AfricaPress-Tanzania: Equity Bank Tanzania has said there is increasing demand for inter-country money transfer within the eastern Africa bloc.
The inter-country money transfer showed two phenomenal, increasing cross-border business activities and the diaspora remittance thanks to the lender’s digital transformation and innovation.
The Equity, one of the leading lenders in East African the region, said in 12 months to last December, 500 million US dollars were remitted in Kenya, Tanzania, Uganda, South Sudan, Rwanda, and DRC-Congo.
Equity Tanzania’s Head of International Money Transfer, Emmanuel Ndatta, said the internal innovation create a digitalised bank network that simplified remitting money within EAC bloc.
“The bank uses own platform and system managed to simplify money transfer within the region thus remove the hurdles and hassles of sending money and also cut costs significantly,” Mr Ndatta said at the side-line of the launching of eight partners in global fund transfers.
The lender is using its platform dubbed Inter-Country which is connected through all its branches where it operates in Kenya, Tanzania, Uganda, Rwanda, DRC, and South Sudan.
The cost of the transaction is 10,000/- for an amount which is not exceeding 10m/-, and additional costs charged for fund above the threshold amount.
The affordable cost factor seems to pull senders, within the region, to use the lender’s service.
According to the World Bank’s Remittance Prices Worldwide Database, the global average cost of sending 200 US dollars was 6.8 per cent in the third quarter of 2020, largely unchanged since the first quarter of 2019.
“This is more than double the Sustainable Development Goal target of 3 per cent by 2030,” WB report showed.
Tanzania’s diaspora remittances, according to WB in 2019, were 437 million US dollars from 4 million Tanzanians living abroad.
An analysis of the World Bank data for 2018 by the Washington-based Pew Research Centre shows that most of the inflows into Tanzania was from the United States, Kenya, Uganda, Burundi, South Africa, Malawi and Australia.
On the other hand, foreigners living and working in Tanzania remitted some 629 million US dollars to their countries last year, with most of the outflows going to India, Kenya, China, Uganda, US, Germany, Burundi, Italy, Britain, Rwanda and Pakistan.
Equity Tanzania Managing Director Robert Kiboti said remittances are good source of an economy foreign currency reserves and also income for households.
The Equity Tanzania is subsidiary of the Equity Bank Kenya which is wholly owned by the Equity Group Holdings, and has a customer base in excess of 9.2 million in six East African country, making it the largest commercial bank on the African continent by number of customers.
In East African, World Bank said, countries received 17.38 billion US dollars from their citizens living abroad between 2013 and 2018, as foreign remittances outpaced foreign direct investment to become the largest source of external financing in low and middle-income countries.
According to the latest World Bank brief, during the period, Kenya topped the region as the biggest beneficiary of remittances, receiving 10.74 billion US dollars, followed by Uganda ($6.28 billion), South Sudan ($2.85 billion), Tanzania ($2.39 billion), Rwanda ($1.13 billion) and Burundi ($257 million).
Also WB’s latest Migration and Development Brief shows that the volume of remittances into the five East African countries increased by more than 60 per cent to 4.66 billion US dollars in 2018, from 2.84 billion US dollars in 2013.
However, WB said remittance flows to low and middle-income countries (LMICs) are projected to fall by 7.0 per cent, to 508 billion US dollars last year, followed by a further decline of 7.5 per cent, to 470 billion US dollars in this year.
“The importance of remittances as a source of external financing for LMICs is expected to amplify in 2020, even with the expected decline,” the WB report said.
Remittance flows to LMICs touched a record high of 548 billion US dollars in 2019, larger than foreign direct investment flows 534 billion US dollars and overseas development assistance about 166 billion US dollars.
The gap between remittance flows and FDI is expected to widen further as FDI is expected to decline more sharply.
As the Covid-19 pandemic affects both destination and origin countries of Sub-Saharan migrants, the fall in remittances is expected to further lead to an increase in food insecurity and poverty.