. Along with improving infrastructure, we believe that banning exclusivity agreements in this sector will also help to bring additional positive change.

However the winds of change are moving in our direction and we are opening once-closed doors to work with more partners in Africa. Steadily, we are painting the world a little more orange.