The news:
- Onafriq, a digital payments service, and M-PESA, the Vodacom and Safaricom-owned mobile phone-based banking services, have signed an International Money Transfer Agreement.
- The partnership will see both fintechs collaborate to streamline remittance flows into Ethiopia.
- According to the agreement, Safaricom, which obtained the Payment Instrument Issuer Licence from the National Bank of Ethiopia in 2023, can now assist Ethiopians in receiving remittances via M-PESA, a mobile money transfer service.
In a briefing at the first-ever International Day of Family Remittances in the East African nation in 2023, Mohammed Endris, the Director General of the Ethiopian Diaspora, stated that remittances make up to 50% of the GDP in some countries.
According to the World Bank, remittance flows into sub-Saharan Africa stood at $53 billion in 2022, indicating the immense contribution of African immigrants to their home countries.
However, Endris also stated that the diaspora sent home to Ethiopia accounts for only 5% of the country's GDP and that they are working to double it in the next five to seven years.
The new collaboration between Onafriq and M-PESA is expected to improve the remittance rate in the country. Ethiopians living abroad sent $4.2 billion in remittance to their country in 2022.
Paul Kavavu, General Manager at Safaricom Ethiopia, noted the signed agreement would offer Ethiopians in the diaspora a seamless channel to send money to their loved ones at home in Ethiopia, giving a significant boost to the $5 billion the country generates in remittances annually.
Kavavu explained that the company’s goal remains to simplify payments, and integrating International Money Transfer capabilities into M-PESA precisely aligns with that purpose.
A report released in 2022 by GSMA based on data collected between 2013 and 2022 revealed that in countries with mobile money services — otherwise known as mobile money countries — the total Gross Domestic Product (GDP) was about 1.5% ($600 billion) higher than it would have been without mobile money.
Founded in 2009 by Dare Okoujou (CEO), Onafriq (formerly MFS Africa) is an African-focused payments company enabling interoperable cross-border and domestic digital payments.
The company boasts a network connecting over 500 million mobile money wallets and 200 million bank accounts in 40 African markets.
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In January 2024, Onafriq selected Alviere, an embedded finance platform provider, to enhance payments and remittances from the US into Africa.
