Maximizing remittances from migrants in South Africa through a low-cost transactional account

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Maximizing remittances from migrants in South Africa through a low-cost transactional account

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Project Goal

Maximize the impact of remittances sent by low income migrants in South Africa to their remittance receiving families in Mozambique and Zimbabwe through a cost-effective and simplified know-your customer (KYC) transactional account.

Implementing Partner

Mama Money is one of the leading remittance service providers operating in over 20 African countries. It is an international money transfer company focusing on providing affordable remittance services. Mama Money has shaped the South African remittance landscape by contributing to the reduction in remittance costs from 14.9 per cent in 2020 to 10.2 per cent in 2021. Mama Money offers low-KYC transactional account through a partnership with Flexpay and Access Bank.

Geographic Target

South Africa and its corridors to Mozambique and Zimbabwe.

Project Objectives

Cost Reduction

Through the Mama Money remittance service, reduce the transfer cost in the South Africa–Mozambique and South Africa– Zimbabwe corridors to 4 per cent

Digitalization

Digitalize migrants sending in cash, through incentives and product awareness campaigns.

Formalization

Promote formalization of migrants’ remittances in South Africa through a low-KYC product, and enabling access to banking services.

Project Description

IFAD is partnering with Mama Money under the PRIME Africa initiative to maximize the impact of remittances sent by low-income migrants in South Africa to their receiving families in Mozambique and Zimbabwe. The project responds to the growing need of migrant workers in South Africa to maximize their net income, and that of their families back home, by receiving money sent at an affordable price. Mama Money’s RemittancePlus account offered to low-income migrants will be expanded to current informal and cash-only senders, thus providing a digital remittance priced at 4 per cent (plus 1.5 per cent FX fees). This is 6.2 points below market average.

Project Activities

Mama Money gathers in depth information of the needs of Mozambican and Zimbabwean migrants in South Africa who send money home, and their relatives receiving remittances in rural areas.

Mama Money promotes the RemittancePlus account, and its agents are trained to raise awareness thereupon. For the first time, migrants sending money will have access to financial literacy training. Mama Money also seeks to engage employers and migrant workers in a digital payroll solution that can. help companies reduce costs and risks associated with handling payments in cash. This allows migrants to be more financially included, and increasingly use digital remittance transfers.

The project also aims at leveraging the role that remittance receivers play in the choice of channel and method to remit by  their migrant family member. Mama Money will conduct activities for the first time at the receiving side, through close collaboration with its pay-out partners.

Expected Results

Supporting Sustainable Development Goals

Supporting Sustainable Development Goals