Why stay the same when you can be better? The new Africa has starts here.
For those not familiar with the term; Remittance is a transfer of money by a foreign worker to an individual in their home country. Money sent home by migrants competes with international aid as one of the largest financial inflows to developing countries. Workers’ remittances are a significant part of international capital flows, especially with regard to developing and labour exporting countries.
Workers’ remittances have become a major source of external development finance. Officially recorded the world bank estimates that remittances to low- and middle-income countries reached $466 billion in 2017, an increase of 8.5 percent over $429 billion in 2016. Global remittances, which include flows to high-income countries, grew 7 percent to $613 billion in 2017, from $573 billion in 2016. The actual size of remittances, including both officially recorded and unrecorded transfers through informal channels is even larger.
“Remittances are an important source of income for millions of families in developing countries. As such, a weakening of remittance flows can have a serious impact on the ability of families to get health care, education or proper nutrition,” said Rita Ramalho, Acting Director of the World Bank’s Global Indicators Group.
There are 2 kinds of remittances-family and community. Family remittances are money sent by individual immigrants to family and friends back home. These remittances are often used to meet their most basic needs.
Community remittances are money sent by immigrants and by hometown associations to communities in their home country. This money is traditionally used for infrastructure like roads, schools, parks and churches.
Remittances are now more than double the size of net official flows and are second only to foreign direct investment as a source of external finance of developing countries. In 36 out of 153 developing countries, remittances are larger than all capital flows, public and private. Also, remittances are stable and may even be counter-cyclical in times of economic hardship. Moreover, remittances are person-to-person flows, targeted to the needs of the recipients who are often poor.
KoraPay’s regulation of remittance flow is key in assuring migrants that their families back home receive the money they have worked for. Migrants often use informal channels to send money home because these channels are cheaper, are better suited to transferring funds to remote areas, offer the advantage of the native language, and, on rare occasions, anonymity. Informal channels however can be subject to abuse. Therefore, there’s the need for an African startup solving Africa’s needs.
KoraPay also strengthens the formal remittance infrastructure by offering the advantages of low cost, expanded reach which can shift flows from the informal to formal sector.
Remittances are done to reduce poverty, as it is the poor who migrate and send back money to their families. The impact of remittances can’t be overemphasized, especially on schooling of children. Studies show that the school drop-out rate is lower and enrollment ratio higher in households that receive remittances.
There is tremendous potential for using remittances to encourage development in Africa. Remittances tend to increase when the home country’s economy slows, making it a particularly effective anti-poverty tool. The money sent home promotes economic growth, increased investment and community development. koraPay then becomes the medium. on which an interconnected Africa is plugged into the global economy.
