Remittances support growth of innovation
One of the fastest-growing sectors in Zimbabwe is financial technology, which has led to a rise in the applications and tools that improve international remittances, a major source of incoming liquidity to the country. With remittances from overseas surging from US$ 1 billion in 2020 to US$ 2 billion in 2022, further innovations can be expected to shrink costs, decrease risks, and improve customers’ experience. Over the last decade, we have seen a dramatic rise in technologies and tools supporting global money transfer services. Today, transfers that could normally take up to several weeks through traditional institutions to complete, can be done in just a few hours. Many home-grown solutions are also expected as the Government, development partners and private sector companies work in unison with finance innovation hubs to accelerate the growth of a knowledge-based and tech-led economy. We interviewed DARRYL PIETERSEN, Director of Anglophone Africa, WorldRemit on Zimbabwe’s technology and remittance trends.
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BW: What recent trends have you observed
in Zimbabwe’s remittances sector? DP: There has been a lot of recent transformation in the remittances industry, from technological advancements to increased partnerships between digital payment operators and financial institutions. However, due to economic challenges in Zimbabwe, the fast-paced dollarisation and preference for foreign notes by consumers, cash remains the country’s most significant remittance channel.
While other African countries can possess more than double the number of mobile money users than the number of bank accounts, in Zimbabwe, the number of active mobile money users is just 4,3 million, according to the Reserve Bank of Zimbabwe’s 2022 Monetary Policy Statement. And yet, despite this, mobile money ascension continues.
We have seen a level of choice where Zimbabweans use mobile money, as it offers more efficient and speedy transfers. Additionally, at WorldRemit our partnership with financial institutions remains critical to the success of remittance pay-outs in Zimbabwe. Through these partnerships, we have increased service coverage, allowing withdrawal services that involve minimal travel and costs.
BW: In terms of innovation, which sub-sectors of remittance technology do you see as having the most growth in 2023? DP: Data is a very important tool in the growth of any business sector, but its value is even greater in the financial world. We anticipate more growth in the number and quality of financial and remittance data handling and management tools. Security, too, is an extremely important consideration of the remit
tance business.
We anticipate more growth in technologies for securing transfers from the point of dispatch, through the various switches and interchanges, and on to the point of withdrawal. Security innovations are especially important as the money transfer world is increasingly targeted by fraudsters.
In the next year and beyond, we expect to see more innovations around protecting remittance integrity. Both recipients and senders are expected to gain more capacity for managing their transfers through advancements in real-time tracking technologies.
The increasing internet penetration (currently at 29 percent), supported by the easy accessibility of smartphones, is expected to drive the uptake of such capacities.
BW: Globally, remittances have contributed to the rise of new innovative businesses. Which lines of business do you see as gaining complementary growth in line with the transformation remittance sector?
DP: The mobile-money sector is one of the biggest areas of transformation in the remittance industry. At WorldRemit, we aim to create the most fluid and secure path for the flow of remittances from anywhere in the world to Zimbabwe. We have invested heavily in technologies that improve our customer experience through diversified tools and products for both senders and recipients. Globally, we have created a number of special solutions for instance by allowing SMEs involved in international trade, make payments to their employees and contractors across the globe, with the aim of saving their businesses time and money when making international payments. Our partnerships with financial institutions have allowed us to penetrate the country in ways that were not possible before and going forward, we know more growth will come from our vast pay-out networks such as our cash-pick up, airtime top up and mobile money services. We are already seeing more value in investments that bring withdrawal services closer to the people, as more and more Zimbabweans gain access to the international money transfer options.
BW: A cost-of-living crisis is occurring globally, and Zimbabwe is among the worst-affected countries. How do you envision this challenge will affect remittances to the country?
DP: It is true that as a world we are currently in troublesome times, which may not subside until later in 2023. However, as of December 31, 2022, Zepz users globally have sent over $500m USD to Zimbabwe this year. We expect this trend to continue as Zimbabweans abroad remain astute in supporting their families back home.