•While family support is identified as the main purpose for remitting, consumers say transfers also play a strong role in future financial planning.
•The findings conducted in Kenya, South Africa, Nigeria, Senegal and Morocco show that 59 percent send funds across borders at the same rate.
Image: FILE
The free falling shilling against the US dollar is likely to drive up the amount of money Kenyans abroad are sending home.
This is according to the Western Union’s inaugural Global Money Transfer Index.
It says that many in the diaspora are increasingly keeping a sharp eye on how their local currency is performing back home and looking to maximise on the opportunity.
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The index shows that 67 percent of Africans abroad send more money when the currency value falls in their receiving country, with 65 percent of receivers agreeing that when currency values fall, they get more money.
An analysis of CBK data on remittances shows that Kenyans living abroad sent home Sh39.3 billion ($309) in February this year when the shilling was trading at an average of Sh126, compared to Sh36.7 billion ($321.5 million) in the same period last year when the shilling was at Sh114 against the dollar.
Despite the amount remitted in dollars recording a slight decrease the value in local currency within the period increased by Sh2.6 billion.
The survey further shows that a majority of Kenyans and Africans at large are optimistic that remittances will increase this year with more than three-quarters of Africa’s receivers (78percent) saying they expect these remittances to increase.
Economic challenges such as higher global cost of living among the recipients at 81 percent across the African continent is driving more people back home to ask senders for more money.
According to the index 62 percent of Africa’s recipients receive money transfers at least once a month or more.
The survey conducted in Kenya, South Africa, Nigeria, Senegal and Morocco shows that 59 percent send funds across borders at the same rate.
“The index tells us that the cost-of-living squeeze across Africa means consumers are relying on money transfers as their daily lives have become more challenging,” said Western Union Head of Africa Mohamed Touhami el Ouazzani.
While family support is identified as the main purpose for remitting, consumers say transfers also play a strong role in future financial planning.
Education costs ranks second-highest as a reason remittances while Supporting business interests at home and saving for the future are cited as critical reasons too.
“As consumers tell us that the remittances they receive will need to increase, it is imperative for money transfer providers to stay agile, and support consumers on their journey,” added Ouazzani.
The tough economic times has seen the number of money sent increasing with 72percent of African senders now saying they are sending more than previously.
“This may contribute to why consumers state frequency and volume of remittances are primarily influenced by family requirements, despite common perception that remittances are driven by when salaries are received,” the survey reads in part.
The index shows that 58 percent of Africa’s recipients want to use digital-only solutions for their money movement needs. When consumers look to the future, however, the picture changes, almost half, 49 percent of consumers in Africa compared to 52 percent , globally, want a choice in platforms when transferring or collecting.
“If we want to maximise financial inclusion, we must offer consumers diverse options when moving money," said Ouzzani.
He further said that consumer preferences will continue to spur innovation within the financial services industry.
Seventy-four percent of senders and receivers across Africa expressed frustration with repetitive and time-consuming paperwork compared to 72percent globally.
In fact, 83 percent of senders in Africa (79 percent, globally) would prefer facial recognition/biometric technology for instant and reliable registration.
Seventy-eight percent of receivers in Africa also want their funds to be disbursed on a prepaid card or e-wallet that does not require a bank account, as well as the option of receiving in different currencies (90 percent).
Eighty-five percent of all consumers surveyed in the region are also eager for integrated ‘super’ apps, allowing them to manage remittances alongside other financial products with ease.