[ACCI-CAVIE] The United Nations International Fund for Agricultural Development (IFAD) has entered into two public-private partnerships (PPPs) to improve access to services for migrant workers to send money to rural areas in Senegal.
Remittances sent by migrant workers to and within Africa will amount to more than $95 billion by 2021, benefiting more than 200 million people, 55% of whom live in rural areas, according to IFAD. One in five people in Africa sends or receives remittances from migrant labor abroad, in addition to domestic money flows.
“Remittances are a lifeline for rural populations. Mobile money transfer solutions offer many underserved localities in Senegal the opportunity to have full access to financial services,” says Pedro de Vasconcelos, head of IFAD’s Remittance Financing Facility.
In the framework of the Platform for remittances, investments and entrepreneurship of migrants in Africa (PRIME Africa), co-financed by the European Union (EU), IFAD has joined forces with the Senegalese fintech InTouch and Orange Money to promote low-cost international mobile money transfer services in rural areas. In concrete terms, the aim is to deploy a network of permanent agents in these underserved areas.
The partnership targets the corridor between France and Senegal, which accounts for a third of the transactions of this type made in the country. InTouch will leverage the Orange Finances Mobiles Senegal (OFMS) network and the remittance system set up by Orange Money in France (OMF).
As part of the second partnership, IFAD wants to strengthen its collaboration with the digital payment company MFS Africa, to which IFAD granted its first grant to this type of company last September. The objective of the agreement announced last Thursday is to allow digital transfer operators to send money directly to mobile wallets. MFS Africa’s partners are Paysend in Europe and Afrimoney in The Gambia. In Senegal, Orange Money will offer this service.
The average cost of sending remittances from France or Italy to Senegal is relatively low: it stood at 4% in Q3 2022. But “There is an opportunity to reduce remittance costs even further by leveraging integrated end-to-end digital solutions that allow for the receipt of funds on mobile wallets,” says Pedro de Vasconcelos. “Indeed, in Senegal, while nearly half of adults have a mobile e-wallet, less than 5% of incoming remittances go through this channel,” he says.
Senegal has long depended on remittances from its citizens abroad. Over the past decade, remittances have represented about 10% of Senegal’s GDP. In 2021, these international flows reached $2.9 billion, an increase of 7% over the year 2020 despite the constraints of Covid-19.
“In Senegal, in 124 rural communities that have a high rate of migration and receive a significant volume of phone calls from France, there is a notable gap between the number of Orange SIM card holders and the number of Orange Money mobile financial services users. The OFMS penetration rate in these rural areas was 13% in 2021. One of the objectives of the project is to double the number of electronic wallets in these rural communities, thanks to international transfers,” said Cheikh Tidiane Sarr, OFMS CEO.
By Commodafrica and LB