The Nation Newspaper

Tag: money transfer

  • Making global money transfer services cheaper, seamless

    Nigeria ranked among the top five countries that received about $613 billion in remittances last year, a Central Bank of Nigeria (CBN) data shows. COLLINS NWEZE writes that many commercial banks are strengthening their technology to make remittances easy and affordable.

    GIVEN its rising benefits, electronic money transfer is gaining wider acceptance in Nigeria and in many African countries.

    Transfer of funds has made it easier for Nigerians in the Diaspora to meet the financial needs of their kinsmen at home. According to the World Bank, remittances to sub-Saharan Africa increased by over 11 per cent between 2016 last year.

    However, the region is still the most expensive in the world to send money to, with an average cost of 9.4 per cent. Quoting a World Bank report on remittances in 2017, the Governor of the Central bank of Nigeria (CBN),  Godwin Emefiele, said that Nigerians in the Diaspora and other African nationals sent $72 billion home last year.

    In an address at the opening of the workshop on Remittance Household Surveys, the CBN boss who was represented by the Director, Statistics Department of the apex bank, Mohammed Tumala, said that Nigerians in the Diaspora placed the country on top of the list remittances in the region. He said, “Remittances inflows contribute substantially to foreign exchange earnings and household finances in most developing economies.

    Money sent home by migrant workers is among the major financial inflows to developing countries and in some cases, it exceeds international aids and grants. “According to the World Bank, global remittances have risen gradually over the years to about $613 billion in 2017, of which $72 billion was received by African countries. As a recipient country, Nigeria tops African countries and is also ranked among the top five globally.”

    Speaking on the development, Ecobank Group Chief Executive, Ade Ayeyemi, said that in the first quarter of 2018, the average cost of sending $200 was 7.1 per cent, and remittance services in Sub-Saharan Africa were the costliest in the world at an average cost of 9.4 per cent.

    The international Sustainable Development Goal aims to reduce the average transaction cost of remittances to less than three per cent of the remittance amount by 2030.

    A substantial proportion of migrants financially support their dependents back home and the potential size of this remittance market is illustrated by the United Nations’ estimate that the number of international migrants, including refugees, was 258 million in 2017. Money transfers from migrant workers and others to all countries worldwide were $613 billion in 2017 and those into Sub-Saharan Africa grew by $4 billion to $38 billion in 2017.

    The importance of the inflow of remittances into many African countries cannot be underestimated. Remittances play a hugely important part of many national economies and their inflows represent 27 per cent and 21 per cent of Liberia and The Gambia’s Gross Domestic Product respectively.

    Ayeyemi said: “Well let me tell you in the true Ecobank fashion of leading from the front – and forcing our competitors to follow in our trailblazing wake – our latest exciting digital innovation is going to reach that goal 12 years ahead of schedule”.  He added  “Therefore I am delighted to unveil Rapidtransfer, our brand new dedicated mobile remittance app. This app will be a game changer for the market, dramatically reducing the cost to zero to three per cent of the remittance amount depending on which delivery option is chosen.

    He said the bank’s vision of “My Money, My Africa” will cement its differentiation from competitors such as Western Union and Transferwise, alongside four key messages such as  affordability,   simplicity, digital and emotional connection to Africa and reach/ frequency. He said the bank’s  mission is to consolidate a modern pan-African bank and to contribute to the economic development and financial integration of the continent.

    He said that the bank’s mobile app Rapidtransfer optimises the user experience across ease of use and expediency, and will be launched for mobiles with a web version.

    “We know the difference your money makes when you send money home to Africa. The links between the sender and the recipient back home will be strengthened through continued innovation and digital disruption,” he stated.

    He explained that Ecobank, the pan-African bank, is harnessing its digital expertise and innovation to bring efficiency and convenience to the international and intra-African remittance markets, while significantly reducing the costs to send funds.

    The launch of the Rapidtransfer mobile app will enable Africans wherever they may be to easily and instantly send money to bank accounts, mobile wallets and cash collection in – and across – 33 African countries.

    As well as being intuitive, easy to navigate and multi-lingual with English, French, Spanish and Portuguese variants, the app provides simple and secure digital on-boarding. Users can choose how and when funds are delivered to the intended beneficiary, with transparent foreign exchange rates prior to each transaction. Charges range from zero to three per cent depending on the options the customer selects.

    Ayeyemi said: “Historically the cost of sending cross-border remittances in Africa has been far too high. Similarly, the process to send funds has long been inefficient and burdensome, with customers forced to physically go to an agent, and yet still have little or no clarity as to when the money will reach the recipient. The Rapidtransfer app remittance solution is a quick, easy and reliable digital solution that removes all of these issues. It is a game-changer for Africans with its sustainable and standout affordability.”

    Ayeyemi went on to state that the app further demonstrates Ecobank’s commitment to enhance the economic development and financial integration of the African continent. “We know that remittance flows into and across Africa from migrants working away from home has an enormously beneficial impact in powering Africa’s domestic economies. By reducing the costs to send the money, Rapidtransfer ultimately enables the beneficiary to receive more of the funds originally sent to them, which in turn will have a multiplier effect on national economies by boosting demand and driving business growth.”

    Likewise, digital money transfer service, WorldRemit continues its rapid expansion in Africa, launching low-cost bank transfers to nine new countries across the region.

    Nearly three million migrants living in over 50 countries can now send money directly from their phones to any personal bank account in the following countries: Botswana, Central African Republic, Chad, Malawi, Mauritius, Mozambique, Namibia, Togo and Zambia.

    WorldRemit’s mobile-first, digital model saves customers time and money, as they do not have to visit a brick and mortar agent to make transfers. Beneficiaries will receive their funds into their bank account within one to two working days.

    Transactions to Africa via WorldRemit have grown by nearly 75 per cent this year. With the new bank transfer service, WorldRemit is launching money transfers in three new markets – Mauritius, Mozambique and Namibia – and expanding its footprint in six other countries.

    Managing Director of Middle East and Africa at WorldRemit , Andrew Stewart, said: “We are delighted to expand our service in Africa to allow more members of the diaspora to send low-cost, fast and secure online bank transfers directly from their phones.

    “Over half of all transactions through WorldRemit go to Africa. The new service will drive down the cost of remittances to the region and support our plan to serve 10 million customers in emerging markets by 2020.”

    Ecobank Managing Director/CEO, Patrick Akinwuntan, said Ecobank Nigeria is part of a highly respected digitally innovative institution – the Ecobank Group with an unrivalled network across 40 countries, about 19 million customers, over 7.7 million mobile App onboarding, over 11,000 branch and Xpresspoint agent locations, over 2,600 Automated Teller Machines, over 11,000 POS, more than 60,000 EcobankPay merchants, Retail Internet Bank and other banking platforms.

    He said the bank introduced zero fees for all transfers done into Nigeria on its newly launched Rapidtransfer app. “Ecobank is poised to ensure Nigerians in the diaspora get the best in class remittance service. We want to make it easy for  Nigerians living abroad to send money to their loved ones at home instantly. Transfers on the Rapidtransfer app are at zero fees from now till 31st January, 2019”

    Further, Akinwuntan reaffirmed that the Ecobank Rapidtransfer app which follows a tradition of leadership in digital banking in Africa is designed to enhance remittances to Africa by drastically reducing cost, while also tackling the long, burdensome and inefficient processes Africans abroad face when sending money to their home countries.

    The bank’s Managing Director urged Nigerians to tell their relatives abroad to take advantage of this new and innovative means of remitting hard earned monies home. In his words “Many Nigerians work abroad and financially support their relatives back home. The app is a safe and secure low-cost remittance solution, which ultimately will put more money into the hands of the recipient as there are no charges deducted”.

    The Rapidtransfer app is touted to be a game changer for remittances to Africa. The app enables users to easily and instantly send money to any bank in Nigeria. Receivers also have the option of picking up cash at any Ecobank branch. The exchange rates are very attractive and the service is open to Ecobank and non-Ecobank customers.

    Interesting features of the app include easy navigation and multi-lingual capabilities. The Rapidtransfer app is available in English, French, Spanish and Portuguese languages. Users can choose how and when funds are delivered to the intended beneficiary, with transparent foreign exchange rates prior to each transaction.

     

    New Partnerships

    Transfast, a cross-border payments and remittance firm has partnered with Access Bank to facilitate inflow of remittance to bank accounts and delivery in the form of cash pay-outs from any of Access Bank’s outlets in Nigeria.

    The two entities signed a global agreement to offer remittance services to expatriates sending money to their loved ones across select markets in Africa.

    The new partnership further expands Transfast’s presence in Nigeria, allowing its customers in over 125+ countries to send money to millions of Access Bank accounts as well as non-account holders.

    Access Bank is one a leading commercial banks in Nigeria, with an extensive network of millions of customer accounts and over 318 branches.

    Likewise,  a new partnership between Access Bank and  Transfast, would increase convenience and ease of banking for Access Bank’s customers in Nigeria as well as support the country’s efforts to achieve financial inclusion.

    The partnership, the bank said, would connect over 15 million Access Bank customers in Nigeria, Democratic Republic of the Congo, Ghana, Rwanda, The Gambia, Sierra Leone and Zambia to Transfast’s best in class online money transfer experience.

    With 15 million people living in countries including the United States, the United Kingdom, Australia and Canada, remittances play a significant role in Nigeria’s economy.

  • Money transfer: FirstBank, WorldRemit partner

    WorldRemit, a digital money transfer firm, has partnered with First Bank of Nigeria Limited to deliver instant money transfers to all of the lender’s acounts in Nigeria.

    The partnership considerably expands WorldRemit’s footprint and allows its customers in over 50 countries to send money to FirstBank accounts directly from their phones.

    Over the years, FirstBank has taken the lead in providing relevant e-payment options for its customers. The bank pioneered with Western Union Money Transfer in 1996, then Transfast Money Transfer, MoneyGram, Ria, PayPal, Pay Attitude and now, WorldRemit.

    Speaking i at the pact signing in Lagos, Deputy Managing Director, First Bank of Nigeria Limited, Gbenga Shobo, said the lender has extended its frontiers to WorldRemit in order to leverage the wide e-platform capabilities it offers to further ease the money transfer process for our numerous customers across the globe who seek new and easier payment transaction options regularly.

    “WorldRemit’s mobile-first, digital model complements FirstBank’s digital strategy to drive convenient banking transactions from the comfort of homes and offices using the FirstMobile and FirstOnline banking platforms,” he said.

    He added: “WorldRemit’s plan to serve 10 million customers connected to emerging markets by 2020. FirstBank is collaborating with WorldRemit to drive convenience and ease of banking for its teeming customers as well as provide the much-needed push for financial inclusion initiatives.

    Established since 1894 and with footprints in six African countries and a full-fledged branch in London, FirstBank has over 14 million customer accounts and more than 750 business locations providing a comprehensive range of retail and corporate financial services across these markets”.

    Regional Head of Middle East & Africa at WorldRemit, Andrew Stewart, said: “We are delighted to be partnering with First Bank, one of Nigeria’s leading banks, to give its 14 million customers access to our best in class money transfer experience. Nigeria remains our largest and fastest growing market in Africa and WorldRemit’s second biggest market globally. This is a key partnership in the country that will further support Nigeria’s transition from offline remittances to online, safer, faster and lower-cost money transfer methods.”

    He said that with a diaspora of over 15 million people living in countries such as the United States, the United Kingdom and Germany, remittances play an increasingly important role in Nigeria’s economy. The World Bank estimates that in 2017 alone, Nigeria received over $22 billion in remittances, making it the largest recipient in Africa.

     

    Sub-Saharan Africa still remains the most expensive region to send remittances to, with an average cost of 9.4 percent for sending $200, according to the World Bank.

    WorldRemit’s mobile-first, digital model provides migrants abroad with an affordable means of sending money, in a few taps directly from their phones – without the inconvenience of visiting brick and mortar agent locations. WorldRemit customers’ complete over one million transfers every month from 50 send countries to over 145 destinations. More than half of these transfers go to Africa.

    According to Group Head, Products and Marketing Support at FirstBank, Abiodun Famuyiwa, the bank is excited to be working WorldRemit in delivering swift digital remittances to its customers in Nigeria. This partnership is one of the numerous ways the Bank would continue to put customers first by leading the industry in the use of technology to provide safe, convenient and fast banking solutions.

     

  • WorldRemit, Lebara partner on money transfer

    Lebara and WorldRemit, two leading brands serving international residents, have entered into a strategic partnership making WorldRemit the exclusive global money transfer partner of Lebara, including transfers to Nigeria.

    The deal allows over three million Lebara Mobile and Lebara Money users to use WorldRemit’s digital money transfer service seamlessly, directly from the Lebara app and website. This supports WorldRemit’s plan to serve 10 million customers connected to emerging markets by 2020.

    Lebara customers living in the United Kingdom (UK), France, Germany, Spain, Denmark and Netherlands will benefit from WorldRemit’s extensive payout network in over 145 countries. This will provide a more convenient and lower cost alternative to the 90 per cent of migrants, who still send money through offline routes.

    As part of the deal, WorldRemit will also benefit from co-branding in Lebara’s full retail estate stores and advertising in Lebara Mobile simpacks sold in 260,000 stores across western Europe.

    WorldRemit founder and Chief Executive Officer, Ismail Ahmed, said: “We are delighted to be partnering one of the world’s premier MVNO brands targeting international residents in Europe, giving its users access to our mobile-first service. With more than 260,000 points of sale, Lebara’s visibility and brand awareness complements WorldRemit’s strong digital capability. This partnership will introduce our safe, fast and low-cost remittance service to millions of new customers.

    “WorldRemit has been working with telecommunication partners on the receive side, but this is our first strategic partnership with a mobile operator on the send side. We look forward to strengthening our leading position in the market with equally ambitious partnerships in the future.”

  • CBN endorses three firms for money transfer

    CBN endorses three firms for money transfer

    The Central Bank of Nigeria (CBN) yesterday stopped hundreds of global remittance companies from operating in the country.

    The affected firms, The Nation learnt, will no longer receive nor disburse the estimated $21 billion per annum collections from Nigerians in the Diaspora to local recipients.

    However, Western Union, MoneyGram and Ria were endorsed by the CBN to continue their operations in the country.

    WorldRemit, one of the international money transfer operators affected by the policy, said it sends more than 40,000 money transfers to Nigeria every month and receives more than $20 billion in remittances annually from migrants around the world.

    Investigations showed that many of the affected firms were not licenced to operate in the country and may have breached some of the operating guidelines. An industry source alleged that the affected firms were withholding dollar inflows meant to deepen foreign currency liquidity in the country, and were paying local beneficiaries with naira instead of dollars.

    “The operators need to do their business with integrity and international best practices. A situation whereby they withhold the dollar supplies and pay Nigerians in local currency can no longer be accepted,” the source, who is conversant with the operation of international money transfers said.

    “The operators opened local accounts where they disburse naira instead of dollar to beneficiaries. This has to stop,” the source said.

    WorldRemit founder and CEO, Ismail Ahmed said: “This move is arbitrary, inexplicable and hugely detrimental to the Nigerian Diaspora who rely on a hundreds of money transfer companies and banks, providing them with choice, convenience and competitive pricing.

    “Even now, as we suspend our service, there is no clarity on why this sudden change has happened. If it is on the basis of new rules, there was no warning. If it is a re-interpretation of old rules, local correspondent networks and banks should have been forewarned.

    “This reverses the progress made by the country when the Nigeria Central Bank banned Western Union’s exclusivity agreements that had created a near-monopolistic position in the international money transfer market. Western Union controlled 78 per cent of the market share when CBN outlawed exclusivity agreements with local banks.”

    Until now, money transfer operators such as WorldRemit operated via partnerships with licensed local correspondents in Nigeria, enabling transfer of funds to local bank accounts – providing a more efficient service than the SWIFT infrastructure.

    WorldRemit has also raised concerns about a 2015 memorandum from the Central Bank of Nigeria, setting out minimum requirements for companies offering international Mobile Money transfer services to Nigeria.

    The guidelines specify that any company offering Mobile Money transfers must have minimum net assets of $1 billion and have been operating for more than 10 years. WorldRemit is the world leader in transfers to Mobile Money accounts and had been planning to launch Mobile Money services in Nigeria.

     

  • Tanzania: Tigo signs money transfer service deal with Vodacom

    Millions of M-Pesa and Tigo Pesa customers in Tanzania will soon be  sending and receiving money directly into each others’ wallets. This followed the recent signing of a mobile money interoperability agreement between Tigo and Vodacom.

    The agreement will see four million Tigo Pesa users exchanging money directly with seven million M-Pesa customers. According to both parties, this is yet another tangible step towards the enhancement of  financial inclusion in Tanzania as well as the expansion of  the mobile money ecosystem in Tanzania.

    The International Finance Corporation (IFC) formulated the mobile-wallet-to wallet standards with support from Groupe Speciale Mobile Association (GSMA), (standards) which have been the basis of the interoperability discussions between mobile network operators in Tanzania.

    Speaking at the signing ceremony in Dar es Salaam, Rene Meza, Vodacom Tanzania’s Managing Director said: “This is a great evolution of the mobile money service in Tanzania. Our customers will soon be able to directly access the money received through Tigo Pesa and use it for whatever purposes they may have without necessarily having to cash it out.”

    M-Pesa users can pay for an array of services from their phones. These include; TV subscriptions, Flights, Insurance services, Utilities, Taxes, School fees, Pension Contributions  and Loans to name but a few.

    In support of this, Meza added: “M-Pesa has added so much value to the lives of Tanzanians over the past seven years and the fact that this agreement with Tigo will see even more Tanzanians using our services to better their lives is indeed a major milestone. We expect to launch the service by the end of the year and are currently working on upgrading our M-Pesa platform which will see us invest in excess of Tshs 150 billion to cater for the expected growth of users.”

    Meza went on to say that  the agreement signed between the country’s two mobile operators would allow Vodacom’s M-Pesa users to directly send and receive money to an additional four million Tigo Pesa users across the country at no additional cost or inconvenience to them by the end of the year.

    “We are now working to ensure that we have both the technology and requisite resources needed to provide the quality of service that our customers have come to expect from us through the years we are nevertheless excited about the opportunities posed by this new operating model,” Meza said.

  • What hope for outbound money transfer?

    What hope for outbound money transfer?

    The Central Bank of Nigeria (CBN) recently launched the outbound money transfer service in Nigeria. Assistant Editor, Nduka Chiejina, looks at the issues involved and presents details of the guideline for the new service.

    TIME was when Nigerians in the Diaspora hard pressed for cash or in critical need of financial assistance from their folks at home could enjoy such benefits. But from all indications, this may not be a problem anymore.

    Thanks to the recent introduction of the Outbound Money Transfer service by the Central Bank of Nigeria (CBN), it is believed will reduce pressure on the foreign exchange market and save independent foreign exchange users the troubles prevalent with official and parallel foreign exchange market transactions.

    Over the years the CBN had initiated several interventions to manage the foreign exchange market but the naira has remained perpetually tethered machinations of forex traders.

    Justification for outbound money transfer

    At the launch of the outbound transfer service in Abuja, it was revealed that Bureau De Changes can participate in outbound transfer of money from Nigeria to countries abroad.

    According to the CBN governor, Mr. Godwin Emefiele, the CBN has “talked with Western Union and agreed that they have to work with Bureau De Change operators that are well structured.”

    Conditions, he said, “will be given under which those Bureau De Change will qualify to become Western Union agents and the CBN will be providing a guarantee (of N10 million on behalf of BDCs that qualify to be on this scheme) to Western Union, Royal or Moneygram as guarantees for transactions that are done to ensure that they themselves feel secured to carry out these transactions without any problem.”

    That N10 million CBN guarantee Emefiele said will be taken out of the N35 million mandatory deposits by Bureau De Changes with the CBN because the apex bank is working to see that the number of outlets that engage in the transfer of money outside Nigeria increases to more than the current 5,000.

    According to Emefiele, “we will ensure that the guarantees are not called that is why we are going to put in place very stringent qualifying criteria to be met before you begin to be recognized as an agent to take on these transactions.” This he said is an opportunity for Bureau De Change Operators to also earn fees in areas that they would not before now have been introduced to make the business of Bureau De Change robust.”

    Modus operandi

    Under the guidelines regulating the outbound money transfer scheme, the banks and BDCs that have met the CBN new requirements will also serve as agents for money transfer services” Emefiele said.

    The transactions that are covered under this initiative “include the maintenance allowance for children abroad, maintenance allowance for aged parents abroad, personal home remittances within allowable limits, cash gifts within allowable limits and other person to person remittances.”

    Other measures that the CBN has introduced to manage the foreign reserve of the country the CBN governor stated “include measures to reduce foreign currency carriage and transportation outside the country, the CBN will be working with the relevant agencies where we will be looking at why people need to carry out so much cash from the country, for what purpose, if they cannot embrace the official channels that have been put in place then we will begin to ask them how much taxes they are paying for such large cash transaction out of the country.”

    However, where individuals feel they are carrying out legitimate transactions, the CBN, Emefiele noted: “will encourage them to adopt the legal and formal means of handling those transactions. The CBN had earlier increased the limits for credit cards and debit cards from $40,000 to $150,000 per annum. The CBN will continue to provide leadership in the payment system transactions in line with the transformation agenda of the federal government of Nigeria.”

    The pilot amount for outbound transfers is $2,000, “we want to start with $2,000 now to test how it will work before deciding whether to go higher. Naturally there are charges for outbound services those who receive money from relatives abroad know that those who send money to them pay certain charges, in like manner when you want to send money abroad you will have to pay charges, the exchange rate will be determined from time to time in line with the market” the CBN governor said.

    Safety precaution

    To check money laundering and other illegal transactions the CBN will be tracking transactions using the information collected from the customers, “returns will be taken, analysed and if it is found that a customer is using the channel for illegal transactions such customer will be cut off from the channel.”

    Benefits of outbound transfer

    The benefits of the outbound transfer service include the fact that payments for remittances abroad can be done in local currency, simplified remittance procedures and minimal control exchange documentation. In addition, bank accounts are not required to transfer funds and finally transaction points are within the reach of customers because of the existence of network of IMTO agents that we have in Nigeria.

    The CBN will soon commence talks with agents to use mobile phones from any of the licensed mobile payment operators for Nigerians to send money from their naira accounts and instruct Western Union to deliver either dollars or pounds or whatever foreign currency to whoever they desire the money to be transferred to abroad.

    Also with the aid of the internet Nigerians can give instructions to Western Union agents and the Naira is taken away from their accounts and effective dollar or pounds are delivered to their wards abroad. The CBN, Emefiele said, does not want its cashless policy to be only Naira cashed.

    First Bank of Nigeria Plc’ Group Executive in charge of Operations, Mr. Akin Fanimokun, stated that “the launch of the outbound money transfer services into the Nigerian market means that for the first time Nigerians can send money out of the country to appointed destinations within minutes.”

    First Bank, he disclosed, has opened “dedicated centres open seven days a week including public holidays and offer extended service from 8am to 6 pm. First Bank has consummated this partnership with Western Union in line with the bank’s mission to provide the best financial service possible while the benefit of this launch is the commission that will accrue to First Bank,” he said.

    Aida Diarra, Regional Vice President for Africa, Western Union Money Transfer, in her remarks, stated that Western Union is present in more than 200 countries and territories and offers services to more than 5,000 locations worldwide.

    Last year alone she said Western Union “processed more than 459 million business transactions, more than 260 million consumer to consumer transactions representing something like $82 billion of principal exchange between consumers.”

    This, she noted, “is quite an achievement when you look at the number of countries we serve, we realize that remittance plays a key role in the economic dynamics and development of the countries, in most of them remittance represents more than 10 per cent of GDP and in most of them remittance is bigger than foreign direct investment.”

    Western Union Money Transfer, she explained, has diversified portfolios made available to consumers with the help of new technology be it mobile internet and other technologies.

    Today someone with a bank account can receive money directly with the account based Western Union through the internet platform of agent partners, through ATMs or through kiosks.

    She added that this also “enables customers with electronic wallets to be able to collect their Western Union transactions directly onto their mobile wallets also making it possible for customers to collect their transaction through Western Union websites which is the first Receive-website globally that we have launched.”

    Outbound transaction, the Western Union executive said, will enable financial inclusion by bringing consumers to Point of Sale to deposit naira and be able to send transaction or cash anywhere in the world. The reason it took so long for outbound money transfer to come to Nigeria, she disclosed, “is because everywhere we work we want to make sure that we do so in alignment with regulations placed in the given country. It is with the blessing of the CBN and the governor after we met the requirement necessary to offer outbound money transfer that we were able to do so now.”

    The cost of the transfer transaction, she said, “will be in line with what obtains in Nigeria today. It will be per principal sum to be sent. Percentage varies according to the principal.”

    Foreign exchange traders are happy with this initiative and have described it as revolutionary but that have urged the apex bank to set up a monitoring unit that will ensure that banks and other operators do not frustrate the new policy by strictly adhering to the issue of BDCs using any bank closest to them for the service and the banks not insisting on having an account with them. These measures the forex traders believe will substantially minimise tension in the foreign exchange market.

    The initiative, according to foreign exchange traders, will complement the effort of the apex bank in foreign exchange management. The first peg of this initiative was the recent revision of bureau de change capital base from N10 million to N35 million.

    Guidelines

    The CBN in the guideline it released to regulate outbound money transfer had stated that “where the beneficiary does not have a bank account or mobile money wallet, payments shall only be made upon the provision of a satisfactory reference from a current account holder in a bank, confirming that the beneficiary is the bona fide owner of the funds.”

    According to the guidelines, the currency to be given to a money transfer agent for an outbound transfer shall be the naira; all outward payment transaction shall be executed in a convertible currency agreed between the parties.

    It added: “Where a currency conversion service is offered before initiation of a payment transaction or at the point of payment, the money transfer services operator must disclose all charges, as well as the exchange rate to be used for converting the payment transaction.”

    In the guideline under the title: Disqualification of Shareholders and officers, the CBN noted that “in line with the BOFI Act No. 25 of 1991 [as amended], all the conditions stipulating the exclusion of certain individuals from the management of banks, shall apply to the management of Money Transfer Service Providers, except with the written permission of the Governor of the CBN.

    Shareholders and officers of the company shall be disqualified, based on the provisions of Section 44 (2) of the BOFIA 1991 as amended. The section provides that: No person shall be appointed or shall remain a director, secretary or an officer of a bank who: is of unsound mind or as a result of ill- health is incapable of carrying out his duties; is declared bankrupt or suspends payments or compounds with his creditors including his bankers; is convicted of any offence involving dishonesty or fraud; is guilty of serious misconduct in relation to his duties; and in the case of a person possessed of professional qualification, is disqualified or suspended (otherwise than of his own request) from practicing his profession in Nigeria by the order of any competent authority made in respect of him personally.”

    Non Permissible Activities as contained in the guideline states that “a money transfer operator is not authorised to: act as an authorized dealer in gold or other precious metals; engage in deposit taking and/or lending money; maintain current accounts on behalf of customers; establish letters of credit; act as a custodian of funds on behalf of customers; engage in institutional transfers. (A money transfer service operator shall not engage in any other business other than as authorised by the Bank.) and buy foreign exchange from the domestic foreign exchange market for settlement.

    With regards to charges, all money transfer operators shall comply with the guide to money transfer charges, as provided by the CBN from time to time. The provider must make refund where wrong, inappropriate or disproportionate charges or fees are identified internally by provider.

    Each operator shall provide a Complaints Management Unit to resolve complaints or disputes submitted by its customers. The unit guideline said “shall provide its services free of charge through well publicised and dedicated channels, including phone numbers and e-mail addresses.

    An operator must fully investigate complaints and make appropriate decision and communicate same to the complainant within one week of the receipt of complaints. Each complaint shall be assigned a unique identifier for ease of reference and operators shall provide dedicated phone, email or other means by which complainants may enquire about the progress of their complaints. In addition, operators shall provide a response to all enquiries within 48 hours of receipt.

    Where a complainant is dissatisfied with the decision, the operator shall provide an internal mechanism to review its initial decision. The review body must arrive at a decision within one week of receiving letter of dissatisfaction from a complainant; Where a complainant is not satisfied with a decision of a review body, the complainant may escalate the issue to the Director, Consumer Protection Department, Central Bank of Nigeria; and A provider shall render monthly returns on all complaints to the Director, Trade & Exchange Department, Central Bank of Nigeria, Abuja, in a format approved by the bank.

  • Paying more for money transfer

    Paying more for money transfer

    According to a recent report, Africans are being handed the short end of the hammer by paying higher charges for overseas money transfer. Meanwhile, the two money transfer companies, MoneyGram and Western Union, have denied the allegation, Bukola Afolabi reports

    In the fallout of the research conducted by two organisations, Overseas Development Institute (ODI) and Charity Comic Relief, it was discovered that Africans living overseas and wishes to send money to their family back home are being charged higher fees compared with amount charged nationals from other continents.

    ODI director, Kevin Watkins, said the virtual duopoly operated by Western Union and MoneyGram in Africa was stifling competition. Although the ODI report did not allege price collusion between Western Union and MoneyGram, it said it was concerned by the uniformly high fees across countries in Africa, irrespective of underlying market conditions.

    Mr. Watkins added: “Migrants sending $200 home can expect to pay 12% in charges, which is almost double the global average. While the governments of the G8 and the G20 have pledged to reduce charges to 5%, there is no evidence of any decline in the fees incurred by Africa’s diaspora.

    “There is no justification for the high charges incurred by African migrants. The $1.8bn lost through the super tax could put 14 million children in school; deliver clean water to 21 million and sanitation to 8million people.”

    Recent World Bank figures show that remittances from foreign workers are expected to rise to $436bn this year but ODI said the cost of sending money back to Africa was far higher than the global average. International remittances are expected to rise to $516bn in 2016, with the likes of MoneyGram and Western Union expected to profit immensely from this.

    According to the outcome of the research, for every $200 sent home, the sender is charged 12% of the amount which is twice the global average of charges expected other nationals are charged.

    It is a known fact that many Africans living abroad work hard under extreme cold condition and are under constant financial demands from their families back home who expect them to attune to their demands anytime such requests are made.

    Western Union had claimed that various factors were responsible for the increase in charges, one of which is the higher taxes paid by the company in African countries. The company also claimed that because it offers efficient services, therefore increase in charges was inevitable.

    “We deliver much needed services to individuals and the fees were set according to factors such as local taxes,” the company stated.

    ODI further said its findings revealed that the two companies are enjoying less competition as they are the only major money transfer companies on the continent, adding that the companies capitalised on the monopoly they enjoy to increase their charges.

    According to Siddo Deva of Charity Comic Relief, the high charge is a burden on Africans abroad who are working hard to earn a living. “Imposing such high remittance fees from hard-earned income is hurting the African Diaspora and more importantly, their families and communities in the countries of origin.”

    However, a spokesman for Moneygram said the ODI had got its figures wrong. “We don’t recognise those numbers at all. There is no Africa premium.”

    He said Moneygram was offering a competitive service for people shunned by high street banks and that someone sending £200 from the UK to Africa would pay a charge of 5.1 per cent, including foreign exchange fees, against a global average of 4.9 per cent.

    Giving more reasons for the increase, an official of Western Union had also claimed that the cost of delivering cash to recipient in Africa is higher than what is obtained in other continents, adding that the company is spending much on security in Africa. “Cash has to be delivered and picked up with armoured cars. The reality is we are providing a very competitive service, a fairly priced service, based on speed, reliability, security of the money arriving. The average global revenue earned by Western Union from transferring money (including fee and FX) is 5.6 per cent of the amount being sent. However, our pricing varies between countries depending on a number of factors such as consumer protection costs, local remittance taxes, market distribution, regulatory structure, volume, currency volatility, and other market efficiencies. These factors can impact the fees and foreign exchange rates offered.”

    With the latest development, Nigerians in Diaspora as well as their families back home are already feeling the heat of the new charges.

    Titi Adetunji whose sister, Nike, lives in Surrey, United Kingdom told The Nation that for every 500 Pounds her sister sent home, she pays 60 Pounds as charge.

    “It is discouraging and she now finds it hard to send home money. She prefers to buy goods and send them home for us to sell which even generates more money. I think the charge has to be reviewed. I wonder why Africans have to pay more than other foreigners whereas we have more Africans in Europe than any other nationals.”

    Mr. Femi Oladeji, whose brother lives in New York, United States, also shares the same sentiment. He is of the view that emergence of more money transfer companies would reduce the monopoly enjoyed by Money Gram and Western Union.

    “Until we have new companies involved in money transfer, Africans would continue to be shortchanged by these companies (Western Union and Money Gram). With all the money they have made in Africa, they have not given anything back to the continent. For every $200 (N31, 000) my brother sends home, we are charged $24 (N3, 720). So you can imagine the amount these companies are making. Are they saying Africans in Diaspora makes more money abroad than immigrants from other countries like Asia, Europe or Middle East which makes them to increase the charge? It is just a way of maltreating us. Even the tax they claim they pay, do they really pay those taxes?”

    He added, “Africans have contributed immensely to the growth of the economy of these countries but it sad that we are not appreciated.”

    A financial expert, Mr. Joseph George also blamed the attitudes of the companies on lack of competition.

    “To me, it seems there are deliberate attempts by the companies and even banks to make sure that there is no competition. They try to stifle out competitions. I agree that they have made their names over the years but that should not prevent competitors from coming into the business. They have made so (much) money in Africa over the years but they are not giving it back to the society,” he said.

    He added: “If they are increasing the charge, there should be positive impact of the extra fees on the economy of the continent but what we are seeing is that instead of making people to benefit from it, they take it back to their country to develop their economy. I will implore them to re-consider the fee most especially for the benefit of those living in Diaspora.”

    Carl Scheible, MoneyGram’s executive vice president of UK and Africa operations, said that the company’s strategy in Africa and globally is all about helping to drive money flow and positively impacting the lives of its customers. He pointed out that ODI’s figures were unrepresentative of the facts.

    Mr. Scheible added: “MoneyGram provides a fast, safe, cost effective and very convenient service to the citizens of the world. Specifically responding to the reports claims, we want to be very clear that at MoneyGram, there is no Africa premium as we offer a competitive service for people shunned by high street banks.

    “For example, someone sending £200 from the UK to Africa would pay a charge of 5.1%, including foreign exchange fees, against a global average of 4.9%. We can provide more details on how these costs are arrived at, including compliance and technology components, plus the ecosystem built around this service including businesses within Africa if that is of interest.”

    A Western Union spokesman added: “The average global revenue earned by Western Union from transferring money including fee and foreign exchange is 5% to 6% of the amount being sent. However, our pricing varies between countries depending on a number of factors such as consumer protection costs, local remittance taxes, market distribution, regulatory structure, volume, currency volatility, and other market efficiencies and these factors can impact the fees and foreign exchange rates offered.”

    Latest World Bank figures show that remittances from foreign workers are expected to rise to $436 billion this year, more than three times what poor countries receive in overseas aid, but the ODI said the cost of sending money back to Africa was far higher than the global average.

    The expected increase in remittances to developing countries this year, according to the World Bank, will be maintained in the next few years despite deportations of international migrants from some host countries, adding that remittances will rise to $516 billion in 2016.

    Around $5bn was remitted to Africa from Britain alone in 2012 and ODI said that reducing remittance costs to the global average would increase transfers by $85m, rising to $225m if charges were lowered to 5%. For sub-Saharan Africa, remittance flows grew by 3.5% in 2013 to reach $32bn, with Nigeria accounting for about $21bn or 65.6% such of transfers.

    African remittances from Britain are forecast to rise to $41bn in 2016. These large sums have encouraged finance minister Ngozi Okonjo-Iweala to plan a Diaspora bond to mobilise savings and boost financing for development.