, NAIROBI, Kenya, Oct 18 – With the World Bank getting increasingly concerned about the high cost of remittances to Africa, calls are emerging to improve competition in field and for banks to open their networks to all the players.
Dilip Ratha, the head of the World Bank’s migration and remittances programme, said the cost of remittances should come down soon, singling out the current cost as very prohibitive, especially to the poor.
And Africa leading money transfer company Dahabshiil say banks and national post offices should open their networks to all the remittance companies to make ease access services.
The biggest global money transfer companies responsible for remittances say their services are cost-effective, considering how fast they are and the choice of services now available to customers but World Bank differs saying the six percent charged by some of these institutions is too high.
In a BBC radio discussion, Ratha and Abdirashid Duale, the chief executive officer of Dahabshiil, argued that the charges imposed by the “biggest companies” are too high.
They also said that there is need for competition alongside improvements in technology to aid the cost reduction.
Duale observed that the “big banks” and national post offices have engaged in exclusive relationships with the world’s largest remittance companies, which enabled the latter to charge consumers unnecessarily high prices – currently standing at an average of six per cent.
“The market should be opened up to other organisations, including Dahabshiil, so that there is competition in the market.
“As it stands, big banks and national post offices have exclusive contracts with the leading remittances companies, hence locking out other players in the industry and setting high costs in remittances,” the Dahabshiil boss observed.
But Duale was quick to add that his company has made it a policy to make it extremely affordable especially when it comes to sending money for humanitarian reasons.
“Dahabshiil has maintained a reputation for keeping charges affordable. When the Bill and Melinda Gates Foundation used Dahabshiil and eDahab to send money to help drought victims in East Africa they were accorded the lowest charges.”
“And it is not in this instance alone, at time we have opted to waive commission because we know how important some remittances are important in saving lives of the underprivileged and the poor in our continent,” added Duale.
Duale said: “International banks and post offices could play a big role by facilitating companies like Dahabshiil as well as the global multinationals. We need their cooperation if we want to make remittances more accessible, especially in Africa.”
According to the World Bank, recorded remittances to developing countries are expected to grow by 4.8 percent to $450 billion for 2017. Global remittances, which include flows to high-income countries, are projected to grow by 3.9 percent to $596 billion.